Good governance: one good reason why it matters

Good governance: one good reason why it matters

‘Charities Back on Track 2011-12: Themes and lessons from the Charity Commission’s investigations and regulatory casework’ makes interesting reading for charity trustees. The story the report tells suggests that governance – good governance – might be worth more attention than you think.

    

‘Charities Back on Track’ outlines concerns that have been serious enough throughout the year for the Charity Commission to justify becoming involved through statutory inquiry in their resolution: a regulator that intervenes based on a risk framework and a proportionate approach to the use of its powers and resources.

Concerns about governance feature highly in the report. Those areas exposed as causing the most concern involve failure to comply with a charity’s governing document and management of conflict of interest and transparency of decision making. Apparently difficulties for charities from poor governance or poor trusteeship featured in 73 statutory investigations closed during the period covered by the report, out of a total of 85. Acting beyond the objects of a charity arose as an issue in 17 of those cases. And unmanaged conflict of interest triggered concern in 16.

Some cases might have included more than one source of concern, of course, as the case studies helpfully illustrate.  Failures in fundraising governance are singled out for a mention, for instance, featuring in 9 of the 85 closed cases together with fraud which arose in 18 out of 85 of those concluded cases.

   

Interestingly, 44% of those charities making up the numbers for statutory inquiries closed in  2011-12 were charities with income up to £25,000. Charities with income between £25,000 and £100,000 accounted for 12% of them and charities with income between £100,000 and £250,000 made up 20% of those charities subject to statutory inquiry closed during that period.

The figures don’t reveal whether those small charities all experienced governance issues worthy of statutory investigation, but the figures do tend to suggest that many of them did so. ‘Charities Back on Track’ is intended to provide charity trustees with the opportunity to learn from the mistakes of other charity trustees. Perhaps one thing for charity trustees to take away from this report is the value in getting the governance basics right and why that can only be time well spent.