Trusteeship in trouble
When recruiting a good Trustee Board is more difficult and more important than ever, how can you recruit the best Board for your charity?
It’s Trustee Week again, and about time too. The news has been so full of charity doom and gloom this year that we’re in danger of hunting good trustees to extinction.
New research published this week by The Charity Commission provides a detailed backdrop to this picture. The report, Taken on Trust[i], found that Trusteeship in the UK charity sector is worth £3.5bn a year, with the average trustee contributing 4.88 hours per week.
The report found that around 120,000 new trustees are recruited every year. There are, however, 150,000 fewer trustees than previously thought. There are roughly 700,000 trustees in England and Wales, meaning that the average trustee sits on 1.35 boards. It follows therefore that around 1.3% of the population is currently a trustee (rising to 5.5% among retired men). The median length of service for a trustee is around five years, with trustee tenure longest in the smaller organisations. In the largest charities, median tenure is between three and four years.
Alarmingly, while Trustees play a governance and executive role in some 80% of (mainly smaller) charities which have no paid employees, the report found that only 9% think training is very important. In most cases, their primary reference point for information is their peers, which has led to concerns that many boardrooms are echo chambers in which trustees merely reinforce each other’s views. Moreover relatively few boards assess their effectiveness, only 12% of trustees have a formal induction, only a third have a job description, and very few have appraisals.
On the positive side, perhaps, 82% of trustees are confident of their legal and financial responsibilities. However a second survey of providers of services to trustee boards[ii] provided a much less rosy picture, with providers believing that many trustees lack knowledge and skills. Only 24% of boards have the skills to avoid fraud, highlighting some serious skills gaps with this and other legal, fundraising and digital issues. Indeed just 40% say they have sufficient skills in governance, arguably the board’s primary function.
The trouble with trusteeships
A year ago, nfp Synergy’s National Trustee Survey found that Trusteeships were characterised by long hours, limited training and rising requirements. In the wake of the Kids Company scandal the survey found that around one quarter (27%) of trustee respondents said they had thought about stepping down due to the requirements of the role, while 23% said the pressure had become too much. Additionally, 71% felt that what was required of trustees was increasing. And thus it turned out indeed.
Both HMRC and the Charity Commission have tightened their criteria around Trustee’s responsibilities: including beefing up the ‘Fit and proper persons’ requirement (such that anyone involved in a disputed tax-avoidance scheme and anyone who has been previously been removed or disqualified from acting as a charity trustee by a charity regulator are now in the firing line); issuing revised guidelines for trustees on financial matters; and a revised Governance Code centring around seven principles: organisational purpose; leadership; Integrity; decision-making, risk and control; Board effectiveness; diversity; and openness and accountability.
Certain issues regarding Trustee Boards have merited further investigation:
Unrepresentativeness of Board members
A recent report from the charity Getting on Board[iii] found that 59% of charity respondents said their boards were not representative of the communities they served. While the Taken on Trust report backs this up, showing that the average trustee is likely to be male, 60 years of age or older and white. The latter report warns that Boards 'do not reflect the communities charities serve', and the lack of diversity leaves the sector at risk from “myopic” decision-making. These issues are becoming ever more important to policy makers and funders, with funders increasingly looking at board composition as part of their potential fundee assessment.
Trustee recruitment
The Getting on Board report found that most charities recruit trustees by word of mouth, and almost half do not even advertise board vacancies on their own websites. The report concluded that such outdated and unprofessional trustee recruitment practices are seriously threatening the efficacy of charities in the UK.
The Charity Commission’s Taken on Trust report found that only 5% of trustees are recruited openly; nearly three-quarters (71%) were recruited through informal networks, and only 5% were recruited via a public advert. Notwithstanding, the research found that diversity was generally worse on boards with a higher level of formal recruitment.
Supporting the Board
The second Taken on Trust report found too few board members seek external support and that the market for trustee support is not functioning effectively. Issues arise both with the demand for support (trustees being unaware of the gaps in their own skills and knowledge) and the supply of support services (support not being provided in the right ways, or not being marketed due to fear of creating too much demand).
Solving the Trustee Board problem
A number of potential solutions have been posited to the trustee recruitment and retention problem.
Getting on Board have started a ‘Trustee Recruitment’ Campaign to change trustee recruitment practices and encourage charities to open their vacancies to a much wider audience, primarily appointing trustees on the basis of experience, diversity, empathy and knowledge, to improve practices and in doing so create strong, diverse boards to lead their work.
ICSA: the Governance Institute has published guidance for charities about recruiting trustees, warning that the failure to recruit trustees appropriately is a breach of trust.
Paying for the privileged
And finally the age-old issue of whether paying trustees would resolve some of these issues has raised its head once more. The Charity Commission research, Taken on Trust, revealed that more than 2,000 charities pay trustees (representing 1.6 per cent of all charities). The research found that paying trustees becomes much more commonplace as charities get bigger with 7.4% of charities with annual incomes over £5m paying their trustees. Previous research has found that 16 of the largest 100 charities paid at least one trustee, although some were paid for duties other than trusteeship.
But whether money really can buy you confident, knowledgeable, financial- and risk-savvy trustees is up for debate. Sir Stephen Bubb, director of the leadership and governance programme Charity Futures, has been quoted as saying he believes the sector is in a dangerous position, with the Charity Commission coming down so hard on the regulation side this is scaring good people away from taking on the liabilities which come with trusteeship, without providing the necessary support safety net.
And while the latest Charity Commission research found that 90 per cent of trustees say it is rewarding, and 94% say it is important or very important to them, some commentators feel that the sector needs to be more realistic about Boards. Peter Stanford, charity writer and broadcaster, summed it up as follows:
‘If – as we are regularly urged – we are going to make charity boards more diverse in terms of age, ethnic origin and socio-economic background, then expecting to find individuals who tick all the boxes at the same time as demanding attendance at four meetings a year and a commitment to put in the hours needed to see how the charity runs at the grass roots, is, frankly, whistling in the wind.’[iv]
[i] Charity Commission (November, 2017). Taken on Trust: The awareness and effectiveness of charity trustees in England and Wales. The report was commissioned by the Office for Civil Society and the Charity Commission, and delivered by a consortium led by the Centre for Charity Effectiveness, Cass Business School and the Cranfield Trust and including NCVO and the Worshipful Company of Management Consultants.
[ii] Charity Commission (November, 2017). Taken on Trust: The provider perspective on advice and support for charity trustees. The report was commissioned by the Office for Civil Society and the Charity Commission, and delivered by a consortium led by the Centre for Charity Effectiveness, Cass Business School and the Cranfield Trust and including NCVO and the Worshipful Company of Management Consultants.
[iii] Getting on Board (May, 2017). The looming crisis in charity trustee recruitment.
[iv] Peter Stanford: There is no easy answer to trustee recruitment, but... ThirdSector.co.uk 17 April 2017 [https://www.thirdsector.co.uk/peter-stanford-no-easy-answer-trustee-recruitment-but/governance/article/1429354]