Following the collapse of Kids Company, Dorothy Dalton, warns the spotlight has fallen on good governance and trustees.
With critical media attention continuing to be focused on charities amid high-profile charity collapses (Kids Company, BeatBullying to name a couple) and the resultant pressure on the Charity Commission to be a tougher regulator, there will be much greater focus on governance of charities generally as well as on the governance of individual charities.
All boards need to be familiar with the revised CC3 The Essential Trustee. We all know that it is our responsibility to comply with the law and our governing documents, however we are now expected to comply with the Commission’s guidance on good practice or explain why it is in our charity’s interest not to comply with any particular aspect of good practice as set out by the Commission.
Furthermore, in March 2015 details of the new annual return were released. The return includes a declaration that relevant parts have “been brought to the attention of the charity trustees, who have individually verified this and given their informed express consent to this submission”. Make sure as a board that you consider the relevant parts.
As was pointed out in the July issue of Governance magazine, charities are required in the new annual return also to confirm whether or not we have reviewed our financial controls in the relevant period. It is possible that if we reply in the negative for more than one successive year, it will trigger an automatic inquiry by the Commission. The spotlight is very much on governance especially as it relates to compliance.
Governance is much more than compliance. It is about ensuring clarity of the strategic direction of the charity and of the values that underpin the charity, taking responsibility for whether or not the charity achieves these strategic aims, identifying and managing risk in a systematic and strategic way, guarding the charity’s assets including its reputation, and scrutinising, supporting, stretching and holding to account the chief executive and the executive team. Delivering effective governance needs commitment.
