Governance has been subject to particular scrutiny since the onset of the pandemic. Charities have enjoyed significant trust in this area due to strong policies, but with the world of work upended, it’s vital to ensure that policies remain robust.
What is a governance review?
A governance review can cover a number of different areas. It might look at the effectiveness of the board’s work, such as: meeting structure; documentation of key decisions; approach to recruitment of trustees or trustee induction and training; the constitution or size of the board, including skill requirements, diversity, subcommittee structures and terms of reference; or a very focused review of one of these areas.
The format of a governance review may also vary. It may be part of a board meeting or away day, but more expansive reviews should be more formal and undertaken by a relevant professional. The trustees will need to decide which is more appropriate at any given time.
Why complete a governance review?
A governance review is an opportunity to reflect on an organisation’s governance arrangements. Following one of the most extraordinary years in recent history, it is important to recognise not only the tough challenges faced worldwide by individuals and organisations, but also the mass-scale versatility and impressive achievements demonstrated in response.
A few key reflections for charities regarding governance arrangements: have they kept pace with the versatility and rapid change within the organisation? Are your current structures still fit for purpose? Do they allow the proactive decision-making that the changing environment requires?
Other reasons to consider a review might be to update governance arrangements to account for changes in the organisation’s size or as a useful means of ensuring the trustees keep up with latest best practice or changes in the law – the Charity Governance Code is a good place to start.
Generally, it is good practice for trustees to carry out some form of governance review annually and in more detail with external assistance every three to five years, which ensures that all risk areas are regularly addressed.
How are governance reviews conducted?
One of the most important things to establish is what you are trying to achieve from the review. Ensure you have an appropriate scope and that the key stakeholders understand the process.
The review, whether conducted by an internal party or third-party consultant, often begins with a survey of trustees and is, in some circumstances, extended to wider stakeholders to understand any particular concerns.
The next step is to analyse the current governance structure and arrangements in the context of your strategic objectives and current situation. This may include benchmarking the size, composition, roles and responsibilities of the board, along with your induction methods and eligibility criteria, against similar charities or best practice. Other areas to review include codes of conduct, terms of reference or board policies.
In addition, if the board is organising a large governance review, it could be sensible to establish a working group consisting of a mix of trustees and staff. It may also involve an outside adviser.
Following the review, the board must develop an action plan to implement any changes, and if they do not intend to action a recommendation, they must clearly document why they made that decision. A working group may be necessary to plan and communicate with key stakeholders on the implementation of the recommendations.
Many charities believe their boards have stepped up, having better attendance and more engagement with meetings being held remotely. In spite of this progress, regulators are still introducing new challenges.
The Charity Commission’s investigation into the Royal National Institute of Blind People caused pause for thought. The findings clearly considered that the Charity Governance Code was not guidance, but regulation which should be followed by all large charitable organisations. With so many changes within the sector and individual strategies, perhaps 2021 is the year for a more robust governance review.
Any review is only as good as the actions taken to deal with the findings, ensuring that all stakeholders share the journey.
Kathryn Burton is a partner at haysmacintyre