Board leadership in challenging times

Thank-you David…

I am delighted to be with you all here again. Thank you for your invitation to speak.

I’d like to focus today on the challenges facing charity trustees during what I think are turbulent times.

But before I start – let me share a story. About this building we’re all gathered in.

As you may know, Westminster Central Hall was built early last century to mark the centenary of John Wesley’s death.

But his followers didn’t just want to mark it by putting up a great big building.

Their vision was to create a space in which all Methodists had a stake, that said something about the movement and its role in the coming century.

To achieve that, the organisers didn’t rely for funding solely on a handful of rich benefactors.

Rather, they toured the country, collecting 1 guinea from every Methodist who would give.

It worked. They found a million Methodists able to give a guinea each. And that’s how this Grand Hall became the heart and home of the Methodist Church for nearly a century.

Why do I tell this story?

Because it highlights a truth that I’d argue applies to the charity sector today as much as ever.

And it’s this: to achieve great things, you generally need at least two ingredients.

First - the will and support of a community. The Methodists could not have made this hall a shared effort unless their fellow believers had been willing to contribute.

Second - the focused, targeted leadership of trustees. A million willing, generous Methodists could not have put their plan into action without the vision, determination and organisation of their leaders.

It’s that second ingredient I’d like to focus on today.
Leadership. And specifically trusteeship.

Trustees have a special role in the leadership of charities.

The managers, CEOs, Finance Directors of larger charities – they’re all vitally important.

But the buck always stops with trustees. Regardless how large or how small the charity, trustees are ultimately responsible.

That’s the golden thread running through a sector otherwise marked by staggering diversity.

And, trustees of England and Wales, life isn’t about to get any easier.

There are tests ahead for your charities and for the sector they operate in – and, as always, the duty to guide them rests on your shoulders.

Clearly, the most immediate concern facing many charities is an acute pressure on resources.

You only need to take a look the Voluntary Sector Cuts website administered by NCVO and other umbrella bodies.

It collates the experiences of individual charities across the country, whose trustees or staff members have posted updates on funding reductions they’ve suffered.

Now, I’ve not come here to make a ‘woe is the sector’ argument about the government’s deficit reduction agenda. That’s not my point here.

My point is more nuanced and it’s to be found in the stories the charities are telling when they add their cuts to the NCVO’s website.

Such as the story of a small Christian youth charity in Kent that works to tackle anti-social behaviour. It says it has lost 25% of the funding it received from local government, is now considering redundancies and is seriously worried about the impact on the young people it works with.

Or the domestic violence and abuse centre in the Southwest, which reports losing between 50 and 100% of its local authority funding – meaning that it will have to say goodbye to at least half of its staff members.

Or the charity, whose chair I spoke to last week. Whose only two staff members have been put on short time, and are expecting their redundancy notice at the end of the month.

These are just three more or less random examples of the kind of stories charities are telling.

And on one level, they are simply a sad reminder of the precarious challenges facing good charities across the country.

But such cases also demonstrate how vital the role of trustees really is, especially during times of crisis, especially when strategies are being redrafted and staff are being made redundant.

Because while it’s only human for staff members to worry about what any changes mean for them and their livelihoods, trustees remain focused the charity’s future and the future of its beneficiaries.

I sometimes think of trustees as the sector equivalent of an airline pilot.

99% of the time, the job of a trustee, like that of a pilot, is perhaps not especially exciting. In fact, being a trustee can be a relatively calm, rewarding affair, which involves direction, support, stewardship, monitoring, and keeping a steady course.

But then there’s the 1 in a 100 event or crisis. When the systems fail or when something – internally or externally – goes unexpectedly wrong, and trustees, like airline pilots faced with the threat of an accident, are required to take active control.

To make swift, wise judgements. And to carry the can for those judgements.

The analogy is admittedly a little over-dramatic. Trustees usually have more than a few split-seconds to make decisions. And if they get it wrong, they will rarely cause mass death.

But my point is that it’s during times of difficulty, such as those we are living through now, that the trustee comes into his or her own.

I know what this responsibility feels like.

The Commission itself, as many of you will know, is in the process of reviewing our strategy in light of cuts to our funding of a third over four years. We are losing 1 in 3 posts. Many excellent colleagues have gone, many more will go over the next few months.

Our board, which I chair, has been extremely closely involved in the review, right from the start. Listening. Strategising.

Board members have been out meeting charities and stakeholders consulting about our future.

We’ve joined staff members on working groups tasked with developing a new approach to our work.

And, above all, we have had the sort of frank and honest exchange of views and ideas during board meetings that mean that, however difficult it all is, however much we may wish we weren’t where we are, I’m confident that we’re taking the right approach.

We are determined to build the strongest Commission we can so that for years to come the public can support charities with confidence.

Many charities, I know, are in similar situations with trustees having to oversee major changes.

Decisions, for instance, about whether to scale back certain services, to narrow the focus of the charity’s work, or perhaps to join consortia of charities to bid for scarce contracts or grants.

We’ll soon be publishing independent research into charities’ experiences of consortia working.

It’s not out yet, so I don’t want to give its main findings away.

But I can reveal one of the points raised in research which I personally found particularly interesting. It is that some charities are not involving their boards in the decision to enter a consortium.

Joining a consortium can be an excellent way to expand reach, have greater impact and enable precious work to be done which targets the most vulnerable.

It can not only be a life-line to those beneficiaries but for the charities themselves. But consortia are not easy. They involve real financial and reputational risks.

There are complex governance issues, the relational aspects are similarly demanding.

It’s hard to imagine how trustees can properly fulfil their duties if they’re not party to decisions of that nature.

There are other sources of evidence to suggest that some trustees appear to be taking a worryingly laissez-fair attitude.

We recently published research on how charities are getting to grips with the public benefit reporting in the Trustees Annual Reports.

It found that some trustees had delegated all responsibility for public benefit reporting to staff members or external accountants.

Now, we know trustees are under pressure, and have a wide variety of duties to contend with.

But what could be more crucial than explaining why your charity exists, what it aims to achieve and how it works to meet those aims? Trustees must take ownership of this work.

Trustees must hold their executive to account. They must challenge orthodoxies and they must continually push their charity to do better.

And they must ask tough questions. Such as this:

Is our charity speaking out, when it needs to, for our beneficiaries, for the people we exist to serve?

Charities must of course not be party political. That is a fundamental characteristic of their independence. And charity independence is vital.

But we should remember that charities have nevertheless played a very important campaigning role in defining and helping to shape issues of public policy.

More fundamentally it is important that charities working with people who are vulnerable bear witness to the experiences of those people and help inform public debate.

A few weeks ago, as many of you will remember, the Archbishop of Canterbury guest edited the New Statesman magazine.

I think his article got to the nub of issues facing our society and the charity sector.

He wrote: if civil society organisations, including charities, are to pick up responsibilities shed by government, what services need cast-iron guarantees of nationwide standards, of parity and continuity?

What, in short, will your beneficiaries be entitled to by right?

And what do you think they should be entitled to?

Finding answers to those questions, as they apply to your beneficiaries, is a legitimate role for charities. I have no doubt that many of you are putting these very questions to politicians of all political hues.

Another important question for trustees to ask is whether their charity is doing enough to explain how, why and with what effect it spends its money.

We know that the public cares about where their money goes. It’s the single most important factor driving trust and confidence in charities.

I think it’s fair to say that charities sometimes feel uncomfortable about this issue.

Many worry that the public simply doesn’t understand how modern charities operate.

Charities worry that people just don’t want to understand that, for example:

• You can’t provide effective support to young offenders without having well-qualified, full-time professionals on board.
• You can’t provide sophisticated healthcare in remote parts of the world without accruing transport costs, security costs or paying doctors.

Its not helped when charities claim that ‘every penny donated goes to the cause’.

Not knowing that means the administration is simply paid for in another way, the public is encouraged to believe charities can live on thin air and love alone.

But, here’s my view:

The public will never understand why charities have ‘overheads’ unless trustees themselves have the courage to talk about them. Overheads are part and parcel of being effective.

The public and funders aren’t going to suddenly ‘get it’ unless it’s explained to them. Charities have to construct that narrative both about effectiveness and the costs of delivering impact.

Yesterday, I saw a great example of a charity leader doing just that. Speaking out about the importance of areas of work that could easily be put down as mere ‘overheads’.

Sir Nicholas Young, chief executive of the British Red Cross, spoke publicly about his charity’s difficulties in raising funds for vital capacity buidling projects in developing countries.

He said many Red Cross Societies in developing countries are under resourced compared to the scale of the challenges facing them.

But the charity hits a brick wall when it tries to raise funds to support, say, a computer system for a Red Cross society in an African country.

Usually very generous philanthropists recoil from supporting what they consider ‘administrative’ expenditure.

Who loses out here? The beneficiaries do.

That’s just one example of the need to educate donors and funders about the consequences of their choices.

A few weeks back, during a public debate, I made a suggestion.

I suggested the Commission and sector work together to develop an indicator or index that shows people, at a glance, what charities spend on admin, and what they spend, broadly, on the ‘cause’.

The response was mixed. Some charities came back to say that, by raising the issue, the Commission was stirring up trouble.

A poll run in Third Sector magazine revealed that 42% voted in favour of the suggestion, and 58% voted against.

That suggests, at the very least, a fairly even balance of opinion on the issue.

To the un-persuaded I say this. Charities receive both public money and money from the public.

They therefore have a duty to explain what happens to that money. In times of plenty maybe it matters less. But now and for the foreseeable future it matters a lot.

So I don’t think we can simply ignore people’s interest. Or wish they were interested in something else.

So my advice to trustees is this:

Challenge your charities to be open, and trust the public to understand.

Let me end with some practical suggestions. In many smaller charities, trustees are having to take on new roles. Such as administrative tasks that they used to delegate to staff members.

This can mean that trustees’ commitment is tested.

There’s only so much that each of us can give. As well as there being trustees out there who feel enthused and energised by new opportunities, there are many trustees feeling a bit overwhelmed.

So I would urge all boards to make sure they have access to the right support and the right networks.

If your charity is not a member of an umbrella body, this is the time to think about joining.

Organisations such as NCVO, NAVCA, Charity Trustees Network can provide training, advice, and support.

Such networks are going to become increasingly important to charities, especially for those that have relied more heavily on the Commission for support and advice.

Since, as you know, we are having to scale back the amount of tailored advice we can provide to trustees.

We won’t be making radical overnight changes – we’ve started a process of gradual evolution in our approach to advice work.

But we are urging trustees to make the most of their representative bodies. They exist to help you become as effective as possible. Please use them.

Secondly make sure you’ve got the right experience to draw on from your trustees.

Having an ex-employee from the NHS on your board helps enormously if you operate in community based health and social care and want to influence local public health commissioning!

All the compact rules in the world don’t obviate the need for this kind of intelligence: knowing to whom and when to insert your ideas and offers!

And lastly, some words of encouragement.

Turbulent times are a test of resilience.

It may be hard always to remain optimistic; but you can remain steadfast.

It may be difficult to plan draconian changes; but you can be ever alive to new possibilities and make the most of them.

If you cannot hand on heart always say you’re enjoying the responsibilities you have been entrusted with. You can still take pride in the charities that you’re helping to protect and mature. Knowing that your beneficiaries, your supporters and society at large, owe you a great debt.

On all their behalves, and remembering that this place was built not from huge donations from the rich few but by the conscientious generosity of the modest many, thank-you.

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