Dominance in charity governance

Governance failings have been at the heart of all the high profile (and not so high profile) charity failures and scandals of the last few years. Don’t take our word for it, read the Charity Commission and other reports over this period, including on tackling abuse and mismanagement in charities.

“Primary responsibility for Kids Company’s collapse rests with the charity’s Trustees… ”

— Parliamentary report into the collapse of Kids Company

By far the most common governance failures are:

• Breakdown in collective decision making by Trustees - usually due to dominance.

• Unauthorised private benefit (up to an including fraud) and/or poorly managed conflicts of interest.

In this article we focus on dominance as a critical governance failing that all Trustee Boards should be on the look out for and seek to avoid.

What is dominance?

Fundamentally, dominance in governance is where an individual Trustee or small group of Trustees, senior members of staff and/or a “founder” either directly make all the important decisions or “railroad” the Trustees into rubber stamping their decisions. This was found to be the case in the collapse of Kids Company, for example, and has been an issue identified in numerous Charity Commission and other enquiries into charity failings.

“A lack of oversight by the charity’s trustees, with the charity’s chief executive and chairman making important decisions without seeking input of the full board.”

— Charity Commission report into The Air Ambulance Service

This often goes hand in hand with a lack of clarity around delegation of decision making to committees and/or staff (sometimes deliberately so) and with poor (or no) management of Trustee/staff conflicts of interest.

“It was not clear who had effective and continuing control of the management of the Charity or its assets.”

— A phrase used in the reports arising from many Charity Commission inquiries

“The conflicted trustees had been dominant in managing significant aspects of the charity at the exclusion of the other trustees. The trustees were also unable to explain how the trustees were managing the ongoing conflict of interest arising from the situation.”

— Charity Commission report into the Holmewood Animal Rescue Charitable Trust

How to recognise dominance?

Recognising dominance in charity governance isn’t always easy for Trustees; it is often easier for those outside the charity. Some of the warning signs could include the charity’s senior staff taking actions that Trustees do not recall authorising and/or decisions being made outside formal structures without some Trustees knowing about them. Trustees and senior staff should ask themselves questions such as those below to explore whether dominance appears to be an issue in their charity:

• Does the charity appear to be doing things without authorisation from the Trustee Board (at least that I am aware of)?

• Did I know about a particular decision? Do I know why it was taken? Do I know who took the decision?

• Do I feel left out and that I should have been involved in certain decisions?

• Is it clear in the charity’s policies who has the authority to make what decisions?

• Am I getting enough information about what the charity is doing, where the money is going and why?

How to avoid/tackle dominance?

Fundamentally, dominance in charity governance arises when nobody speaks up; when other Trustees or senior staff fail to point it out. If a Trustee or member of staff suspects that decision making is dominated by a few Trustees, senior staff or a founder, then they should point it out. Firstly at a Board meeting to other appropriate governance forum and if that doesn’t work, they should consider whistleblowing either within the charity’s policy on this or by reporting the issue to the Charity Commission.

Of course, it is much better to avoid dominance issues arising in the first place. Ways to do this include:

• Putting in place a clear scheme of delegations for decision making and ensuring that delegated decisions are reported back to the Trustees at each Board meeting.

• Ensuring that the Trustees hold the executive team to account through regular reporting to the Board on financial and service delivery performance and developments.

• Rigorous risk management processes within the charity that ensure issues are flagged early and that plans are in place to deal with issues they arise.

• Robust policies on whistleblowing and staff grievance procedures.

• Regular review of the charity’s governance; both the governance structure and policy framework and the practice of governance within the charity (e.g. behaviours and compliance). It can be helpful to engage an independent, expert third party to support such reviews, particularly where Trustees have concerns that all is not quite as it should be.

Of course, the measures that should be taken to avoid and deal with dominance in decision making within charities should be proportionate to the risks involved and take account of the size of the charity involved. It isn’t necessary to tie a small charity up in red tape but it is important that Trustees are alert to the risks and feel able to speak up if they have concerns and that the culture is one of openness and constructive challenge.

To find out more about charity governance, including the support and training we offer, please contact us at julian@almondtreeconsulting.co.uk to arrange free initial telephone discussion.