Charity governance is a really important aspect for trustees and senior management to get right.
How good is governance in your charitable organisation? When did you last review this critical area? Do you know what makes an effective board? Are your governance arrangements up to date and working well?
We examine this important topic on how to measure the effectiveness of your governance arrangements and how your board can take clear actions to improve it.
Charity boards should undertake regular corporate governance reviews with an internal review at least annually and an external review every three years.
If you did undertake a governance review within the last 12 months, what format did it take? What were the outcomes? What actions did you take? When is your next one planned?
If you don’t undertake an annual review of corporate governance, then how do you really know how effective your charity board really is?
The Charity Commission NI states that “Charity trustees are the people who are legally responsible for the control, management and administration of a charity.” Trustees of incorporated charities also have legal duties and responsibilities as company directors. By undertaking regular corporate governance reviews (and acting on them), trustees can therefore reduce their personal risks and demonstrate they are meeting the requirements of their role.
Board effectiveness and corporate governance are inextricably linked.
Corporate governance is often defined as “the system by which organisations are directed and controlled.” An effective board will ensure that good governance arrangements are in place and this will help to make the board more effective. They go hand in hand with each other.
Most charity trustees are very conscious of the need to demonstrate good governance arrangements and the requirement to benchmark themselves against their relevant Charity Governance Code:
Despite the different codes, they all emphasise similar key areas such as the need for boards to review governance regularly, at least internally and every year.
Charity governance reviews should incorporate benchmarking against good governance code standards for the sector.
Depending on where your charity is registered, generally your board should review:
Internal reviews allow your board to annually “self-assess” your governance arrangements, so that trustees can refresh yourselves about best practice and address any gaps over time. Sometimes when problems emerge, you can focus on specific areas such as policies; conflicts of interest; financial management; risk management; strategic planning; stakeholder engagement.
Your board should complete an external review every 3 years if you are a larger charity or when there is a crisis of some kind. This will usually follow the methodology of the external reviewer or consultant. Cost may be an issue as they tend to be based on consultancy days, however, they will bring to your board some external specialist expertise.
Whether internal or external, a corporate governance review is usually set against sector benchmarks or best practice standards. These include key elements of what is in the paper checklists that accompany the relevant Charity Governance Codes.
So how do you undertake an internal assessment of your corporate governance arrangements?
Paper checklists? Many boards that undertake an internal corporate governance review use paper checklists, with the trustees and relevant staff meeting face to face. The staff or secretariat write up and agree the reports/actions afterwards. This can save you costs but it can be time consuming to complete and uses considerable trustee and senior management time. It can also be a little unstructured and confusing if the governance benchmarks are unclear to all those involved.
One alternative is to involve an external specialist in all reviews but this can be expensive and also time consuming as it can take 3 to 4 weeks or longer.
Our online Charity Governance Reviews will reduce the time taken to conduct your reviews. It will also ensure you are assessing your charity against key benchmarks and therefore maximise the time you spend addressing your actions.
We use a unique online Charity Governance Tool so your board can work collaboratively (and with senior management if relevant) to self-assess how effective your governance arrangements are. Your board can complete this face to face or remotely via an online meeting portal such as Zoom, MS Teams or Google Hangouts.
You can complete it in one or two sessions and immediately download your own personalised Charity Governance SMART Action Plan. This saves your staff valuable time at meetings and writing up reports.
Watch our short Charity Governance Review Explainer Video and see how the Charity Governance Tool can improve your charity.
Using the online Charity Governance Tool to show you how effective your charity board is, has the following advantages:
Saves you time – you generate your online Report and SMART Action Plan instantly
Saves you money – cost is significantly less than it would be to hire specialist consultants
Use it easily – the questions and terminology are easily understood
Complete it at your own pace – all at once or in bite sized chunks over several weeks, you choose
Benchmark your arrangements against the code standards – good governance practices are included within the review
You have online access to an interactive tool – complete it with your team, bringing everyone together with the board
Reassure key stakeholders – demonstrate to key stakeholders (and potential new trustees) that you are committed to complying with the highest board effectiveness and good governance standards