News from The Civil Society
ICAEW review warns boards to beware of over-reliance on CEO
Failings in charity governance often occur because boards become over-reliant on the chief executive or a single trustee, the ICAEW’s latest review project has found.
And the Charity Commission agrees that this is a common issue that crops up in its casework.
The ICAEW used its annual charity group conference today to publish the report from its review of strategy development and implementation by charities, derived from conversations with charities that volunteered to take part in the project in return for some free strategic planning advice by qualified accountants who are members of the ICAEW. Some 26 charities with incomes of less than £5m were reviewed.
The review findings included the following:
- Charities with formal strategies in place are better equipped to withstand economic pressures, but the effectiveness of these processes can be compromised by inadequate skills on the board and poor relationships between trustees and management
- Most of the larger charities reviewed had strategic plans in place, compared with fewer than half of the smaller ones
- Many trustees do not have a full appreciation of their role and do not contribute properly to the running of the organisation
- There is a big risk that boards come to rely too heavily on one dominant individual, and this can lead to severe governance breakdown
- Few charities considered mergers in their strategies
- Many trustee boards lacked the financial and general experience to devise strategies
- A number of charities appeared to suffer from a conflict between the CEO and trustees
- Few charities linked strategy to risk assessment or used scenario planning techniques to test and challenge their strategies
- Charities are still not accessing the extensive range of information, advice and guidance which already exists to help them, and
- Further research is needed into the causes of boards’ shortcomings in the areas of governance and strategy.
The Charity Commission said it could act on some of the recommendations but many were outside its remit and should be taken forward by sector umbrella bodies, including carrying out further research.