Governance crisis? Help is at hand!

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This week the press have jumped on the news that the Charity Commission has given an official warning to the National Hereditary Breast Cancer Helpline. There has been a massive conflict of interest that hasn’t been managed properly – the founder and her daughter have been paid – and some exceptionally poor financial management.

Here I look at the problems faced by smaller charities and those with relatively inexperienced Boards, and note what support is out there.

 

How has this happened?

Many are posing the question, “how has this gone unnoticed for so long?” after the charity’s annual accounts show a decline in spending on charitable activities in three consecutive years from 6% to 3.4% to 2.8%. To give a sense of perspective, the average spend on charitable activities is 83%.

Perhaps this wasn’t spotted because the Charity Commission is underfunded to deal with the increase in inquiries and investigations, nevermind proactively seeking out poor governance practice? Or perhaps the Board weren’t equipped to managing the charity? Or perhaps there was a change in accounting method – how did charitable spend jump from 2.8% of total expenditure to over 98% in the just one financial year? That’s some impressive turnaround management or interesting accounting.

Gina Miller, Founder and Chair of the True and Fair Foundation (and of Brexit fame) has suggested there be a minimum (percentage of) spend on charitable activities. Thankfully the Charity Commission has rebutted this, with a statement reflecting the diversity of charities and consideration of their life-stage being taken into account – reminiscent of the response the Commission and others gave the True and Fair Foundation’s report ‘A Hornet’s Nest’ early last year.

Maybe it’s time to revisit Dan Pallota’s TED Talk: The way we think about charity is dead wrong?

 

Charities are specialist

Charities are specialist and need managing accordingly to be legal and effective. My reflection on working with small charities is that people tend to join a Board because they are motivated by the cause. They are not typically from a charity management background, and then find themselves up to their eyeballs in CC guidance, or conversely, not! Passion for – and knowledge – of the cause is extremely important but how effective is it if the infrastructure isn’t there to deliver it? As Wendy Watson, Founder of NHBCH stated:

“Mistakes were made. I’m not a businesswoman, I’m somebody passionate that wants to keep the helpline going and find a way to raise some money to do that.”

The usual brief I receive is, “we need some help developing our fundraising strategy”. It’s true, but the precursor to that is clarifying organisational purpose, honing down their priorities from doing everything in their causal area to a few strategic areas where they can genuinely make a difference. This strategic direction should come from the Board and highlights the need for a sound understanding of charity governance.

The main issues for NHBCH seem to be around managing conflict of interest (CC29) and financial management (Charity finances: trustee essentials (CC25). It’s not illegal for family members to be on the Board or work for the organisation, but conflict of interest – including perceived conflict of interest – must be managed. The governing documents detail how conflicts of interest are managed, and how and when meetings are conducted (i.e. decision making). Adhering to the governing document therefore ensures trustees operate legally. Given the jump in NHBCH’s charitable expenditure in the last financial year, Charity reporting and accounting: the essentials, March 2015 (CC15c) might also have been a useful resource.

 

Help is at hand

Trustees in large charities often have the support of a paid-for governance function ensuring things operate smoothly: trustee inductions, Board papers are in on-time and circulated, minutes are taken and approved, queries are resolved within working hours. These organisations are therefore well placed to capitalise on the non-charity sector experience that these trustees bring. But for smaller organisations and those with less experience of charity management, this in-house support is missing.

Charity Commission guidance is publicly available and in becoming a charity trustee you are agreeing to comply with it. It’s pleasing to see the new Charity Governance Code progressing themes every trustee should be mindful of. (NCVO’s blog on the Charity Governance Code covers everything you need to know about the Code.) But for those organisations reflecting on their governance as a result of lack of funding or that they think they may need to close, how pressing are these themes? They need a fix, and strengthening governance at point of crisis feels a little too late.

So here’s a quick summary of what you could do if you’re new to a Board.

  1. Charity Commission Guidance. An excellent place to start for new trustees of those needing a refresher, is The essential trustee: what you need to know (CC3).
  2. KnowHowNonProfit. Free info! Check out the Governance section.
  3. Small Charities Coalition. Free trustee matching, finding and networks. And seminars taking place across the country, including this one on Governance in Chester in October.
  4. NCVO membership. It’s worth the membership fee. Access tools such as the Governance Wheel (easy to use and gives a snapshot of governance strengths and weaknesses), the Trustee Bank (free trustee recruitment site) and get discounts on training and consultancy. I’d recommend Charity Trustees: Induction and Refresher Training – next one in October in London.

Do you know of other useful resources are out there for new charities and trustees? If so, please share!

Fundraising for difficult causes: a starting point for small charities

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In 2009 I heard Mark Astarita launch the Gill Astarita Fundraiser of the Year Award at the Institute of Fundraising National Convention. In addition to that burning feeling in the throat when you’re trying to keep yourself together, I vividly remember him talking about Gill fundraising for truly difficult causes, including drug and alcohol charity Addaction: “Gill never had much truk with any fundraiser who said their cause was hard to fundraise for”. That speech has stuck with me.

Roll on a few years and I’m going for an interview at a large children’s charity. At the time I was working for an environmental charity and a colleague and friend asked if I had applied because “it’s easier to fundraise for kids”. Of course some causes are easier for people to understand and empathise with, though I imagine that their fundraisers aren’t there for an easy life.

These two separate incidents made me think that perhaps some people simply accept that some causes are difficult to fundraise for. I feel that this is rather defeatist and a barrier to testing new fundraising ideas. Combine this attitude with some of the challenges many small charities face – limited time and resource to divert from front-line services to fundraising – and you’re in a bit of a pickle.

So what can we do to raise income for smaller, more niche charities?

I’m going to talk through what I think is a sensible starting point, giving examples of two different causes. Ideally this approach would be complemented with other work (e.g. external environment and competitor analysis), but if you’re pushed for time and want a starting point, I’d recommend this.

The first charity provides palliative care services. It is based in a deprived area and while there is huge goodwill towards it across the community, nobody has any spare cash. The second is a theatre organisation which aims to democratise the arts. It genuinely transforms the careers of the people it works with, but some perceive the arts to be a rather elitist, particularly given the current climate.

While these organisations are dissimilar in pretty much every way, the approach to their funding strategies is similar. Because whatever the cause, someone will fund it.

What it’s important to understand is:

  1. Which organisations need this service to continue; and/ or
  2. Who cares enough to fund it?

Here’s a suggestion for how you might go about this:

Firstly, consider all your potential funders.

Working through the income spectrum, from donations, grants, contracts to trading, who are the organisations or people that need or care enough to fund your work?

For example: Is it in the interests of business to support you? Is your cause emotive enough to appeal to a large number of individuals? Might your services save the NHS money? Have you got stuff, space or skills you could sell?

This isn’t about chasing the money, it’s just an initial way to start prioritising which income stream(s) to consider pursuing. Remember to consider your organisational strengths too – e.g. if you don’t know any rich people and you’re a niche cause, major donor giving might not be your best trick.

Secondly, determine what the motivations of those potential funders are.

For example, the palliative care organisation is not currently receiving any statutory funding.

Marie Curie estimate the cost for a day of community care at the end of life is £145 compared with £425 for specialist palliative in-patient care in hospital. This represents a saving of £280 a day per person.

“If additional community services were developed to enable even 30,000 patients to reduce their hospital stay by just four days, there would be a potential saving of £34 million.” Alternatively, a compelling message to statutory funders could be the increased cost to the NHS of not funding the service and the organisation ceasing to exist.

Now let’s think about the theatre organisation. Let’s face it: some people have done alright for themselves. Be it through the arts, business or simply through being born. And despite the recession their lives remain pretty much the same. Major donor giving looks like a strong option for this organisation. But why would wealthy people want to give? Because they love the theatre? Because they want to support young people? Because when they were younger, someone gave them the break that they really needed?

Building a sustainable funding strategy is dependent on many factors but I’d argue that taking the time to identify the potential funders with the greatest motivation and ability to give is right up there on the to-do list.

Reflecting back on Mark’s speech which made such an impact on me when I was new to the sector, I wonder if Gill had started out with the mindset that the causes she worked for were difficult and that’s just how it was, she would have pioneered new fundraising techniques such as door-to-door. Would she have raised such significant income? Would she have been considered a leader in the sector? I doubt it.

So let’s leave any defeatism at home, put some strategic thinking behind our fundraising programmes and make the most of what is working in our favour – our cause and our potential funders.

References:

Congratulations! It’s gin time!

The 1873

This is the house cocktail at The Gilbert Scott – the bar adjoining The Renaissance St Pancras. It is, quite simply, delicious.

Acquire these:
250ml Bombay Sapphire gin
200ml cranberry juice
300ml apple juice
10ml rhubarb bitters
7.5ml egg whites, preferably pasteurized

Do this:
Chill the ingredients over night (never in a freezer – how crude!).
Combine the gin, cranberry and apple juices, rhubarb bitters, and egg whites into the siphon.
Serve in a chilled champagne coupe.
Devour.

I have removed the bit involving a CO2 canister as I don’t feel it’s necessary. I imagine The Gilbert Scott would disagree.