The ACEVO Governance Commission was established to review the state of governance in the charity sector, and to make recommendations as to how it could be improved. In response to evidence suggesting an increase in concern regarding governance-related issues in the voluntary sector, the ACEVO Commission set out to produce a practically-focused piece of work, focused on supporting voluntary organisations to understand and address the issues and challenges that can affect their governance. Guided by the concerns raised by respondents to the Commission's consultation exercises, the report focuses on three main areas:
A key function of a charity board is to hold the CEO and the executive team to account and ensure they are acting to deliver the organisations strategy and objectives. In a similar way the board of any charity should be accountable for effectively fulfilling their duties and legal responsibilities. Formal appraisals for the CEO and board are a useful mechanism to monitor performance, set objectives and also identify what areas of performance require extra support and have this put in place.
The ACEVO governance commission found that 65% of survey respondents carried out a formal annual appraisal of the chief executive but over half of respondents did not carry out an appraisal of the board chair.
The Commission recommends:
- All charities establish a regular formal appraisal procedure for the CEO, the board and the chair of the board
- The charity commission require charities to include a section on key governance processes and standards in their Annual Report
- Funders and commissioners include as part of their assessment process consideration of an organisations governance arrangements
It is essential for charities to consider how they support their board in understanding their duties and responsibilities; these will be unique to the organisation concerned dependent on the size and shape of the organisation concerned. The commission's consultation revealed the roles and responsibilities of Chief executives, staff and boards are not the same across the sector but rather a reflection of the diversity of the sector. In defining roles and responsibilities this section explores the importance of establishing a culture which encourages ongoing conversation on this issue.
The commission points to Charity Commission guidance CC3 ' the essential trustee: what you need to know' as a useful source to aid understanding of the trustee role and include this as part of the trustee induction process.
The Commission recommends:
- Charities should ensure they have up to date written guidance to be given to trustees on induction this should include:
- Role descriptions which are discussed and agreed on appointment and subject to regular review
- Written delegation processes. Providing details on areas the board may have delegated functions or responsibilities
- A copy of the business plan's section on governance and organisational terms of reference
- Trustee induction guidance should be subject to regular review and supported with appropriate opportunities for training and professional development
- The charity commission to review guidance (CC35) on the governance of charity trading subsidiaries to better support trustees to understand and manage potential conflict between the role of 'director' and 'trustee'
The commission explores how charities can establish and maintain a well functioning board and an overall high standard of governance. This section considers the selection, recruitment and training of new trustees as well as how to improve board skills and diversity.
The areas covered by this section of the report are reflective of the issues raised during the commission's consultation process, where 52.5 % felt they had issues recruiting trustees from under- represented backgrounds. The commission looked into the importance of keeping the board informed and ensuring they receive key information through effective management of board papers. It also considers how to manage conflicts and disputes amongst key personnel.
The commission recommends:
- All charities use an open advertised process to publicise trustee vacancies
- All charities have a comprehensive induction checklist for new trustees
- Charity trustees review and decide how to ensure their governance training needs are met and budgeted for
- Trustees discuss and out in place a process for addressing and resolving conflicts at an early stage
- Trustees consider implementing defined term limit which are ideally staggered to ensure appropriate turnover rate
- Trustees ensure the organisation has a formal written risk register which is under regular review
- The government takes up the recommendation by the social sector skills review that charity trustees should have the legal right to take time off work for trusteeship in a similar way to school governors and magistrates
- The Treasury should review the funding of the charity commission and whether current and planned levels of investment are sufficient for it's investigative functions to be properly carried out