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  1. Wealth
June 29, 2011

NPC: Charity trustees face challenges

By Spear's

New Philanthropy Capital has produced a report which outlines the main challenges facing charity trustees today

New Philanthropy Capital has produced a report which outlines the main challenges facing charity trustees today
THESE ARE TOUGH times for charities. Public spending cuts are kicking in, there is increasing competition for private funding, and 39% of charities say they have seen an increase in demand for their services as a result of the recession.

As charities feel the squeeze, it will be more important than ever that trustees are there to lead and support them. Trustees need to help charities plan ahead and respond to the changing environment. But they also need to maintain a strong focus on their charity’s mission and review how they can provide the best possible support to beneficiaries.

NPC and The Clothworkers’ Company ran a series of seminars for trustees in Spring 2011, designed to give trustees an opportunity to hear from experts and to debate the issues that are high on their agenda, including how to support charities through challenging times; how to review board performance; and how to collaborate with other organisations.

This report highlights the key themes discussed during these seminars and explores some of the topics in more depth through case studies from charities ranging from large national organisations such as Macmillan Cancer Support, the National Trust, Crime Reduction Initiatives and Tomorrow’s People, through to smaller charities including Mind in Bradford and The Broomhouse Centre in Edinburgh.

Download the report by clicking here

Key themes
The seminar discussions and case studies covered many aspects of good governance, but four key themes emerged:

•    building an effective board;
•    reviewing and renewing your board;
•    coping with challenges; and
•    managing collaboration and mergers.

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Underlying many of these discussions was the question of whether the board has evolved to meet its charity’s changing needs. So, for example, is the board size and governance structure still effective and do trustees have a mix of skills, perspectives and experience that are suitable to the charity in its current state? If not, how can the board address these issues? Trustees explained how they had made difficult but important changes to improve their governance and ensure the board keeps pace with their charity’s development.

Trustees emphasised that particular issues need special attention in challenging times. They felt that it was more important than ever to:

•    Know your business. The economic downturn means that trustees need to be really clear about the financial model their charity works on and what this means for their strategy and risks. Kate Sayer from Sayer Vincent, a specialist firm of consultants and auditors working with charities and social enterprises, urged trustees to question the reliability of their charity’s income and the flexibility of their cost base and to plan accordingly. In some cases, a reduction in funding may mean that trustees have to re-examine the sustainability of particular services or invest more in their fundraising efforts.

•    Keep up-to-date. This is a fast-moving environment and trustees need to make sure that they are up to speed with any significant developments—it is not enough simply to wait until the next board meeting. The relationship between the chair and chief executive is crucial. Getting the right level of information in the board papers is often a challenge, particularly in large charities. Rachael Bayley, a trustee of Barnardo’s, described how developing a ‘dashboard’ to summarise key information has helped its trustees keep a handle on everything going on in the charity, which has an annual income of £234m and runs 415 projects across the UK. Thanks to analysis from their dashboard, they have been able to review and improve the efficiency of their charity shops and refine their fundraising efforts.

• Think flexibly and respond rapidly. Kate Sayer emphasised the importance of not putting off difficult decisions until it is too late. As some seminar participants put it, maybe the key message in challenging times should be ‘be prepared to change’.

•    Ask challenging questions. The board also needs to make sure that it keeps focused on the bigger picture and does not shy away from challenging questions. With increasing competition for funding, seminar participants noted that trustees need to help their charities be very clear about what makes them distinctive—what is their ‘unique selling point’? Participants also emphasised that trustees should be thinking about collaboration as well as competition, and consider whether they might maximise impact for their beneficiaries by working with other charities. And, as part of the board’s role is to ‘think the unthinkable’, in some cases this may include considering the potential for merger.

• Provide strong and supportive leadership. Boards need to make sure that they are taking responsibility for tough decisions and prioritising people management. Seminar participants noted that issues like closing services or losing staff can be incredibly stressful for the executive team. Trustees should take responsibility for difficult decisions—for instance it may be more palatable for announcements about redundancies to come from the board, given that it is more distanced from day-to-day life at the charity. During times of change, charities should also think carefully about how they communicate developments to staff, volunteers, beneficiaries and funders, to manage morale and respond to concerns. In particular, speakers emphasised that the human dimension should never be underestimated—fears about loss of power, jobs or identity can be the biggest stumbling block in building a partnership with another organisation and trustees need to prepare carefully for this.

Download the report by clicking here

Background to this report
Stories from the boardroom forms part of NPC’s larger body of work on trusteeship, which includes the reports Board matters, Trusteeship 2010 and Talking to trustees (which discussed the main themes from NPC’s 2010 seminar series for trustees). This work has been generously supported by The Clothworkers’ Company.

Readers should note that the purpose of this paper is to share interesting ideas and experiences discussed during the Spring 2011 seminar series. It is not designed to provide a comprehensive record of proceedings. Two of the case studies in this report were developed from presentations made at the seminars; the others are the results of interviews with chairs and chief executives of charities that were identified as case studies through research and recommendation.

Download the report by clicking here

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