The Statements of Recommended Practice for charities (SORP FRS 102) defines a “larger charity” as a charity with a gross income exceeding £500,000. By this definition, over 160 UK universities would easily be deemed to be “larger” charities.
Not everyone in the sector would accept that even the governance experience found in a much smaller HE institution is readily applicable and transferable to a very large institution. And if this is the case, then surely there isn’t anything that larger universities can learn from smaller charities outside of the sector?
My executive experience has been exclusively in large, complex organisations, both in the commercial sector and in higher education. Unsurprisingly, perhaps, much of my governance experience somewhat mirrors this. I am, however, currently a Trustee Director and Chair in three, locally based, smaller charities.
I’ve recently been considering what governance learning there may be in these smaller organisations that might be applicable to higher education governing bodies. Perhaps surprisingly, there is some that I would offer. These would include the need for governing bodies/Trustee Boards to clearly focus on and understand key risks, the need to engage with the concept of a “volunteer” workforce and the possibility of benefit in the blurring of governance and management accountabilities. This blog focuses on the last of these.
The difference between governance accountabilities and management accountabilities
The commonly accepted position is that “if we were to list the principal sins of governance, the mix-up between management and governance responsibilities would rank high.” (Source: “Management or governance?”, The Good Governance Institute, July 2021.
It seems evident to me that the smaller a charity, the more there is a legitimate requirement to accept that there will be a blurring between governance and management accountabilities. Can there be benefit, however, in deliberately exploring the interface in larger organisations, specifically tailored to the charity’s needs?
Practical experience in three charities
The smallest charity I’m engaged with has no employees, only volunteers. Trustee Directors were, therefore, required to regularly empty the blue paddling pool which was collecting rainwater from the leaky roof of a building we were responsible for. There wasn’t anyone else who could do it. I have, however, never seen “emptying the paddling pool” on any job specification for a charity trustee. Here, governance accountabilities and management accountabilities are clearly conjoined.
The mid-sized charity I’m involved with has a turnover of ca £1M per annum – deemed “larger” by charity commission standards but not really in practice, particularly in terms of the breadth and depth of experience in the executive team. There remains a need for Trustee Directors to bring their experience to bear and engage more directly in management activities than a textbook might suggest. Here we formally structure this by not only having a Trustee Board, meeting quarterly and genuinely focused on governance, but also a separate Management Committee. The Management Committee meets monthly, and is composed of some Trustee Directors sitting alongside the leadership team and charged with responsibility for “managing” the charity on a much more operational basis. The charity, and its beneficiaries, benefit greatly from the experience of Trustees being directly deployed in supporting the management of the charity’s operational activities.
The third charity I have experience of has a turnover of ca. £6M per annum and, formally, there is a much more “normal” and clearer separation of governance accountabilities. We do, however, have the entire executive leadership team in attendance at all Trustee Board meetings, typically for all items, even though none of the executive are formally members of the Board. Effectively, we choose to operate closer to being a “unitary” Board with both Board members and executive members exposed to the others’ thinking and views, in real time, as it happens. This has, I believe, contributed greatly to the stability and success of the charity, particularly through the most challenging times of the pandemic when our operations not only continued but were in fact expanded.
What might this suggest to HE institutions?
As the Registrar and Secretary to a very large university, I would have been – and often was – the first to explain on induction processes for new members of the governing body what the differences were between their accountabilities for governance and the executive’s accountabilities for management. In doing so, I’m sure I implied, or indeed explicitly stated, that there should be no blurring of accountabilities, either conceptually or in practice. There was a clear line between the two and this line should not be crossed.
I now wonder whether in pursuing this approach and in rigorously following it, we discouraged highly capable governing body members from offering their significant experience and stretched executives from seeking wise counsel. There certainly needs to be both a clear separation of powers and clarity about who is responsible for what, but I wonder whether there could be more scope for governing body members to deploy their skills and experience in a structured way to help tackle some of the difficult challenges that many institutions face.
Certainly, in the three charities I’m now engaged with – two of which are “larger” charities as defined by the Charity Commission – the experience brought by Trustees to management activities is vital in delivering tangible benefit to those we are charged with helping. Perhaps there is more that could be on offer in higher education institutions too?
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