Charities increasingly embroiled in complex cultural disputes, report lawyers

12 Jul 2023 In-depth

Charity lawyers are reporting an increase in challenging and complex disputes within charities that do not lend themselves to a traditional investigation. Lea Legraien reports… 

By fizkes / Adobe

Charity lawyers have warned that complex disputes between staff members at charities are becoming increasingly common.

Some are now finding that they are spending more time dealing with challenging disputes within charities that cannot be addressed through “a traditional investigation under a grievance or disciplinary procedure”.

Recent examples include the Charity Commission issuing an official warning to an Oxford University college last year after finding that it had spent more than £6.6m on legal and public relations fees to try and resolve a dispute with former dean Martyn Percy.

Also last year, Cats Protection’s interim chief executive announced he was stepping down after he expressed concerns over the welfare of the 18 cats kept in the charity chair’s three-bedroom house.

Sector lawyers warn that such instances are increasingly frequent. Not only can these disputes be costly, but they can also cause huge reputational damages to the charity and impact beneficiaries. 

Shift in the type of dispute

Carla Whalen, partner at Russell Cooke, says that she has seen a change in the type of dispute since she started practising as a charity specialist employment lawyer a few years ago.  

In the past, what might have been seen as a “traditional human resource complaint”, as she puts it, would have been a very specific complaint about a specific act or something done or not done under a particular policy. 

Now, she says that complaints tend to relate to “nebulous concepts” such as the organisation’s working culture or wellbeing, which are more complex and trickier to deal with.

“I’ve recently come across some really challenging dispute situations in charities. Sometimes these have involved multiple members of staff and trustees, which puts a strain on everyone including people in the workplace who aren’t directly involved, and tend to be more complex to deal with than complaints made by one person against another individual,” she says.

“They require a much wider and deeper review of the relationships, power dynamics and values at play in an organisation. All of this takes a significant investment of time and money and the process can feel very stressful and unsettling.”

Tom Murdoch, partner at Stone King, agrees that this type of dispute happens a lot and is quite sensitive and difficult to resolve. 

He gives two examples that illustrate internal conflicts around values. The first is a generational clash in a large learned society arguing about how to deal with a member found guilty of historical (but not directly related to the charity) child abuse. The younger members of the society wanted to reject this person as a fellow while the older members defended them.

“There was a huge battle at the charity about whether or not having this person clashed with the charity’s values,” he says.

“It was incredibly long and painful and involved people tearing lumps out of each other in public meetings, and had the charity itself in all sorts of difficulties because of the dispute. In some ways, a good thing came out of this because in the end they adopted a clearer code of conduct and a disciplinary process.”

The other example is a conservation charity having to expel people who believed in conservation but carried out unethical and unscientific reintroduction of species to a site, which other conservationists thought was “extremely harmful”.

Murdoch says: “It’s led to similar consequences: huge fighting and public controversy, bringing the charity in the public eye for the wrong reasons, splitting them when they should be unified.”

Generational difference and impact of Covid-19

It is difficult to pinpoint the triggers that have led to an increase in this type of dispute. For Elizabeth Jones, partner at Farrer & Co, it could be partly down to “generational differences”, with younger people having different expectations around management style. 

“Sometimes, differences between a management style that 10 years ago would have been absolutely fine isn’t sitting so well with some members of the workforce now,” she says.

“Younger people are incredibly switched on to culture and attach a huge amount of importance to how their workplace aligns with their values. Therefore, they have high expectations around the workplace. I don’t think they’re wrong to have those, but it can cause conflict among a generation that has come before that, and, perhaps, had different expectations.

“People entering the workforce now, their awareness of these issues and tensions and their expectations that those are resolved is perhaps slightly different to older generations’. Sometimes, our involvement can be around helping mediate some of these difficult conversations that are being had within workforces because culture is so important to get right.”

She adds that issues around culture “can start off coming from a very small percentage of your staff but often they can be the canary down the mine and it’s worth listening when people are raising issues because often there is something in what is being raised”.

The rise of hybrid working, notably because of Covid-19, might have also played a role in the number of disputes arising. “Some people find it difficult to operate within the hybrid environment that can throw up a lot of challenges,” she says.

“Because people are dealing with each other more over screens and less in person, that in itself just makes it harder to resolve disputes. When you’re not sat around a table with somebody in person, things become more intractable.”

Suhan Rajkumar, a charity law and governance expert at Bates Wells, notes that an increasing number of organisations are starting to see “the importance of culture and wellbeing”. 

He says: “Purpose-driven organisations such as charities can find these issues particularly acute because their staff and volunteers are, on the whole, more likely to be engaged in these issues, sharing, for example, strong views on issues aligned with their employer’s charitable objects. 

“Charity staff and volunteers are also more likely to hold their organisation to a high standard than staff in a commercial business might be, where there will not always be the same expectation of behaviour aligned to a set of values.” 

These issues are not unique to the charity sector, though. Society as a whole is becoming “more alive to behaviour and power imbalances”, Rajkumar says.

“The risks of bullying, harassment and discrimination, these issues are more likely to come up in charities as well – both as a reflection of wider society but also due to higher expectations of behaviour and conduct in a purpose-driven organisation,” he says.

Reputational damage and harm to beneficiaries

The real cost for charities dealing with these disputes is the potential reputational damage they can have and harm they can cause to beneficiaries.

Whalen says: “We have instances where disputes, often between staff and trustees, have got to such a point that the board of trustees is genuinely thinking about whether to just close down because it doesn’t feel that they can function at all and be what they’re set up to do. 

“When we’re talking about it being ‘costly’ we’re not just talking about professional fees. If your fundraisers are doing nothing generating funds because they are demoralised or engaged in some complex group grievance, or if you’re not able to deliver the work because you have high rates of staff absence or whatever, that becomes very costly too.”

She argues that traditional disputes that involve, say one employee, are “much easier to contain”, whether they are dealt with through settlement or non-disclosure agreements. 

However, disputes around culture can be trickier to contain as they often involve more people. 

“It’s not just personal, it’s more of a wider issue that they feel it’s their duty to bring to the attention of the outside world, the media or the Charity Commission if they don’t think it’s being taken seriously within the organisation,” she says.

“Rather than a situation where perhaps in the past, ultimately they would completely break down, you could probably pay someone off, you can’t really do that here.”

Not just empty words

So how can charities prevent these issues from arising in the first place?

Rajkumar says: “Organisational culture is set from the top, and all trustees will be alive to their role in setting and maintaining organisational culture, addressing complaints and concerns, and providing a safe environment for staff and volunteers.”

Both Whalen and Jones say that charities must have policies and procedures in place to help manage any internal disputes or concerns.

Jones says: “It’s important to keep a close eye on how your staff is feeling, to have employee surveys and look very carefully at the results and act on those. Even when it’s only a handful of people who are raising an issue, think very seriously about whether there is something in that that should be picked up and addressed, and not let things bubble up because that tends to create a more significant issue over time.”

Whalen warns charities that produce diversity and inclusion statements or well-being policies that are “quite high standards” or have “quite ambitious targets” while people in senior roles “haven’t been given any training or had any input into developing them”. 

“Where the crunch point sometimes comes is that staff are given an expectation that something will happen, whether they’ll get a certain amount of support in the workplace or they’re going to work to become an anti-racist organisation,” she says.

“Sometimes people feel like an organisation is being two-faced: outwardly, the organisation is saying that it’s committed to all of these things but staff doesn’t feel that.

“So, one of the things charities should do is take the time to think carefully about the statements they’re making externally and internally, particularly about topics that can be quite emotive, and make sure that if they go out there saying something they’ve got some plan to back that up and understand what it means in practice and that it’s not just empty words.”

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