News28.11.07 | 'Chief Executives on Governance' launched at acevo's Annual ConferenceRegulators should enable to third sector organisations governance is fit for purpose in the 21st CenturyAcevo’s latest study into the state of governance in the third sector has revealed a worrying gap between knowledge and implementation of best practice. Sir Rodney Brooke, Chair of the General Social Care Council was invited by acevo to chair a Commission of Inquiry to determine if third sector governance arrangements are ‘fit for purpose’ in the 21st Century. ‘Chief Executives on Governance: Acevo Commission of inquiry 2007’, is based on the views of chief executives. It also draws on evidence from Chairs, leading figures in the public sector and experts on governance, and includes detailed case study material from countries around the world. The need for reform in governance remains a key priority for third sector CEOs. 70% of those surveyed agree or strongly agree that ‘Improving governance should be a priority for the sector’.
The Brooke Report recommends that; • Chief executives must be supported in implementing board appraisal, more transparent recruitment processes for board members to enhance openness, performance and improve on the sectors record on diversity. The code of governance should be used by all chief executives as the framework for governance development. • Third sector umbrella bodies should continue to offer support to chief executives as well as chairs and trustees particularly in the implementation of good practice. Charities, the report argues, should be free to pursue the governance structures that best suit the needs of their organisation. In some cases this may include payment of trustees for loss of earnings of beyond, or bringing the CEO on to the Board and considering unitary board structures.
Sir Rodney Brooke, Chair of the Commission into Governance said, ‘Half the third sector’s income now comes from the state. It is imperative that the standards of governance in the third sector give confidence that taxpayers’ money is being spent properly. Many third sector bodies have admirable arrangements on governance. Many do not.
It is essential that when public money (as well as charitable donations) is being spent that it be spent transparently. Trustees should be appointed through open processes. Voluntary organisations should be able to demonstrate that they are giving value for money. They should be clear about their objectives and evaluate their performance. Their trustees should be appraised.
The Charity Commission should be flexible in enabling charities to choose the organisation which best suits their purposes and in appropriate cases allowing payment to trustees.’
Seb Elsworth, Head of Policy at acevo commented, ‘Even when reform is within the regulations, it often falls on the voluntary organisation to prove it will be of benefit, rather than on the regulators to prove that it will be detrimental. This makes the whole process complicated and time consuming.’
Fit for Purpose
Responses indicated there was often a lack of top level strategic thinking by boards with deficiencies in defining outcomes and measuring performance. Only 40% of acevo members could agree with the phrase “My board is highly effective in developing and reviewing our strategy”. Recent initiatives on best practice in governance indicate a step in the right direction. Given its short history, awareness of the code of good governance is very strong with 88% of acevo members’ Boards being aware of the Code. However, there is a significant gap between awareness of best practice and implementation of it, with only 44% of them who are implementing it.
Seb Elsworth said, ‘We need to ensure we are getting the basics right. The tools are in place and we must start using them. Of course proportionality should come into play, but these principles apply to all sizes of organisations.
Accountability and performance are increasingly important and the sector cannot afford to continue to be complacent and risk losing public trust.
Practical support must continue to be offered to chief executives to bring about change in their organisations. Chief executives should ensure that there are periodic reviews of their governance structures to ensure that they are fit for purpose. This may include exploring bringing the CEO on to the board and investigating unitary board structures.’ 76% of surveyed organisations have no mechanism in place for the appraisal of individual trustees or chairs and 65% have no mechanisms for appraising the performance of the board.
The Brooke Commission recommends that third sector leaders implement Board appraisal arrangements, as stated in the Code of Good Governance for the sector. Diversity Evidence presented to the Commission revealed shocking statistics on diversity in terms of age, gender and race. Research on Board recruitment revealed that 57% of acevo members’ boards rely on word of mouth to appoint the chair.
These findings were thought to be at odds with the values of the sector, showing a lack of inclusion and professionalism. The Commission recommended that Chairs and Chief Executives should become more transparent in the recruitment processes for trustees. Payment of trustees should also be considered by third sector organisations to encourage the right mix of skills and experience on Boards. 15% of members already believe it will be necessary to remunerate trustees beyond expenses.
About the publication
‘Chief Executives on Governance: Acevo Commission of inquiry 2007’ was produced by an independent inquiry, commissioned by acevo. The publication will be launched at acevo’s Annual Conference, taking place on Thursday 29 November at the Business Design Centre, London.
Thereafter, it will be available on publications section of the acevo website.
This publication was kindly supported by CCLA and Grant Thornton.
For further information please contact erin.mcfeely@acevo.org.uk or on, 0845 130 1806.
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Editors notes: • acevo (Association of Chief Executives of Voluntary Organisations) is the professional body representing charity and not-for-profit sector chief executives in the UK, with over 2000 members. Back to news |