What began as a nagging problem with charities’ ability to recruit trustees has steadily morphed into a full-blown crisis.
The most recent available figures – from November 2017 – showed there were 100,000 unfilled charity trustee vacancies.
By January this year, some 74% of charities were reporting difficulties hiring the trustees they needed.
Despite widespread media reports that public confidence in charities as a whole has plunged in the wake of the scandals at Kids Company, Oxfam and Save the Children, Britons’ willingness to fundraise – and donate – remains strong.
This year’s London Marathon wasn’t just the biggest and hottest in the race’s 38-year history – it also saw a record amount raised for more than 2,000 charities.
Virgin Money Giving said after the event that £21.8m had been raised for good causes through its platform with the final amount raised expected to be £25m. Meanwhile, JustGiving said a further £22.3m had been raised through its platform.
Yet competition between charities is intense; for donations, for volunteers and for trustees. In many ways, having the right trustees is the key to attracting the donations and volunteers needed for the organisation to thrive.
It’s imperative that charities have a strong board of trustees equipped with the right skills and experience to enable them to raise funds, but also to ensure donations are used effectively and, of course, correctly.
There is not only a legal obligation but also a moral obligation for charities to use the funds they receive in the correct way.
But the raft of legal obligations imposed on those willing to give up their free time to become a trustee can be daunting.
Trustees need to be aware of not only the Charities Act, 2011 but also the Charities (Protection and Social Investment) Act, 2016, the Charities Act, 1992 and now General Data Protection Regulations (GDPR).
Trustees are also now being warned they need to take out indemnity insurance, as well as being cautioned of the need to retain legal counsel separate from that of the charity.
And while the general public may not have been put off charitable giving by the Kids Company and Oxfam scandals, it’s increasingly clear that potential trustees have.
One charity with whom we work at HW Fisher & Company has been trying to recruit a new chair of trustees for nearly two months, through recruitment sites such as Charity Job and and Charity Trustee Network.
But in all that time it has only had two applications, and both were from wholly unsuitable candidates. The charity in question has subsequently been forced to recruit the services of a headhunter – an expense it can ill afford.
Such reticence among potential trustees is a consequence of the raft of new legislation introduced since 2011, as well as the lack of clarity over the role the Charity Commission plays – and the unresolved question of whether it exists solely to regulate, or also to promote – the not-for- profit sector.
The Commission’s newly appointed chair, Baroness Stowell, has raised the issue of public trust twice already: once in front of MPs in a pre-appointment hearing and then again in her first substantive speech as chair to the National Council of Voluntary Organisations’ (NCVO) annual conference earlier this month.
While it is important to highlight declining public trust in charities, doing so of course runs the risk of becoming a self-fulfilling prophecy. Talking down the charities sector will surely only put off potential, well-qualified trustees.
In the same speech Baroness Stowell gave a glimpse, perhaps, of the attitude of the Commission to those it works with. She said: “The Commission’s job is not to represent charities to the public, but to represent the public interest to you”.
This is, or at least should be, only partly true. If the Commission does not help to represent charities to the public, the crisis in recruiting trustees is certain to get worse.
But government funding of the Charity Commission is, at least for now, geared towards regulation. As a result, much of the Commission’s work focuses on enforcement.
And some of the requirements placed on charities – and by extension their auditors – could be described as onerous. Particularly, new whistleblowing obligations placed on charity auditors that have the potential to put then in a very awkward position with their clients.
Meanwhile, there is less government funding available for training potential trustees about the role they are undertaking. As a result many new trustees risk embarking on the job without a full appreciation of the importance of their position.
There are, of course, specialists such as HW Fisher & Company that can help bridge the training gap. But for small charities that are already operating on a shoestring this may not always be an option.
Ultimately, without a greater focus on recruitment and training of trustees there will be some charities that fail.
And if there is not a concerted effort to help charities maintain standards of governance, more are likely to fall foul of the Charity Commission’s rules and even the law. That will surely only help to erode public trust in charities further.
Neal Gilmore is charities principal at the chartered accountants HW Fisher & Company.