Andrew Hind's opening plenary address to Trustee Exchange 2011

30 Mar 2011 News

Andrew Hind offers a personal recollection of lessons learned on governance from various trustee and executive positions.

Andrew Hind

This is the full text of Andrew Hind's speech to Trustee Exchange 2011, in which he offers a personal recollection of lessons learned on governance from various trustee and executive positions.

Thank you Lindsay, and good morning ladies and gentlemen.

I’ve been asked to give some personal recollections on governance.  So this is me sharing my own experiences with you, trustee-to-trustee.  It’s not a lecture from Andrew Hind, former CEO of the Charity Commission.

First I want to share some data with you about trustees.  (Slide 1).

Now what about my own personal experiences of trusteeship?  I am just one of 1.2 million people who act as a trustee.  So I don’t claim any unique insight.  But in the dozen or so charities in which I have served as a trustee I have seen plenty of examples of good practice, and quite a few examples of bad practice and things which got in the way.

I want to talk first about some of the smaller charities I’ve been involved with.  As I noted earlier, three-quarters of charities have income under £100k; and 45 per cent have an income under £10k p.a.

Being a trustee in small community-based charities that didn’t know where the next penny was coming from, far less the next pound, taught me just as much – perhaps more – than the multi-million pound charities at the opposite end of the spectrum.  It’s the small end which really is the beating heart of civil society.

The Scouts

I want to start this journey of recollection with the 2nd Barnet (Parish Church) Scout Group, a registered charity.

My wife and I have three sons.  20 years ago when the eldest was six, he was really excited about joining the beavers, the feeder group before the cubs, and then the scouts.

But just weeks before the big day was due to come, on his sixth birthday, the group announced that it was going to close unless more volunteers came forward to act as trustees.

I’m not proud of the fact that it was personal self-interest that led me to volunteer to go on the board.  

The only other trustees were the scout master himself – whose name is Tony de Naeyer, Tony’s two sons, (both were qualified scout instructors) and a daughter-in-law, who was leader of the cub pack.

This is an organisation making a real difference to the lives of boys and young men in our community in north London, operating on an absolute shoestring.  The annual income, even now, is only £2,000 p.a.

I stayed on the board for almost 10 years, as all three sons worked their way through the system.

What did I learn?

1.    In a charity with no staff, the volunteers and trustees have to do everything.  If they don’t do it, it doesn’t happen.  Arranging camps, applying for grants, negotiating the scout hut rent with the council, CRB checks.  And all this has to be done after the day job has been finished, the family fed, aged relatives looked after.  

That was the single most important thing I took with me to the Charity Commission many years later: - Trustees do a great job.  They are nearly all well-intentioned.  Let’s do everything we can to make life as easy as possible for them.

2.    It is very difficult to operate as a board of trustees where everyone has an equal say, and where cliques aren’t allowed to spring up and dominate decision-making.  I’m sure you’ve all experienced that as well.

In the 2nd Barnet Scouts, the de Naeyer family were desperate for new blood to come in and share the load.  Three or four parents joined the board like me.  But it was hugely difficult to get the family to share decisions with us as equals.  I always felt that decisions like ‘What should the subscription be next year?’ or ‘Should we fundraise for a climbing wall or a new minibus?’  were settled round the de Naeyer supper table before the trustee meeting had even started.

And yet, in the final analysis, it is people like Tony de Naeyer who make the difference.  He had been scout master for over 20 years when I joined the board.  Yesterday I looked up 2nd Barnet Scouts on the Charity Commission website.  Tony de Naeyer has now retired as scout master, one of the sons has taken over, but Tony is still on the board.

I passed through and did my best while I was there.  But Tony has given 40 years of service in various guises.  Without him the Group would have folded long ago.  So who was I to worry about some minor governance imperfections?

Dominant, committed personalities, with all sorts of flaws, but without whom there would not have been a charity at all, seem to dominate the experience I have had in a number of charities – and not just small ones.

3.    Even in a tiny charity with an income of only £2,000, transparency and accountability were important.  We didn’t use those terms 20 years ago, but we did publish accounts and hold an agm.  And it was vital to the parents of the boys that we did.  They may have only been paying £20pa as a subscription, but they righly wanted to know what we had used the money on.  It was very hard getting them to volunteer to come and help on wet Monday evenings, but they turned out for the agm, and wanted to understand the key messages in the trustees report and the accounts.

Friends of the Barnet Countryside Centre 

It’s time to move on.  And next I’m going to take you to another small community-based charity.  This one is literally at the end of my road. (Slide 2)

It is a story about the Big Society which began long before the Big Society was invented as a concept by David Cameron.  And interestingly it started in another round of local authority spending cuts in 1991.

An environmental education centre for local schoolchildren was set up on a disused playing field in 1975.  It was funded by grants to schools from Barnet Council which paid for classes to visit the Centre.  But at the beginning of the 90s, in the last recession, severe financial cuts took place, the two staff at the Centre were made redundant, and The Friends were formed to start the fight for survival.  In 1992 The Friends were granted charitable status.  I became one of the first trustees, and stayed on the board for five years.

It’s been a long, hard road.  But remarkably, the Centre is still going, with the Council allowing us to use the site at minimal cost, some support from local business and a few die-hard volunteers.  The annual dawn-chorus bird walk will take place in a few weeks, Barnet bee-keepers recently began to keep bees on the site, and 15 school visits were held last summer involving about 500 children.

The big lesson for me from the Friends has been about how the power of a community is a huge force for good if it can be harnessed behind civil society action.  The local community weren’t prepared to see the Centre closed.  They wanted the next generation of children to have the same opportunities that their own kids had had.

Wind forward to 2011.  Time precludes a detailed discussion of the pros and cons of the Big Society.  But my view in a nutshell, based on experience at The Friends, is that it’s a sound idea in theory, but it needs some help from local authorities.  The Big Society can’t run on thin air.

Mariners

With the third charity I want to talk about, things got very sticky.

The thing that all trustees worry about reared its ugly head – personal liability.  There won’t be a person in this room who hasn’t worried at some point during their trusteeship about the possibility, however remote, of being help personally responsible for some failing or other of the charity.  In this case it became all too real.

I want to take you to the great Zambesi river which flows through south-east Africa for nearly 2,000 miles before entering the Indian Ocean on the east coast of Mozambique.  It actually splits the country in two – north and south.

The Mozambican civil war which started in the 1970s finally came to an end with muti-party elections in 1994. Over 900,000 people were killed, five million civilians were displaced, many were made amputees by landmines, and the country’s infrastructure was devastated.

This is what the mouth of the Zambezi looked like at the end of the war (Slide 3). The river, which previously was the commercial highway for the country, had no boats on it because there weren’t any seaworthy vessels left.  Poor people in rural areas couldn’t get goods to market and the redevelopment effort couldn’t begin.

Enter Chris Marrow, a former ferry operator in the Orkneys, who set up Mariners and persuaded the EU to enter into a £600,000 contract with the charity to build a number of barges and ferries to operate on the river.

Chris had the great idea to employ former engineers from the defunct sugar factory at the mouth of the Zambezi and get them to transfer their skills to shipbuilding.  He had the less good idea of getting me, a former colleague at ActionAid, and three others to be trustees.

So far so good.  While the contract in Mozambique was being progressed, Chris would go and win similar contracts elsewhere, using the allowed admin percentage from the EU contract– and the others to come - to pay his salary and other UK overheads.

The trouble was, the other contracts never arrived.  After a couple of years, we’d exhausted the EU contract’s admin budget.  The charity couldn’t pay Chris any more.  He couldn’t provide for his family, and was forced to take another job in England. 

And guess what?  The trustees were left holding the baby. Four of us doing this in what little spare time we had were landed with the responsibility to account in micro-detail to the EU for a £600k contract in Mozambique with no expatriate staff, no communications to the project site and no means of delivering the boats.

For over a year it was touch and go.  The EU would have been well within their rights to insist the trustees make good the £500,000 funds spent, which at that point had bought steel for some half-finished boats, engines which hadn’t arrived in Africa and had paid for a UK CEO who had now resigned. 

They didn’t tell me about this in the Charity Commission’s CC3 guidance on how to be a trustee.

I remember the day the DHL courier arrived at my house with boxes of books and records, in Portuguese, for me to prepare the accounts.  It took months of negotiation with the EU for them to accept that we could hand over responsibility for completing the project to another NGO, and that my accounts were legitimate, and good enough to pass muster.

In the end the project really delivered for the local people and got trade flowing again on the river, but it was something I never wanted to go through again.

Now I want to change pace, and give you a few quick vignettes of charities at the other end of the income scale.  Major household-name charities I have been involved with, and some of the governance lessons I’ve learned from them.

VSO

VSO is a highly-effective charity and I was privileged to be a trustee for three years from 1995-98.

But I left because I couldn’t get to the meetings.  As simple as that.  Board meetings were held on mid-week afternoons at 2pm in Putney.  As a busy person trying to hold down a senior job in the BBC, I couldn’t keep taking half-days off to be a trustee somewhere else.

I asked that the meetings be held in the early evening, or occasionally at weekends, but the chair didn’t want to change the arrangements.  There must have been lots of other people like me who wanted to serve VSO, but a simple thing like the time and place of the meetings made it impossible to be a trustee if you were a working person.

I’m a strong supporter of diverse boards.  Some things a charity can’t control, but it can easily do something about where and when it holds its trustee meetings in order to ensure as wide a range of people as possible can serve as trustees.

Unicef UK

Another charity doing excellent work where I was a trustee in the late 90s.  This was where I first came across the phenomenon of the ‘great and the good’ dominating the proceedings of a trustee board.

A bit like the 2nd Barnet Scout group, but in a far higher-profile charity, the chair and deputy chair seemed to reserve some key governance decisions to themselves, using the rest of the board as not much more than a rubber stamp.  The chair was a member of the House of Lords, the deputy chair was the wife of a senior politician.

When the chair was reaching the end of his term of office, it was suddenly announced that an invitation had been extended to a former High Court judge, known to the chair, to succeed him.  Would the rest of the board of trustees please care to scan his CV and endorse the decision?

So much for the principle of shared responsibility, democracy and mutual support around the board table.  At times like that it felt like there was the ‘great and good’ inner circle, and then the rest of the board made up of ordinary people.

This is not to say that both chairs didn’t fulfil their roles with distinction, and open lots of doors in the corridors of power, but it’s just not the way I believe that charity boards should operate.

If big names are needed to front campaigns or fundraising events, or help gain access to senior opinion formers, far better in my view if they are given the honorary title of patron of president.  But this should not be confused with the core governance role which is the responsibility of the charity’s trustees.

National Asthma Campaign

I’ve never been a trustee of this charity, but I was an adviser for a time, many years ago.

It’s another story of someone who was a trustee, but who should have been an honorary president.  He was a senior politician and provided the charity with important introductions into his world of political influence. 

I remember attending one board meeting when he spent the whole meeting signing a great pile of letters to constituents.  He may not have intended it, but the message was clear:  the rest of you carry on with the routine business, I have more important matters to attend to.

That just isn’t the way effective charities are governed any longer.

ActionAid

My first job in the charity sector was as finance director of ActionAid from 1986-91.  It was a dynamic charity international development organisation then, and still is today.

It was only founded in 1972, and when I joined the CEO was a young American in his thirties called Rip Hodson.  He had new ideas every day and the sort of driving energy that you need to bring them to reality.

The problem was that after ten years with Rip as CEO, the organisation was exhausted.  The staff couldn’t keep up with Rip’s growth plans.  Income was growing fast, but we couldn’t develop experienced staff fast enough to deliver the on-the-ground results that Rip insisted on seeing.

I learned a great lesson from this experience.

No matter how impressive the staff, or how strong and dominant the CEO, in the end it is the trustees of a charity who have ultimate responsibility for calling the shots.
After a terrible period of soul-searching the board decided that they had to back the staff over the chief executive.  Rip left.  A new CEO was appointed. 

No one person was bigger than the organisation.  That is just as it should be.

Barnardo’s

I was finance director at Barnardo's in the early 1990s and I have one major recollection in charity governance terms.

Barnardo’s wasn’t short of members of the ‘great and the good’ on its board in those days.  But, for me, the stand out trustee was a woman without any qualifications, with no high-flying career, but who had herself been brought up in a Barnardo’s home in the old days of institutionalised care.  That experience, and her ability to use her natural emotional intelligence, enabled her to contribute with often greater value than all the other impressive people around the board table.

The lesson for me was clear.  Everyone can contribute.  There is no magic formula for what makes agood trustee.  Diversity of social background, as well as of age, gender and skills and experience is essential in a fully-rounded board.

Diana Fund

My last subject is the scene of the most difficult situation I have ever been in as a trustee.  I said never again after Mariners in Mozambique, but this was even worse.

Princess Diana died, as everyone will remember, in a car accident in August 1997.  There was a national outpouring of grief and emotion, and within a few days the Fund was set up to receive the donations that were pouring into Kensington Palace.  In a short period, more than £100 million was donated by the public.

The first trustees of the charity included Diana’s sister, her lawyer and her former private secretary. The Fund embarked on a process of making grants to causes closely associated with Diana’s previous charitable work.

The trustees hit upon the idea that the charity’s funds could be swollen further by entering into commercial deals to use her name and image, which the Fund believed it had rights over.

This was the beginning of a ‘charity traffic accident’ of immense proportions.  Firstly the Fund was heavily criticised for poor taste in some of the endorsements which were approved (Slide 4).

Then in 1998, after taking legal advice,  it sued Franklin Mint, a company in the USA which was well-known for selling memorabilia, and which had produced a Diana doll  (Slide 5) which was not licensed by the Fund. So began a six-year litigation battle in which the Fund was badly damaged.

I joined the board the following year, with a number of other ‘second wave’ trustees.

When we lost the case Franklin Mint counter-sued, claiming we had acted maliciously. I wished my due diligence had been better when I agreed to become a trustee.

The counter-suit personally named all the trustees, and was for a sum of well over a hundred million dollars.  That was greater than the reserves of the Diana Fund.  The killer blow was when we realised that the Fund had not been set up as a limited company, it was merely a charitable trust.

So the trustees’ personal assets were on the line. For two years I was seriously worried that I was facing a reasonable chance of bankruptcy.

It’s not very impressive of me to have got into this situation twice!

Eventually, in 2004, there was an out-of-court settlement in which the Diana Fund paid £13m to charitable causes agreed by both sides.

There are a number of obvious lessons from the sorry tale:

-    Despite a lawyer’s optimistic assessment of risk in a case, the worst can and does happen.  Nothing in court is guaranteed.

-    Never operate as an unincorporated trust if there is the remotest possibility of the trustees bearing personal risk.  That is why I hope the new CIO structure gets going as soon as possible.

Trustee Exchange is the annual governance conference associated with Governance magazine and organised by Civil Society Media.