In setting our policy positions and writing guidance NGA looks not just to the education sector, but at governance across all sectors.
For example, our view that there should be a maximum length of service in one institution for chairs and trustees/governors wasn’t plucked out of thin air, but from looking at practice and evidence from across sectors. See our blog on this subject from 2015.
So naturally we keep check of what’s happening around the wider governance sector.
On 22 August 2018 the Charity Commission took the fairly drastic step of issuing a formal warning notice to one of the most well-known and well-supported charities in the UK, the RSPCA. The warning notice specifically related to the settlement granted to the former acting chief executive. The notice is short and fairly stark stating:
“On the grounds that the Charity Commission considers that the officers of the charity at the time of the relevant decisions committed a breach of trust or duty or misconduct or mismanagement in the administration of the charity in relation to:
- A failure by the officers to comply with their duty to ensure they were sufficiently informed before making a decision about the settlement to the former Acting Chief Executive;
- Failure to act with reasonable care and skill in relation to the negotiation with the former Acting Chief Executive.”
It goes on to make three recommendations, paraphrased below, that the trustees:
- Abide by their own code of conduct
- Have formal training to ensure they understand their role as charity trustees
- Implement the independent report commissioned by the RSPCA and ensure all trustees are aware of it.
It’s fair to say that the governance of the RSPCA has been ‘problematic’, possibly veering more to ‘basket-case’ for some years, which may explain the revolving door of CEOs. Good luck to the latest incumbent who took up his post in August. But there are lessons here for all those governing.
NGA’s eight elements of effective governance include:
- Understanding the role & responsibilities
- Committed to asking challenging questions
- Confident to have courageous conversations in the interests of the children and young people
The warning notice from the Charity Commission suggests that none of these three things were in evidence in relation to the decision in question. The recommendation also backs up NGA’s long-standing position that appropriate induction training should be mandatory – those governing need to understand what they are there to do. Likewise it is long-standing NGA policy that all governing boards should adopt a Code of Conduct. As with any policy it needs to be followed, otherwise it’s just a piece of paper. Yes it’s good practice to get people to sign the document annually – to remind them to read what it says – but if you as a board has adopted a Code it doesn’t matter if someone hasn’t signed it – it’s a board decision the individual can be held to account for the Code.
Of course, it’s also a reminder that scrutiny of finance, particularly in relation to executive pay (albeit in this case a final settlement) remains high – rightly so. Not every governing board will have HR practitioners or lawyers who may have the skills to negotiate an appropriate settlement – but we can all ask questions of whether it is appropriate and indeed ensure that where expertise doesn’t reside in the board – external help is bought in.
In issuing the warning notice, David Holdsworth, Deputy Chief Executive of the Charity Commission also commented on good governance, saying:
“Good governance in charities is not an optional extra, or a bureaucratic detail. Good governance is what underpins the delivery of a charity’s purposes to the high standards expected by the public.”
With the new term nearly upon us – it’s a good time to remind ourselves of what we are supposed to be doing and how.