A Charity Finance Group (CFG) report has raised concerns about the financial expertise and diversity of charity trustees.
The second annual report by CFG and MHA MacIntyre Hudson found that nearly nine in 10 charities think they could benefit from having greater understanding of financial governance.
CFG surveyed over 200 charities, with 57 per cent of respondents saying they understood strategic financial governance matters well or very well.
However, 87 per cent of charities surveyed said their charity could benefit from having a better understanding of strategic financial governance matters, and 65 per cent said their charity fails to formally assess their board’s financial competency.
In addition, 55 per cent of charities said they do not formally assess the effectiveness of their financial governance, an increase of nine per cent from the previous survey.
And only 56 per cent of charities said they make financial training available for their trustees, a reduction from 81 per cent in the previous survey.
Meanwhile, some 44 per cent of respondents said the diversity of charity boards was poor in terms of demographics and background.
However, only 15 per cent of respondents said their charity’s board had a lack of diversity of thought.
‘More to do’
Caron Bradshaw, chief executive of the Charity Finance Group, said charities need to prioritise improving the financial competence of their trustees.
She said: “While the survey indicates that there have been some notable improvements in financial governance amongst trustees, there is still a lot more to do to ensure all trustees are engaged in the finances of their charity.
“Help is available, but charities need to commit to using it to unlock the finance skills of their trustees. We encourage trustees not to be complacent over the lack of diversity in the boardroom.
“It needs to be prioritised to ensure people from diverse backgrounds join our boards - better decision-making depends on that diversity of thought and voice.”
Meanwhile, Sudhir Singh, partner and head of not for profit, MHA MacIntyre Hudson, said trustees’ lack of financial competence could be holding back their charity’s impact.
He said: “Our survey results are consistent with last year in identifying mediocre standards in financial governance and a lack of real commitment to trustee competency and diversity.
“The inconsistencies in charities’ responses certainly points to a widespread lack of self- awareness, and probably unacceptable complacency.
“Trustees need a reality check on their own performance, and increasing numbers are undertaking formal assessments.
“Most would be truly shocked if they understood this is holding back their charities’ impact on beneficiaries.”
The survey was undertaken in August 2018 with charity respondents ranging in size from £1m to £100m in annual income.
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