The crisis in fundraising has been blamed on trustees, says David Ainsworth, but is this fair, and can we really improve sector governance to make sure it doesn't happen again?
Earlier this week the Public Administration and Constitutional Affairs select committee published a critical report into fundraising regulation, and it reserved particular criticism for trustees. It was boards, not fundraisers, they singled out for blame.
Karl Wilding, director of public policy at NCVO, has already tackled this subject in an excellent blog. Here’s his view:
"The exam question set by PACAC’s report – and one which the sector has been wrestling with for some time – is not how do we sort out fundraising but how do we ensure that our governance is as robust and effective as it should be. The report suggests that no system of regulation can substitute for effective governance by trustees. It rightly highlights that this requires a change of attitude and behaviour from trustees."
The FRSB calls for similar changes in its report into the death of Olive Cooke. But the issue of trustee oversight is not limited to fundraising. Trustee failure has been blamed – and rightly – for a lot of the crises in the sector in recent times. Many saw it as the job of trustees to speak out in defence of chief executive pay, for example. And it is likely that the PACAC report next week will focus on governance as the reason for the collapse of Kids Company.
Wilding describes poor governance as “a chronic problem” for the sector, and his next question is the obvious one: how we get that change?
First, if we require a change in culture and behaviour, we will not get it without a change in structure. Expecting the same people to behave differently in the future than they did in the past, without changing the structures they work within, is an exercise in futility.
Before looking for solutions, we need to understand why the problem has arisen in the first place. Why aren’t trustee boards providing good governance?
Time and resources
One reason is that trustees are part-time, and therefore just don’t have the resources to commit. Particularly in larger organisations, it’s a bit unrealistic to expect that trustees can provide in-depth scrutiny of everything. In very large charities, there must be entire departments which have never seen a trustee.
It’s not just a question of taking action, either, but of knowledge. Trustees are external to the day-to-day running of the organisation, so they rely largely on knowledge and information provided by executives. It must be easy enough to just not tell them what is going on. If this happens, how are they expected to find out?
This seems like a particular problem for the large charities which have borne the brunt of the criticism in recent years. While a trustee board of a dozen people may be more than adequate for a small organisation, it seems strange that we can expect the same model to be successful at much larger ones.
Not that just adding people is the answer. It isn't. In contrast, some larger charities have found themselves weighed down by historical precedents which have led to huge, poorly representative trustee boards. Does the traditional board structure work at all for these organisations?
At the same time that boards lack manpower, though, they are also too big. Trustee boards can have 20 people around a table, which must make it extremely hard to make decisions, and there is always the problem of groupthink, which grows larger with every individual added. In some ways a big committee is capable of being stupider than any of its members, and can easily develop blind spots.
This problem is compounded by recruitment. How do you get onto a trustee board in the first place? Are you elected, or invited? If you’re elected, do you have the skills needed to make decisions? If existing trustees choose new ones, you can get a clique in which only yes-men get into the club. If they don't have enough say, it’s easy to end up with a board of two camps, in which no agreement can be reached at all.
Then there’s the uneasy balance between the primary roles of trustees – strategy, scrutiny and support. Trustees are there to set the direction, scrutinise the action of the staff, and provide help to the executives, but these are often contradictory drivers. It’s perhaps not surprising if trustees become more interested in one, rather than the others, and let the others fall by the wayside.
Stomach for the fight
Let’s also be realistic about what trustees can be expected to take on. They are unpaid and part-time, and they have reputations and other responsibilities to think of. We’re already asking trustees to take on daunting legal responsibilities. Now there are calls to add to the workload.
You can understand why unpaid and part-time trustees, even if they’re keen to challenge the decisions of executives, often just don’t make much headway in driving culture change. You can imagine that even if trustees had tried to force fundraising departments to change their ways, the staff would just go back to tried and tested tactics as soon as trustees’ backs were turned.
And it's all very well people like myself in the media saying that the utter trustee silence on chief executive pay has been a disgraceful abandonment of responsibility (it has) but let’s look at it from the trustees’ point of view. They make difficult decisions, without reward, and then national newspapers come out and throw brickbats at them. In this situation, would you stand up and be counted, or shrug your shoulders, say “Sod this, I’m not paid enough”, and run for the hills?
You just need a quick look on the high ground to find the answer. But it’s hard to blame them. Look at Alan Yentob. He gave 19 years of time and not a little money to Kids Company, and when it folded it cost him his job.
Why, really, would anyone be a trustee at all? And if we keep asking more of trustees, and belabouring them more and more for failure, how are we going to get anyone to take the damn job?
Finally, there’s the question of accountability. It’s all very well saying that we must make trustees behave differently, but how are we going to? What levers can we pull to make them? Trustee boards are accountable in most cases to no one except the Charity Commission and the courts, and getting either to intervene is hardly the easiest thing to do.
If trustees choose to ignore everything that’s been written about their failures, and just carry on doing what they’ve always done, there isn’t much anyone can do.
Who watches the watchmen?
Ok, so what now?
So is the model of voluntary trusteeship completely broken? Well, no. Despite what I’ve said, it’s actually proved remarkably resilient over more than a hundred years. It might not be perfect, but if you’re going to replace it, rather than just complain, you have to have something better, and I’m not sure anyone’s found a silver bullet.
Trustee payment, in particular, has been shown to achieve nothing except upping attendance rates, and it might make things worse. There’s a whole school of psychology explaining why people will do less work for pay than they will for free. Plus, it creates new incentives, including to make money rather than serve beneficiaries.
I’m not sufficiently knowledgeable about all the many different governance structures in the sector to come up with an answer, but basically the common theme seems to be this: rather than giving more resources to the trustees, put more resources into supporting trustees. Some charities have introduced stakeholder councils to represent the beneficiaries, paid secretariats to help trustees, development boards, and scrutiny committees for each individual function. I can't prove this has helped, but it sounds sensible.
What if we can’t fix it?
The truth may be more unpalatable, though. It’s not just the charity sector which has bad governance, after all, it’s every sector. Good governance depends on a small number of individuals, often with pretty conflicted motives, doing a good job. And it relies on them being able to forge strong relationships with each other and executives. Too often, those relationships just break down.
Maybe the truth is that it’s simply very hard to have good governance.