Robin Fallas, Partner at MacRoberts LLP in Edinburgh, discusses how to build resilience as a social purpose organisation.
The average charity trustee / manager has had a lot to think about over the past few years. We have had:
- significant change in required data protection processes interlinked with a sector wide focus on raising fundraising standards
- regulators looking to ensure effective regulation on behalf of the public without doing so in a way that might put off all prospective trustees
- dried up grant funding across various sectors
- serious safeguarding issues inviting significant negative media attention and new regulatory guidance
- an added backdrop of Brexit uncertainty
There are however excellent examples of charities that have built resilience over the same period, in particular to “nail down” risks, through development of processes and tools to suit their organisations, and enhance their ongoing ability to deliver their missions.
The following are a collection of some of the measures that have made a difference:
Getting the right people in
- Succession planning: A resilient board is facilitated by a ‘light touch’ document setting out key skillsets required for the trustees to be ‘fit-for-purpose’. This will vary from charity to charity. In addition to the generic skills (e.g. charities, financial, legal, marketing, fundraising), there are examples of more recent relevant skillsets (data protection, safeguarding) and charity specific ones (nanotechnology to duck-race expert(!)). Avoid the “process only” approach of never revisiting the skillset document. Ensure a “live” process - one that is briefly reviewed and discussed annually against an evolving backdrop, including looking ahead to when trustees are due to retire.
- Does the egg float / is the water right for the egg? A resilient board is one where the prospective trustee and charity can first understand if they will work well together. Communication processes are key. For the prospective trustee, the focus is on gathering sufficient information on the charity, and for the existing trustees, an understanding of the prospective trustee. If that all works well, the trustee needs to hit the ground running with a good background understanding – again, provision of sufficiently detailed background information (in the form of an induction pack).
Having the right processes in place for resilience
- The risk matrix: I have two favourite refrains for this, being, equally: the “beating heart” and “functional safety net” for any charity. Pouring over a risk matrix is unlikely to be anyone’s main reason for being a charity trustee. After all, it is a document that will not set any heart alight as its place is not to “set the strategy to maximise the public benefit” (though it ought to protect against failure to do just that!). The forms for such a document are many. The form that impresses is the user-friendly functional one: identification of core/key risks; rating of risks; actions against risks; trackers of actions; flexibility and scheduled processes for considering and updating these factors. It operates as a pre-emptive setting of a safety net to ensure the trustees are thinking about all areas of risk and identifying the most important. It also operates “responsively”, backed by processes to identify and deal with new and emergent “weak points” in that safety net. It will look entirely different for the village duck-race charity versus the national childcare charity - and that is entirely how it should be.
- Communication: the above will not build a charity’s resilience if communication is poor, be it between trustees, with Executive staff or indeed with donors, regulators and others. Again, the most common methods of ensuring resilience through good communication (which will vary depending on charity size and type) include: focused sub-committees looking at risk; scheduled meetings to discuss risks and making the time to discuss how to speak about, understand and deal with new and emergent risks. It is these “living document” processes together with having the documents, which we see the Office of the Scottish Charity Regulator (OSCR) highlighting in its publications on safeguarding for example. Remember in all this – the way to ensure resilience is not having process for process’s sake, the point is to identify and manage relevant risks to enhance your charity’s ability to deliver social impact.
- Financial monitoring: it goes without saying that financial risk management is key, and the most resilient charities ensure up-to-date information (often on a standing quarterly basis or more frequently) is used to monitor financial risk.
Taking resilient decisions and actions
- Decision making: a resilient decision is one which should OSCR, as an example, seek to understand how the charity arrived at a decision, the charity can provide sufficient records, justifying why the decision was taken and the options that were considered. The records would then demonstrate advice having been taken. The focus of publicly available OSCR enquiries has been wide, including for example failed fundraising ventures and levels of payments made to ex-staff. In relation to each, the resilient charity should be in a position to show, through minutes and papers, how it arrived at the decisions it took and what it considered in arriving at its decision.
- Doing the right thing and informing OSCR of “notifiable events”: a resilient charity will act appropriately and transparently when serious issues arise. Media coverage of recent safeguarding failures has demonstrated that there will be scant public sympathy for any charity seeking to hoist up a “no issue here” banner in an attempt to hide serious issues that need to be dealt with. OSCR’s notifiable events regime reflects the regulator’s intention that all charities must inform them when dealing with serious matters. The direction of the recent Scottish Government consultation on potential charity law reform also pushes for further transparency and a clear legal basis to the notifiable events regime.
The views on this page are those of MacRoberts.
You can catch Robin Fallas’ Building Resilience session at Road to Growth: Edinburgh on 12 September. Register for free here.
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