Derek McAuley (Chief Officer for the General Assembly) and I have been asked to run a 40-minute session the the Annual Meetings next year on governance based on information found in the Help is at Hand handbook. Does anyone have any thoughts about the priorities for a session such as this.

All suggestions welcome.

Good Governance: a Code for the Voluntary and Community sector

'Good Governance: a Code for the Voluntary and Community sector' has been published, setting out best practice for governing a voluntary organisation. It builds on the original version from 2005, and should be clearer with less jargon. The Code Steering Group is now working on a version for small, unstaffed organisations, due spring 2011, plus a new supporting website.

The summary and full version may be found here for downloading.

Managing money

Apologies if I am teaching 'granny to suck eggs' but it is important to ask how boards manage their organisation's money. The term manage implies an active approach rather than monitoring which is reviewing what has gone on. My experience is that many organisations monitor their finances rather than manage them. Managing actively does not mean not spending money but it does mean understanding what money is being spent, when and on what and similarly with income - what is coming in, when and from where.

It is not so important in times of low interest rates but one of the things to manage is how much money is needed in the current account and how much can stay in an interest-bearing account. To do this you need to know when bills come in - many of us spread bills through the use of direct debits - this often gets us a better deal and helps us to spread spend - it also means that it is paid automatically from our banks. Which means that it is vital that bank accounts are reconciled with cash-books - at least quarterly or as often as bank statements are received.

Patterns of expenditure are useful to observe - the use of Excel or other spreadsheet software helps to plot spend over a year and then to compare year on year. You can then start to make links - for example if you rent out your building, do your utility costs go up the more you rent out the building. Can you therefore work out the additional cost of utilities for renting out the building and build that into lettings' charges? How vulnerable is your organisation to stock market fluctuations and do you need to build some contingency into your reserves for this? Are there times of the year when giving to the collection is less - do you need to find additional income at this time of year e.g. by having a stall at a car-boot sale or running a raffle?

Understanding your finances will help you to feel more secure - reporting this in simple terms to community members will provide transparency and help people to feel involved. It may also provoke some to offer to help out with fund-raising or money management - for example finding a better deal for your utilities or insurances. The more people are involved with finances the more likely they are to feel a responsibility for them which makes the treasurer's job a lot easier.

Catching up before my holiday

Nearly a month of trying to get my computer sorted - it wouldn't start, got fixed, wouldn't start, got fixed and then everything was different - discovered my on-line back-up wasn't working and so have had a happy few weeks reacquainting myself with my beloved computer, buying a laptop that works and trying to sort out the back-up. Not quite done that yet.

So where was I? Ah yes reserves policies. Here's one I did earlier - it's for an organisation which gets income from renting its building to businesses, has that building to maintain and is in the throes of major improvements hence needing to build up a capital reserve.

XXX Organisation
Reserves Policy

Introduction

XXX Organisation reserves policy is to maintain sufficient level of reserves to enable operating activities to be maintained, taking account of potential risks and contingencies that may arise from time to time. These risks may include

• Rent arrears;
• Tenants leaving and units left vacant being unable to rent them; or
• Needing to leave units untenanted to ensure building works may be carried out safely and efficiently.

Additional contingencies

In addition, amounts are set aside to meet financial risks associated with potential contingencies and uncertainties relating to XXX Organisation’s operating activities. These include:

• The funding of unforeseen major projects that have not been provided for in the normal financial planning process in particular building works to ensure health and safety; and
• The provision for an orderly winding-down of operations in the event of a significant adverse event that is outside the control of XXX Organisation.

The reserve fund

Currently all XXX Organisation’s reserves are unrestricted and are therefore free reserves. The unrestricted reserves of XXX Organisation are designated and allocated to meet the above risks and contingencies and is set at £18,000 to be kept in a high interest account.

Capital fund

XXX Organisation is aiming to build up a capital fund to finance building works. It intends to keep back about £20,000 per annum from its income to add to this until a maximum of £250,000 is reached. This fund will be invested in a high income account.
Review of Policy

The policy is reviewed annually by XXX Organisation’s Trustees.

Signed: Dated:


You may of course make it much longer and more comprehensive but I think that it is about what works for your organisation. Most of our Meeting Houses and Chapels have very straightforward finances with similar amounts of money coming in each year from live-giving, legacy income, investment income, income generation and grants; and similar annual outgoings to fund ministers/lay leaders/worship leaders, running the congregation, building maintenance and building improvements.

And if it's a matter of having a more comprehensive policy but taking many months to decide on it or having something quite simple to be going on with, then I would suggest having something simple at first. The other thing about short and simple is that people will read it and have a chance of understanding it. As with any policy it needs to be understood and taken on as the policy by all trustees/management committee members.

Once you have a reserves policy you then need to look at your books to see if you have that amount and if not work out how to build up the appropriate reserve. Conversely if you have too much money in reserve you need to be talking about how to spend the money. As said in the previous post, money held by charities is meant to be spent on their charitable purposes.

Treasurers and reserves

Just a brief posting today, methinks.

Treasurers - who'd be one? Especially in organisations without admin or finance staff like our local faith communities. I had the role for three years and got myself into all sorts of knots - the end of the financial year was an interesting time as it kind of went like this ... £1,500 too much, then £200 too little, then £80 too much and then something like £4.21 too little - eventually I would get the discrepancy between bank figures and cashbook to zero but it hurt to get there. Now I am a woman who loves figures but I don't love accountancy and book-keeping.

Treasurers are often accused of being mean because many don't appear to like spending money. However the buck stops with them if there were ever an audit of how money had been spent. Treasurers should have an overview in their heads as to how the organisation is doing. What is being spent, what is coming in, what is on the horizon (both expenditure and incoming) and what the community would dearly love to do?

The Charity Commission is quite clear that money in should equal money out. We are after all charities and money should be used for our charitable purposes - having money sitting in a bank is not a charitable purpose. But charities can carry reserves and capital funds. Reserves are to keep the charity going should income reduce (as with a stock market downturn) or should expenditure increase (if the water charging policy is implemented) and for planned maintenance and as a buffer for say emergency repairs. A charity may also save money for a large project say retiling a roof or making the building accessible.

However if you carry any kind of extra money other than to cover usual expenses then you must have a reserves policy. This must say how much you have or intend to have and for what purposes. It is a useful exercise to write a reserves policy as it enshrines to some extent your community's thinking about risk, your knowledge of future financial issues and your aspirations for the future. I will post an example of a reserves policy within the week.

Now I must away to drive to Yorkshire and trust it isn't raining there as it is here.

Trustees - officer roles

The Charity Commission only dictates that charities have a chair and a treasurer. Company law used to require an incorporated charity to have a Company Secretary but that changed in 2008. You may of course have a secretary and a vice chair and any other number of named officers - vice or deputy -treasurer, minute secretary, membership secretary, lettings secretary and welfare secretary and suchlike.

Whether these people are formally appointed (either elected or selected) as trustees or not it does not really matter - if you act like a trustee i.e. you are involved in the strategic decision making (not just the discussions) then you will be treated as a trustee by the Charity Commission. You can't have the power without the responsibility - whatever your governing document says!

The chair and the treasurer are both key roles. The treasurer's is easier to describe. In organisations with a finance director then the role is often called the honorary treasurer and this person monitors the finance director's work and therefore the financial stability of the organisation ensuring that all procedures are followed and that no only is the organisation viable now but will be for some years to come. NCVO say that these are the overall roles of a treasurer

• Maintain an overview of the organisation's affairs
• Ensuring its financial viability
• Ensuring that proper financial records and procedures are maintained.

Clearly in smaller organisations - probably most of our communities, treasurers do much more hands on work with the money often collecting money, banking it, preparing budgets and accounts, and being the main contact for the bank.

I believe that the chair's role is pivotal to the success of any charity. However I have known charities with good staff and a poor chair who have done well. Whatever your view it is best to get this agreed between all the trustees. NCVO says this of the chair's role.

The chair is a trustee with a specific role on the board. The chair is elected or appointed to this role as set out in the charity’s governing document.

The role of the chair is to chair meetings of the trustee board.

In addition, some chairs take on a number of additional roles. The chair can only take on these additional roles if they have been authorised to do so. This authorisation might be set out in the governing document or related procedure, or agreed by the other trustees in a role description or some other document.

Additional roles of the chair sometimes include:

• Supporting and supervising the head of staff or chief executive and acting as a channel of communication between board and staff
• Acting as a figurehead for the charity (for example, representing it at functions, meetings or in the press).
• Leading on the development of the board and ensuring its decisions are implemented.
• Taking urgent action (but not decision making unless authorised) between board meetings when it isn’t possible or practical to hold a meeting.

The roles above are not exclusively roles of the chair. For example, in some charities the development of the board might be led by another trustee; in others, the charity’s press spokesperson might be a member of staff.

In my experience it is through the chair that the board communicates with the chief officer/staff. If supervision is provided to staff then it is usual for the chair to both supervise the chief officer and to give line-management support. If there are staff then the relationship between the senior staff and the chair can make (or break) an organisation.

Here is a good discussion document from the Scottish CVO about the relationship between the chair and the chief officer.

When the relationship is between minister and trustees (who are also the ministered to) there are different considerations which I admit I understand from a personal point of view i.e. how we do it in Newcastle-under-Lyme but I am not sure that this can be systematised. So I will have a long hard think about this.

The Nonprofit Social Media Decision Guide

This guide which covers things like Twitter,Facebook and blogging can be downloaded for free from here. You will need to sign up with your name and contatct email address.

Resources

I am setting up a Google site to hold resources about governance and signposting to good resources. I hope to have this done in a week. I have started but have been busy so only got half way there.

'We're not a business'

I have heard this from fellow Unitarians and from people who work and volunteer for other charities and community groups.

There are clearly rules for charities including our faith communities. We must follow these and then there is good practice - which we can choose to follow or not. But there are insights to be gained from for example understanding how businesses behave just as there are insights to be gained from psychology as to how individuals behave. We do not become psychologists by learning from psychology so we don't become business people by learning from business methods.

Whilst some of the information available comes from business sources, much comes from a more general study of organisations whatever those organisations do. The question to ask is always, 'how helpful might this be?' and not, 'where does it come from?'.

I also have a very big bee in my bonnet about efficiency. Efficiency is not about rigid structures (indeed some of the most efficient organisations have very few formal structures), it is not about the bottom line (i.e. money) and it is not about emotionless process. Efficiency is about getting something done with the least effort without sacrificing quality. Efficiency also means that things get done rather than not done, and they get done the right number of times.

Just simple examples - flower rotas, milk rotas and cleaning rotas - ensure that the thing gets done (always have a contingency plan like some dried flowers, some long-life milk and an eye that misses the dust) and they get done the right number of times. For example they avoid - two people bringing the flowers, having three bottles of milk when you only need one, or people polishing the hymnbooks because everything else has been cleaned three times. These examples are reflective of broader issues of efficiency with for example finances, meetings or developing the organisation.

Some people are fantastic at developing processes and procedures and some aren't - if you have someone who is then cherish them and set them to work helping you (that is working with others and not for them) to make the most of what you have. Less time spent on inefficient activity means more time to do something else.

As I have written a few times, efficiency is a spiritual imperative - our time, our skills and our resources are finite and I believe that we are bound to make the best of what we have been given.

Leadership and management

Someone has asked me about leadership and management saying about the seeming conflict with leadership being about vision and boldness and management being about caution and detail.

First I guess the theory might be helpful. The webpage is quite helpful.

Leadership - which is the role of any board but which is a role which can be partly delegated or at least shared - is about vision and direction. Where are we going? We know that life and organisations change without any intervention - so maintaining the status quo also requires effort - if we do nothing we and our organisations die. Do we want the status quo or would we rather aim for something else, something more? As faith communities I think that we are duty bound to say that we want something more - I don't think anyone has the right to say that what we have is enough. This is not in terms of us as individuals but in terms of what we offer to the world - we need to be striving to be greater than we are.

In faith communities if we have a minister or lay-leader then we have an appointed spiritual leader - how that person chooses to realise that leadership is for them to decide - I would hope that they decide this with the community that they lead. Can this leadership be extricated from the leadership that the congregational committee (board) provide? Probably not and it is often this that creates tensions within our faith communities. The General Assembly has guidelines for developing the partnership between congregation and minister and they can be found here.

It would be great to be able to write that this is how it should be done and this is what works - but as ever our communities are much too varied and interesting for that. In some cases it is the opposite - there is a feeling that there is no leadership and people are either not willing or not able to recognise that leadership (individual or collective) is essential.

With leadership you get direction and with management you get a sense of both planning and implementing. Planning means saying how something will be done and for example what resources will be needed and implementing is then doing it. Management is about overseeing these stages - management does not have to be one person and more often than not in our communities many people have a role to manage a bit of the work.

So for example - one of our visions is to ensure that people are informed of what we are doing to encourage them to become more involved. I manage that bit of what we do by ensuring that we have newsletters, calendars, running a Facebook group, CDs and DVDs and by emailing/ringing people when required. This is not to say that I do it all - but it is my job to make sure it gets done. The 'making sure' bit is the management bit.

So leadership is indeed about vision and direction and management is about ensuring that that vision is followed by travelling in the desired direction. The two complement each other and are necessary for a successful organisation. Whilst we do not need to overformalise things we do need to ensure that we are efficient - because inefficiency hurts people by wasting their time and their energy and sometimes their money. To get the most from the least effort we need to act efficiently.

Doing governance

I have sat on a few boards during the past 20+ years. I have chaired a couple and am chair to one currently. I have been a treasurer and a secretary and a vice-chair - this latter often means that you end up as chair which can take you by surprise as happened to me earlier in the year. I have also worked in my consulting life with many boards and many more individual trustees.

What separates the good from the bad from the downright ugly? I think that the best are those who are ambitious - not for themselves but for the organisation.

For example I came onto a board of an organisation which owned an historic building (not a Unitarian one) and the board met twice a year and spent an hour at each meeting discussing the building. The organisation gave out its profits to local charities and it seemed that many trustees thought that this was much nicer than discussing building issues. When I suggested that we should meet more often and focus more on the building some of the trustees told me of their personal commitments - I respectfully said that this was not about them but about the organisation and we should do what we could to ensure that the organisation flourished.

(If people do not have the time to commit to doing it properly they should not be on a board - if you have a good person who cannot commit time to board meetings then use them as a special advisor to be called on when needed.)

Back to the example, needless to say many trustees left, although some stayed and have shown enormous commitment to the changes. We also have some enthusiastic new blood with skills needed to manage and improve a building. We have had to spend tens of thousands of pounds just to get the building safe let alone improved but at least we can sleep safe and sound in the knowledge that we are unlikely to be sued for negligence. However we still maintained our grant giving and improved the process now giving grants four times rather than twice a year.

We achieved this by splitting the work down so that we had specialists looking after the building, specialists looking after the business planning and specialists looking after the grant-giving. All three have been given equal weight.

We progressed from being a board which just wanted to let things tick over whilst feeling warm and fuzzy about our generosity as we gave out grants, to one which aspired to be something more than we were - in everything that we did. We focused on the building as the most important asset that we owned but we have also built up our profile by focusing on our other assets - the people on the board, our trustees - we have held our fist open AGM and have been working in real partnership with other organisations locally. We have used our skills and our networks to make progress.

So - what makes a good board? One that has aspirations for the organisation wanting it to be better, and it does this by focusing on its assets. In our communities this can mean a focus on a building, often on the maintenance side. However our assets are not just bricks and mortar - what do people involved in your faith community bring to the table in terms of skills and the contacts and networks that they belong to?

Or perhaps more importantly what are the human qualities that they bring - for example love, kindness, generosity of spirit, laughter, tears, a listening ear and a speaking mouth, busy hands and supportive arms?

The governing document

As stated in a previous posting there are several things that a trustee needs to be aware of - the first one is the organisation's governing document. Depending on the form that the organisation takes this document will have different names. A company has articles and memorandum of association.

The memorandum of association sets out the company's name, the proposed location of its registered office, a statement regarding the liability of its members. It also contains the company's object - that is, what it does. However since October 2009 it is possible not to have a restricted object for ordinary companies - but for a charitable company the object will need to be restricted to charitable purposes - which is about public benefit. The articles of association (often just called 'articles') contain the rules for the company's internal regulation and management e.g. the meeting schedule, who can call a special meeting, the quorum for meetings, what happens if the company needs winding up.

Most of our chapels and meeting houses will be unincorporated associations and so will have constitutions. I suspect that many of these documents are decades old. Here is Charity Commission guidance about constitutions.

Trusts have trust deeds.

So first, have a look at the governing document and see what you can and cannot do as an individual trustee and as a board. Is this document fit for purpose or could you update it a bit to (a) fit more accurately with how you actually do the governance now; (b) ensure that you have covered everything that you currently do; and (c) is clearer for trustees and others to understand what the organisation's powers are?

Don't rush headlong into wanting to change the governing document but keep it in mind as something you might like to do consider at some point in the next year or two. Then have it on your list of things to talk with other trustees about.

Whatever changes you may have in mind ensure that you are familiar with what it says so that you may work within it.

Good resources for trustees

Clearly if you are a trustee or considering becoming one you don't want to be overwhelmed by information but it is a good idea to know where to look if you want something clarifying or need further information. The three sources that I use most when I am supporting charities that I do my paid consultancy for or that I am on the board of are

** The Charity Commission Over the past ten years they have become much more approachable, their information is accessible and as they are the charity regulator we might ask, 'If they don't know then who else is going to?' (The Office of the Scottish Charity Regulator (OSCR) and the Charity Commission for Northern Ireland).
** National Council for Voluntary Services (NCVO) and its sister site Get Legal which was set up to 'to enable organisations and their advisors to access clear information and guidance on the most appropriate legal form and governance structure for delivering their goals.; and
** Vol Resource This website looks a little old fashioned and a little tired but it is a mine of very helpful information.

The GA also has its own publication Help is at Hand which can be found here. The only problem with written material as opposed to web-based material is that it can go out of date and as this was written in 2007 it may be a good idea to check legal issues online to ensure that things have not changed.

What is a trustee?

There are two types of trustee - holding trustees and (managing) trustees. Where a charity is not incorporated it is not a legal entity and therefore cannot own property. So where there is property, as with chapels and meeting houses, someone has to legally own that. There are two types of owners possible


- holding trustees: who are people whose sole role is to hold the legal title to the property in their name (there are usually three+ holding trustees); and
- custodian trustees: which are incorporated organisations which hold the title to the property. The B&FUA (British and Foreign Unitarian Association) is often used to do this for both the General Assembly and its member congregations.


You can have a mix of holding and custodian trustees. Holding trustees should have no role in governing or administering the charity although in practice this often happens as there are so few people willing to take on such roles. There is also an official custodian who can hold the title of a property - this is administered through the Charity Commission.


Other (governing) trustees - the type that we are normally talk about - are the people entrusted with ensuring that a charitable organisation meets its charitable object. The object details what the organisation was set up to do, its reason to exist.


The three things that trustees must be very aware of are


** their charity's governing document (often called a constitution - more on this later) which includes its object;
** the law of the land (charity law and more general law e.g. health & safety, equal opportunities and employment); and
** good practice for running charities. Being aware of good practice and aiming to work in such a way should ensure that the charity's resources - time, effort, skills, money etc - are used efficiently.


Trustees have clear legal duties when it comes to their trustee role. They are individually and severally (i.e. as a board) liable for the charity and depending on the legal form of the charity may or may not have financially limited liability. But limited financial liability only protects if the trustees have acted legally and with due care and attention.


Trustees are volunteers and can only in very rare circumstances be paid for any of the work that they do for the charity - and if this is possible it must be detailed in the governing document. It is usual for trustees to be able to claim reasonable out-of-pocket expenses like travel and car parking fees. It is also a good idea for a charity to have an estimated budget figure for the cost of trustee meetings (venue hire, refreshments and travel expenses) - to invest in its governance.


If you believe that working as a trustee for a charity can make a real difference to people's lives then it can be a wonderful experience in particular if your fellow trustees are like-minded and hardworking. But it is not a position to be taken on lightly or without finding out exactly what it may entail.

What is a charity?

A charity is any organisation set up for the purposes of promoting the public good. This may be (and almost always is) the good of a sub-section of the public but you can't set up a charity to benefit your family. In 2006 the idea of public benefit was tightened up and you can see here what the Charity Commission says about it.

An organisation has a form and a status. The form for most charities is either an unincorporated association or a limited company. There are also trusts, industrial and provident societies, charitable incorporated organisations and limited liability partnerships. See Get Legal for more information about these.

As an unincorporated association the organisation is not a legal entity and cannot own anything or employ anyone - all this is done by the trustees. As a company the organisation is itself a legal entity - so for example the company can be awarded a contract.

The status of an organisation is about whether or not it is a registered charity. An organisation does not have to be registered to be a charity - but it helps in particular for organisations which use public money, either individual donations or grants. Having charitable status infers a degree of protection for trustees if they abide by charity law and provides a framework for operating the charity. It also imposes responsibilities on trustees and required reporting to the Charity Commission.

Therefore, any organisation which is deemed a charity will have a legal form and may or may not have a registered status.

What is governance?

Governance – 'the systems and processes concerned with ensuring the overall direction, effectiveness, supervision and accountability of an organisation from Cornforth via ChangeUp (2004)

Governance is not so much about doing as thinking and shaping, directing and delegating, monitoring and reflecting, setting targets and supporting the achievement of targets and taking responsibility for all that happens within an organisation. Authority may be delegated but responsibility cannot - not ultimate responsibility. In an organisation with several staff and volunteers there should be little actual doing by the board. Whatever else it is, it is about leadership - knowing where the organisation is going and then putting processes in place to get it there.

UK - the national and local scenes

I like to read the minutes of the GA's (General Assembly of Unitarian and Free Christian Churches') Executive Committee meetings to see what's happening and sometimes to see what is not happening. Those interested in reading these can sign up to receive the e-news sent out by the GA - see their website

I may use illustrations from national or local activity to highlight what I think is good and not-so-good approaches to charity governance.

And so the blog begins

This blog is born out of a desire to make a positive contribuion to UK Unitarians' continued discussions (or not) about how good governance works and to offer some hints and wrinkles about how to make it work for Unitarian communities wherever they are, however big or small.

Much of what I write will apply to Scotland and Northern Ireland - but they have their own charity regulators and their own charity law. The Office of the Scottish Charity Regulator (OSCR) and the Charity Commission for Northern Ireland. The Charity Commission covers England and Wales.