Opinion

Retain independence at all costs

Governance | Sir Stuart Etherington | 1 May 2007

In this series, a guest writer is asked to challenge current thinking. Stuart Etherington challenges those who compromise their charity's independence.

With all the noise that greeted the Charity Commission's recent report, Stand and deliver: The future for charities delivering public services, it is important to focus on its most salient finding. This was not that over two thirds of all funding agreements for public service delivery are for only one year. Nor was it that only 12 per cent of charities say they achieve full cost recovery. The most shocking statistic was that a mere 26 per cent of charities providing services said that they felt free to make decisions without feeling pressure to conform to the wishes of their funders.

While the other findings are a welcome addition to the ongoing debate on funding, it is this perceived pressure upon trustees when making key decisions about the future of their organisations that is of critical concern. Are we really in the precarious position where many charities are not able to exercise straightforward independent judgement? The potential that this scenario has for mission drift, and the extent to which charity trustees are involved in the agreement of decisions made on their behalf, could have a fundamental impact upon charities' vital self-governance and autonomy.

It is this situation that must also be the Commission's main concern. Its duty as regulator is to ensure that charities are independent and that trustees take their decisions fully informed and free of control or undue influence from outside.

The Charity Commission, and trustee boards, should therefore be asking some hard questions as a result of this report. Are trustees taking full responsibility for the mission of their organisations? Are they rejecting proposals for funding where they run counter to their organisation's objectives, or direct it away from agreed core priorities and values? And just how much do boards know about the funding decisions made by their charity's management? And whether charity managers are under serious pressure from external funders?

It is the role of trustees, not chief executives or senior managers, to ask these questions. They own the charity's mission and they must be effectively scrutinising management. If this report is correct, then chairs and boards need to take a much more rigorous approach to addressing the Commission's call to view our independence as absolute, non-negotiable and sacrosanct.

Reasserting the voluntary principle

Key to this independence is the fact that charities are governed by unpaid boards. The debate on the payment of trustees, beyond the circumstances currently allowed for by the Commission, continues. But having a professional approach does not mean that we should professionalise our governance. The United States continues to offer warnings about the risk of losing public confidence through the payment of trustees. Instead of moving in this direction, we must reassert the voluntary principle. This is the defining essence of the sector and ensures that we continue to exercise independent judgment.

Independence is a fundamental and core principle for our sector. Trustees must take full responsibility for strategic decisions about the circumstances in which they want to work with government and the ways in which they want to negotiate that complex relationship. I would rather see charities close than lose the very reason that they exist in pursuit of funding that robs them of their independence.

Profile

Stuart Etherington is chief executive of the National Council for Voluntary Organisations. Throughout his career he has been involved in the leadership of voluntary organisations and policies surrounding them. As such he has become a leading commentator, both through his writing and his media profile. His leisure pursuits include reading political biographies, going to the theatre and opera, and watching Surrey County Cricket Club and Charlton Athletic FC.

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