Government and the Voluntary Sector, Governance, Leadership

Good Governance Matters

Debra Allcock Tyler, CEO at DSC, writes about trustee responsibilities and the need for all trustees to understand the finances of the charity they govern.

Many, many years ago I was supporting a charity who were being presented with financial information which wasn’t accurate and was potentially critically risky. The problem was not so much the fact that the charity trustees hadn’t picked up the irregularity in the numbers, but that the Treasurer was having an affair with the Finance Director and hadn’t noticed the irregularities in the figures. One assumes he was blinded by love perhaps? One now wonders if the pair of them had actually been having one-to-ones about the finances or doing something else entirely!

The Governance issue here is not so much the affair but that, as far too many boards do, they had abrogated responsibility for knowing about the money to the Treasurer. It turns out that there was no deliberate wrong-doing but simply a quite large error that hadn’t been picked up and because the Board typically didn’t bother with the figures themselves, they left it to the Treasurer, no one else was in a position to ask the right questions.

However, notwithstanding the unprofessional and risky behaviour of the Treasurer, the Board were well and truly at fault here. Not so much for not knowing about the affair and dealing with it – but because clearly they had not taken their collective responsibility for understanding their charity’s finances seriously.

This story is true but probably an extreme example of what can go wrong when boards aren’t properly trained, when not enough time is given to all of them to understand their responsibilities as trustees and when they don’t fully realise the implications of them not knowing how the charity operates and what the risk points are.

We are so keen to attract trustees to our boards that I think sometimes we are in danger of underplaying what a key role it is and that it does involve them having to make time to understand the charity, the management information and the finances. All of them.

The governance structure of charities is often criticised because of its voluntary nature – and there are undoubtedly challenges commensurate with volunteers carrying the ultimate legal responsibilities for the work of their charity. But it is also a very effective structure when it is done right.

Because they are unpaid, trustees are not influenced in their decision-making by consideration of any impact on their personal remuneration. No one can accuse them of financial self-interest in any decisions they make and so they can confidently say that everything they do is for the sake of the charity without anyone doubting them.

Being a Trustee is a wonderful thing to do – and doing it well means that you are helping to make society better for your fellow citizens, either through working with people, animals or the environment.

So even though there are a lot of responsibilities on trustees which can be scary – with appropriate support and access to expertise it is a lot less intimidating.

So that is why we encourage you to either attend yourself or encourage your board to come along to our online Good Governance Matters Conference where you will learn about trustees’ responsibilities in relation to trust and confidence, finance, complying with the Governance Code and the role of trustees in fundraising, amongst other things.  You will hear from fellow trustees and experts and come away feeling better informed and more confident in the role.

Find out more and book your tickets to Good Governance Matters, on Tuesday 31 October, here now.