You may recall that in my last message I invited questions or comments, and as a result I have had a couple of queries thrown my way. My first couple of points this month are answering those, just in case they might be of interest to the wider group.
1. The first question related to the legality of conducting trustee meetings remotely, and it was specifically raised because there seems to be conflicting advice on line. During the pandemic the Government implemented the “Corporate Insolvency and Governance Act 2020” which allowed incorporated charities to hold meetings electronically even if their governing document did not specifically allow this. The Charity Commission then provided its own direction to clarify the implications of this, and also to authorise the increased flexibility for unincorporated charities which were not covered by the Act. The flexibility allowed by the act ended in March 2021, and then there was an interim period when the Charity Commission advice allowed more flexibility than the Act. However, the Charity Commission updated its guidance in April 2022 and so the more flexible approach which was allowed because of the pandemic formally came to an end. The Charity Commission’s temporary guidance is no longer on line and as far as I can see their guidance has reverted to CC48 – Charities and meetings – GOV.UK (www.gov.uk) and Charity meetings: making decisions and voting – GOV.UK (www.gov.uk). Both are quite old documents – but there do not seem to be any updated versions. The reason why there appears to be conflicting advice on line is because various documents that were published as the rules changed between 2020 and April 2022 have not been taken down. So, bottom line: there are no longer any special dispensations in force regarding electronic meetings and you must hold your meetings in accordance with your Governing Document. If your Governing Document does not specify that meetings can be held remotely but you wish to do that, then you should update the Document. Advice on the procedure for changing the Governing Doc is at: Changing your charity’s governing document (CC36) – GOV.UK (www.gov.uk). Or you can ask me to do it for you!
2. I had another question on whether it is good practice for individual trustees to circulate proposals, other than through the Chair. This question came about because I make it clear on my course that the Chair holds no legal authority over other members of the Board; responsibility, and indeed liability, is equally spread across all members. However, almost any group will work more efficiently if there is a leader to coordinate efforts, and that coordination should be provided by the Chair. Since the Chair would normally be elected by the Board members there would be an expectation that he/she can be trusted to fulfil that function efficiently. Thus, while the Chair does not have authority over other trustees, in a line management or legal sense, it is good practice for proposals to come though the Chair – otherwise there is a risk of a scattergun approach to the management process rather than a properly coordinated process. What is important though, is that the procedural process of working through the Chair should not create an impression that the Chair’s view is any more important than that of any other board member. So, for example, if the Chair tried to silence a suggestion from another trustee without passing it on to the other members, then that trustee would be perfectly within his/her rights to make sure that the other members were aware. An overbearing CEO that is not held in check by fellow trustees is a common failing in charities; there is a perfect example in the next paragraph!
3. There has been one Charity Commission Inquiry over the last month. It concerned the Charitable Incorporated Organisation (CIO) “Care4Calais.” It was an interesting case, because although it was a well-meaning charity that was focused on the beneficiaries, many of the things which commonly cause problems for charities came together in one inquiry. In summary
a. The charity was basically run by one lady; she was the Founder, CEO and Chair of the charity (obvious potential for “Founder Syndrome!”) Whilst in small charities it is not unusual for one person to have multiple functions, the role of “trustee” must be distinct from other roles, and it must be possible for the Board to hold the CEO (or person running the day-to-day operations of the charity) to account. The Board consisted of the foundr, her sister and one further volunteer who was often in conflict with them. A Board should consist of a least the minimum number stipulated in the Governing Document, and members should be aware of the risk of conflict-of-interest when there are closely related members involved.
b. The financial controls policy for the charity were contained on an undated two-page document, and this led to some dubious practice. For example, over a 3-year period £340,000 was paid from the charity to the CEO’s personal bank account. It turned out that the CEO made payments on behalf of the charity through her personal account, and then reimbursed herself. She did this was because non-sterling payments were free on her personal account and she was saving the charity money. However, the inquiry found this practice created unacceptable risk. Trustees must ensure that their charity has adequate financial controls in place. It is important that the financial activities of charities are properly recorded, and their financial governance is transparent. Charities are accountable to their donors, beneficiaries, and the public. See: Financial Controls for Charities (CC8)
c. The charity started small, with the operations being conducted by a few volunteers. As it grew, the number of volunteers became unmanageable without a proper management structure. Which led to volunteers doing their own thing, and safeguarding issues. Trustees should ensure that their charity has appropriate procedures and policies in place, such that volunteers get appropriate training, and comply with the charity’s policies. Volunteers must:
· be clear about what they are supposed to do, through appropriate role descriptions
· be aware of the rules and boundaries within which they must work, for example, when representing or speaking on behalf of the charity
· work safely
· know what to do if there’s a problem
· know what they need to report and who they report to
d. Charities must have an easily accessible complaints policy and trustees should take an interest in the procedure for dealing with complaints.
Details of the inquiry are at: Charity Inquiry: Care4Calais – GOV.UK (www.gov.uk)
4. One updated Charity Commission publication this month: Investing charity money: guidance for trustees (CC14) – GOV.UK (www.gov.uk). I’ve run out of space to comment further in this update. But may well offer some views next month.
And finally, a reminder that my next one day trustee course is in Portsmouth on 16 November. I would be grateful if you could pass my details on to any fellow trustees or colleagues who may find it useful.
With best wishes,
Craig