Governance – a word which may induce a yawn or glazed eyes of disinterest but which is key to the health of a non-profit organisation. It is about accountability and transparency. In the absence of good governance all the efforts being made to achieve an organisation’s objectives are likely to be diminished.
The ultimate responsibility for the governance of a non-profit sits with the board of trustees/board of directors if incorporated/council/management committee if there are no paid staff, but its implementation is shared by others, particularly members of a senior management team. This includes those employed in finance and fundraising who are charged with monitoring, maintaining and/or increasing income levels.
Governance is: the systems and processes concerned with the overall direction, effectiveness, supervision and accountability of an organisation (Professor Chris Cornforth).
Good governance ensures that
- the finances of the organisation are sufficient to sustain it and are well managed
- the reputation of the organisation is protected by upholding its values and ensuring it attains its mission and objectives
- the strategic direction of the organisation is set and reviewed through consultation and monitoring its implementation
- conflicts of interest are identified and properly managed
- the necessary organisational policies are in place such as Equal Opportunity, Health and Safety, Fraud Prevention
- the boundaries of responsibility between board and staff, and the delegation of appropriate responsibility to the chief executive, are identified and are understood
- the chief executive is properly recruited, supported and monitored
- board members’ performance collectively and individually is reviewed, and there is succession planning incorporating a review of the skills and experience the Board needs to be effective.
Any activity carried out in the name of the organisation must comply with the governing document (constitution, memorandum and articles, trust deed) and relevant legislation (Charity Law, Company Law, Tax Law). If the organisation is incorporated, monitoring compliance is usually carried out by a Company Secretary (the role itself is no longer obligatory in law) who may be either the Chief Executive or the Finance Director.
The overall welfare of staff and volunteers sits under the governance umbrella, as does the relationship with external partners, as well as monitoring contractual arrangements and the methodology used for income generation whether by staff or by volunteers/supporters.
Good governance involves being mindful of who the organisation’s stakeholders are, making sure they are kept informed of developments and consulted appropriately.
There is a great deal of guidance available from:
- Governance Magazine
- The Charity Commission
- Institute of Chartered Secretaries and Administrators
- National Council of Voluntary Organisations
- Know How Non Profit
- Companies House
Governance consultant and mediator