Monday 15 September 2014

Give charities a seat in the boardroom!

A startling intervention on the shallow approach of big companies to the charity world came as a welcome surprise this weekend. Britain’s biggest companies have a superficial relationship with charities and volunteering, the Bank of England’s new chief economist said, as reported in The Times and The Economist.

Speaking at the Pro Bono Economics lecture, at the charity he helped to found, he made a strong plea for greater interaction between the non-profit and for-profit sectors. The Times reported that:

Andy Haldane used his first speech since taking up the job to criticise companies for failing to recognise the full value of charities, which he believes contribute as much to the economy as the entire energy sector.

He singled out in particular the dearth of boardroom members drawn from charities. The presence of only one non-executive director from a charity in the entire FTSE 100 ‘is not consistent with volunteering having entered the corporate bloodstream’. There was also no excuse for one-third of FTSE 100 members having no volunteering programme for their staff, he said.

The only FTSE 100 board member from a charity is Jasmine Whitbread, the international chief executive of Save the Children, who is a non-executive director at BT. However, she spent much of her career in the corporate world before joining the charity sector.

Charity chief executives often preside over huge budgets, have to motivate people willing to work for nothing or very little, manage services all over the country or abroad, and have to build and protect their brand.

In the Pro Bono Economics lecture, Mr Haldane said that volunteering in the UK might amount to as much as 4.4 billion hours per year, not far off 10 per cent of the total hours put in by the paid workforce. In terms of value to the economy, it could be £50 billion per year, or about 3.5 per cent of GDP — similar to the size of the UK energy sector. However, too many companies failed to appreciate its value, he said.

‘My suspicion is that many companies are still not close to recognising fully the benefits from volunteering,’ Mr Haldane added.’And let me illustrate that with one startling fact. Among those FTSE 100 companies, how many board members are drawn explicitly from the voluntary sector? Precisely one. That is not consistent with volunteering having entered the corporate bloodstream.’

He predicted that companies would wake up to the value of charities and have far closer relationships with them, largely to recruit and retain the best staff.

Younger people have shown that it is a pre-requisite that the company they work for does more than just make money, he said. ‘Generation Y, born from the 1980s onwards, place a much greater weight on a diverse career experience, with a strong social dimension, than their predecessors. And generation Z, the millennials, are unlikely to buck that trend. Where they lead, companies will surely need to follow.’

Mr Haldane was formerly the Bank’s head of financial stability, a position he held during the banking crisis. The lack of diversity on banks’ boards was said to be a factor in the crisis. Critics said that it led to ‘group think’, a culture where no one challenged anyone else’s view.

An excellent way to start to tackle this problem of groupthink would be to bring in the talents of charity CEOs. 

Most big British companies have corporate social responsibility (CSR) programmes, which make donations to charities and encourage staff to volunteer their skills. Many now have special days where staff can take time off to do voluntary work. But this is generally superficial and may even just be patronising to the people whom staff go to work with. It makes board directors feel good but it neither helps them really understand the sector nor care for its future. I have met too many of them who think running voluntary organisations is ‘just a bit of charity work’.

Yet many of ACEVO Chief Executives run complex voluntary organisations,  where thousands of people operate in highly ethically-conscious environments. Their ‘bottom line’ is far more complicated than a mere profit/loss and investment calculation. They have learnt also to earn and keep the public’s trust, while managing some of the biggest brands in the world. As an aside, I’m pleased to see this theme is on parliamentarians’ radar at least; it crops up several times in our Red, Blue and Yellow Books of the Voluntary Sector, the first of which is launched at Labour Conference this Sunday.

It is time these good people were sitting on the boards of our top companies. Years ago I was asked to sit on the ‘Tyson Task Force’ which looked at board room diversity. A good report emerged but the recommendations were weak and amounted to little more than exhortations. That was a decade ago. Little has changed. Now it’s time more was done to reform boardroom governance in the City. And this won’t happen without legislative change. So I’m pleased that our party conference programme will start off one part of this debate; promoting greater dialogue between charity CEOs and politicians. Next it’s the turn of the boardrooms themselves…

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