building better governance - wordpress.com centre for charity effectiveness intellectual leadership:...

www.cass.city.ac.uk

Fiona Ash, Christine Fogg

05-06 May 2016

BUILDING BETTER GOVERNANCE

Cass Centre for Charity EffectivenessIntellectual leadership: developing talent, enhancing performance

www.cass.city.ac.uk

Centre for Charity EffectivenessIntellectual leadership: developing talent, enhancing performance

What does Cass CCE do?

• Consultancy (including governance reviews) leadership

programmes, support for mergers etc.

• Part-time MSc degrees for people working for

nonprofits

• Professional development programmes – such as this!

• Academic research

www.cass.city.ac.uk


Why building better governance is important to us

• Our vision is for all non-profit boards to add value to their

mission through effective governance practices, structures and

behaviours

• We aspire to drive positive sectoral change through enabling

organisations to enhance their governance skills

• We believe that leaders should be developed so that they can

become more effective, impactful and inspirational for the

benefit of their causes and wider society.

www.cass.city.ac.uk


Our definition of governance

“an umbrella term for the systems,

processes and behaviours that enable

trustees to hold the organisation in trust,

steer its work and optimise the benefit to its

current and future beneficiaries”

Cass CCE

www.cass.city.ac.uk


Programme DAY ONE

Introductions & overview

Accountability – an exploration

Break at 11.30 am

Running Effective Meetings

Lunch 1pm

Board involvement in strategy

Close at 4pm

DAY TWO

10 am start including catch up &

reflections on Day One

Reports & Dashboards (1)

Break at 11.30

Reports & Dashboards (2)

Lunch 1pm

Board evaluation & performance

review

Final reflections & close at 4pm

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What’s included

• Practice Guides with the basics

• Handout on the findings from this seminar will follow

which include resource signpostinghttps://casscce.wordpress.com/about-cass-

cce/building-better-governance/

• Development plan to record key findings & actions to

take away

• Consultancy for more bespoke solutions

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EXPLORING ACCOUNTABILITY

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Trustee Accountability

The purpose of this first session is to consider:

• To whom are you accountable?

• And for what?

• What are the information needs of those you are

accountable to?

And a secondary question:

How is that accountability carried out? What are the

board’s responsibilities?

www.cass.city.ac.uk


Exploring accountability

Accountable (noun)

•Require to account for one’s conduct (Oxford English

Dictionary)

Various academic definitions of accountability e.g.

•Holding one (an individual or organisation) to account for

their actions (Stewart)

•Voluntarily( Fry)

•Includes evaluation of performance (Boyle et al)

•Should include a moral dimension of socially responsible

behaviour (Roberts)

Ros Oakley, Cass CCE

www.cass.city.ac.uk


Group work

At your table discuss:

• Who is your charity accountable to?

• What are you accountable for?

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Staff

SupportersService

users

Who

Members

Local

authority

Volunteers

Allies

Donors

Beneficiaries

– current and

future

Suppliers

Regulators

Neighbours

Partners

Public

Partners

Legislators

www.cass.city.ac.uk


Governance

Costs

Investment

choicesFundraising

methods

Concerns

Ineffectiveness

Failure to

protect the

vulnerable

Terrorism

Fraud

& theft

Campaigning

Fake charities

Unwelcome

neighbours

Conflict of

interest

Unfair

competition

Waste

Tax

avoidance

Pay

www.cass.city.ac.uk


Accountability

• Identifying to whom accountability is due

• Understanding and reconciling expectations that

may be both legitimate and divergent

• Setting reasonable standards

• Providing accessible information by which to

assess compliance

• Modelling integrity in decision and actions

Source R.P.Lawry Accountability and Nonprofit Organisations: an ethical perspective 1995

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Charity Commission

Parliament has given the Commission 5 statutory objectives

to increase or promote:

• public trust and confidence in charities

• awareness and understanding of the operation of the

public benefit requirement

• compliance by charity trustees with their legal obligations

in exercising control and management of their charities

• the effective use of charitable resources

• the accountability of charities to donors, beneficiaries

and the general public

www.cass.city.ac.uk


Key charity reporting requirements

There are different accounting and reporting

requirements depending on size and type of

charity. Typically:

• Annual return (online)

• Annual accounts

• Trustees Annual report (TAR)

• Public benefit reporting (via TAR)

• Serious incident report –as required

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Serious incidents

Report any serious incident that results in – or

risks - significant:

• loss of your charity’s money or assets

• damage to your charity’s property

• harm to your charity’s work, beneficiaries or

reputation

www.cass.city.ac.uk


Serious incidents

• Fraud, theft or other significant loss

• A large donation from an unknown or unverified source

• Links to terrorism or to any organisation that’s ‘proscribed’

due to terrorist activity

• A disqualified person acting as a trustee

• Not having a policy to safeguard your charity’s vulnerable

beneficiaries

• Not having ‘vetting’ procedures in place to check your

prospective trustees, volunteers and staff are eligible

• Suspicions, allegations or incidents of abuse of vulnerable

beneficiaries

• Investigation by another regulator

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Public benefit reporting

• Registered Charities are required to set out in their

annual report the activities they have carried out

for public benefit

• Two basic requirements:

• An explanation of the activities undertaken by

the charity for the public benefit

• Statement by the trustees that they have had

regard to the Charity Commission guidance

•More info required by larger charities (over £500k)

www.cass.city.ac.uk


% of annual reports meeting public benefit

reporting requirement

Period / % of reports assessed 2011-

2012

2012-

2013

Includes report of activities

undertaken for public benefit

Includes statement that had regard

to CC guidance

Charities who met both of the above

Source: CC Annual Monitoring Review Public benefit reporting by charities March 2015

www.cass.city.ac.uk


% of annual reports meeting public benefit

reporting requirement


2012

2012-

2013

Includes report of activities

undertaken for public benefit

44% 64%

Includes statement that had regard

to CC guidance

44% 47%

Charities who met both of the above 27% 35%


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2012

2012-

2013

Statement of purposes

Summary of main activities to

achieve purposes

Description of how activities benefit

beneficiaries

Charities who do all 3 of above

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2012

2012-

2013

Statement of purposes 81% 88%

Summary of main activities to

achieve purposes

71% 80%

Description of how activities benefit

beneficiaries

55% 65%

Charities who do all 3 of above 44% 64%


www.cass.city.ac.uk


Trust and confidence – things people want to

know

• 96% agree it is important that charities provide

the public with information about how they spend

their money.

• 94% of people agree it is crucial for charities to

demonstrate how they benefit the public

• 90% agree it is important that charities explain in

a published annual report what they have

achieved

Source: Public trust and confidence in charities. Ipsos Mori on behalf of the Charity Commission June 2014

www.cass.city.ac.uk


Hallmarks of an effective charity

1. Clear about its purposes and direction

2. A strong board

3. Fit for purpose

4. Learns & improves

5. Financially sound and prudent

6. Accountable and transparent

Charity Commission

www.cass.city.ac.uk


Hallmark 6 : Accountable and transparent • Complies with its legal obligations (and best practice) explaining

what the charity has done for the public benefit

• Explains in its Annual Report how it has achieved its charitable

purposes (and for hospices in the Quality Account)

• Has effective complaints procedures

• Can show how it involves beneficiaries and service users in the

development and improvement of its services

• Has a communications plan ensuring information is given to

everyone with an interest in the work of the charity

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Code of Good Governance

1. Understanding of role

2. Ensuring delivery of organisational purpose

3. Working effectively as individuals and a team

4. Exercising effective control

5. Behaving with integrity

6. Being open and accountable

Good Governance – a code for the voluntary and community sector

(2nd edition October 2010)

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Principle 6

The board will lead the organisation in being open and

accountable, both internally and externally. This will include:

• open communications, informing people about the

organisation and its work

• appropriate consultation on significant changes to the

organisation’s services or policies

• listening and responding to the views of supporters, funders,

beneficiaries, service users and others with an interest in the

organisation’s work

• handling complaints constructively, impartially and effectively

• considering the organisation’s responsibilities to the wider

community, e.g. its environmental impact.

www.cass.city.ac.uk


Board accountability in practice

• Many nonprofit boards expect their executives to account

for use of their organizations’ resources. However, few

boards apply any such expectations to themselves.

• When we asked interviewees to identify the board’s

constituencies—those stakeholders whose concerns the

board should hear directly and with whom its members

should communicate—a surprisingly large number of

respondents simply could not identify a single such group.

• Most boards did not do anything to address the matter

directly except a few exemplary ones

Board Accountability Lessons from the Field, Thomas P. Holland 2002

www.cass.city.ac.uk


Approaches to ensure accountability

A thoughtful rather than mechanistic approach to:

•Clear expectations – real focus on mission & values (& have

these values extend to front line)

•Clear decision making criteria that are objective & impartial

•Policies & conversations on conflicts of interest- avoiding even

the appearance of self-dealing

•Identifying and staying focused on priorities: setting expectations,

not merely to critique & review what’s brought

•Have direct two-way communications with constituencies

•Strengthen the board itself: assessment of meetings; formal

evaluations

Board Accountability Lessons from the

Field, Thomas P. Holland 2002

www.cass.city.ac.uk


Group work

Accountability to stakeholders:

In the light of what you’ve heard what are

your board’s strengths & weaknesses in

terms of accountability?

www.cass.city.ac.uk


What is your board’s position on

accountability? Questions to take away

• Does your board understand your legal

responsibilities and are you meeting them?

• Have you identified the range of stakeholders

interested in or affected by your work?

• Do you understand what information needs your

various stakeholders may have?

• What voluntary disclosures and engagement do

you choose to make, to whom and how?

www.cass.city.ac.uk


Items in the resource bank for this seminar:

• CC guidance on reporting requirements

• CC annual monitoring review report

• Good practice resources

• Other accounting and reporting initiatives and

examples

www.cass.city.ac.uk


Running Effective Meetings

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Running effective meetings

The purpose of this session is to explore:

What makes for an effective (and interesting!) meeting

And we’ll be considering generative and critical thinking –

to support the quality of the boardroom conversation – and

the dynamics (and behaviours) that create the context for

effective participation leading to high quality decisions

www.cass.city.ac.uk


Some of the things in the resource bank for

this section are:

• Sample board annual calendar

• How to think about investing time in a meeting, and the

agenda

• Board meeting review

• Board observation sheet

• Constructing a board agenda – top tips

Not going to cover these in any detail in this session

www.cass.city.ac.uk


Human capital

• Diversity: age,

ethnicity, culture,

education

• Skill set

• Experience

Governance structures

• Understanding of role

• Committee structure

• Size and composition

• Meeting frequency

Trustee personal

attributes:

• Commitment

• Psychological type

Board dynamics:

• Communication

• Team mix

• Relationship quality

Structural

Behavioural

Individual Board

ICSA G&C October 2014 p 23

Dr Jeremy Cross Changing our View

www.cass.city.ac.uk


The Board Meeting is the place for:

• Active discussion (even dissent)

• Information sharing

• Deliberation

• Informed decision making

Effective trustee performance in meetings

requires:• Analysis and developing ideas

• Encouraging critique

• Minimising bias

• Solutions that are in the best interests of the Mission

W A Brown in Cornforth & Brown (2014)

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It’s all about decisions….

And the single most important

driver of quality decisions is

behaviour…..

‘Complex decision making is by its nature

a motivated, cognitive process’W A Brown on Cornforth & Brown 2014:86

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What are the enablers & barriers

to effective decision making?

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Effective decision making in meetings

Enablers:

• Review of past

decisions

• High quality

documents

• Time for debate &

challenge

• Timely closure

• Clarity on actions

Barriers:

• Dominant characters

• Insufficient attention

to risk

• Matters brought for

sign off

• Complaisance

• Intransigence

ICSA 2013(86)

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Exploring generative thinking in the boardroom

Generative thinking is:

• Higher level thinking…

• Right brain, tapping feelings and insights

• Asking and focussing on better questions…springs from

curiosity and is playful and inventive

• Considering the future and longer term…

• Framing issues and finding meaning…exploring why…

It’s one part of ‘tri-modal’ thinking – to be used as warranted –

moving from one mode to the next seamlessly… (swarm of bees)

Asking the right questions at the right time…

Chait, Ryan, Taylor 2005

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Fiduciary Mode

(ensuring proper

stewardship of tangible

assets)

Strategic Mode

(in partnership with management)

Generative Mode

(being ‘supportively

inquisitive’)

Making sense of our world

Making sure we are doing the right things

Ensuring things are done right

Three

governance

mind-sets

Adapted from Chait, Ryan, Taylor 2005

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Exploring critical thinking in the boardroom

• Design the meeting to tap the brainpower of trustees: time

• Switch ‘my’ brain on to critical thinking: ‘the art of analysing and

evaluating thinking with a view to improving it’ – self-corrective

• Get rid of impediments such as:• Not wanting to be wrong/being certain you’re right

• Social loafing and ‘groupthink’

• Groupthink

• Focus on sense-making, framing and asking questions and

engage in real dialogue – listen with the intent to understand

• Move from dialogue to discussion

Trower 2013

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Questions to aid critical thinking

Governance Mindset Sample questions..

Generative

Strategic

Fiduciary

Paul & Elder 2008 in Trower 2013(9)

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Designing the meeting and the

annual calendar to tap the

brainpower of trustees

What approaches can we use?

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What difference can the Chair make

to tapping the brainpower of

trustees?

Consider the approaches, tactics and

strategies the Chair can employ to ensure

Trustees shift to critical and generative

thinking as appropriate.

www.cass.city.ac.uk


The board as a high performing team ensuring

effective participation in meetings

• HPT = small number of people with complementary skills

equally committed to a common purpose for which they hold

themselves mutually accountable and who are deeply

committed to one another’s personal growth and success

• How to create this:• Pay attention to board composition, including the mix of minds

• Ensure a shared sense of purpose and meaningful goals

• Make values and norms explicit

• Provide new trustee induction and mentoring

• Measure team performance

• Ensure a skilled Chair

Katzenbach & Smith 2006

Trower 2013

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What are the key BEHAVIOURS we require of

nonprofit trustees?

• Think about being a member of a HPT…

• Think about participation and engagement

• Think about effective decision making…

What behaviours must we look for when we recruit

and develop Trustees?

www.cass.city.ac.uk


It’s all about engagement…

‘Complex decision making is by its nature a motivated,

cognitive process’

• How individuals share knowledge, engage in discussion and

challenge ideas

• Three stages: processing information; interpretation &

discussion; judgement

• Effective board members feel able to speak up to share ideas

and challenge positions, including the attractive status quo

• Engagement has 4 psychological antecedents:• Meaningfulness – belief that it’s important and ‘I’m’ accountable

• An appreciation of discussion and deliberation

• A belief in ‘my’ ability to perform

• Feeling of trust and safety to take risks

W A Brown on Cornforth & Brown 2014:86

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Board Involvement in Strategy

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The purpose of this session is to consider…

• What strategy is

• The Board’s ‘formal’ role in relation to strategy

• What does that look like in practice? The ‘how’?

• When should Boards engage with strategy?

• What does this mean for your organisation?

www.cass.city.ac.uk


What is strategy?

Making astute decisions about what to do next……

• Giving an organisation purpose and direction (reflects your objects)

• How you will meet stakeholder needs, now and in the future to maximise impact

and create value

• A means of motivating staff, volunteers, the Board

• How you respond to change and threats, make the most of opportunities

• Provides a framework for decision making and setting priorities

• States where you focus resources

• Top down vs bottom up? http://knowhownonprofit.org/organisation/strategy/whatis

http://knowhownonprofit.org/organisation/strategy/whatis

www.cass.city.ac.uk


Charity Commission - Hallmarks of an effective charity

1. Clear about its purpose and direction

2. A strong board

3. Fit for purpose

4. Learns & improves

5. Financially sound and prudent

6. Accountable and transparent

www.cass.city.ac.uk


Code of Good Governance

1. Understanding of role

2. Ensuring delivery of organisational purpose

3. Working effectively as individuals and a team

4. Exercising effective control

5. Behaving with integrity

6. Being open and accountable

Good Governance – a code for the voluntary and community sector

(2nd edition October 2010)

www.cass.city.ac.uk


Clarity of purpose and steadfastly focused on it…

The whole board is clear about who and what you exist for

and the difference you want to make. Together you have

identified and made the big decisions about priorities and

share a set of values that guide your work together and

frame your decision making.

Ref: A Chair’s Compass, Assn of Chairs 2014

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Question: What are the key ingredients for

strategy formulation involving the Board?

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It is not about….

• About imposing your will as trustees – ‘you shall’…or I’ve had a

good idea….why don’t we….a contact of mine said that we

should….

• Rubber stamping a strategy document drawn up by the staff or

other board members in isolation

• Creating a document the size of a telephone directory (and then

ignoring it for 3 or more years) – 8 pages will do!

• Creating a series of unrealistic, unachievable goals

• Losing sight of the people you serve (and your objects)

www.cass.city.ac.uk


Vision: To end preventable loss of life at sea

Purpose: The RNLI saves lives at sea.

Our vision is to bring forward the day when all cancers

are cured

We believe that everyone should have a safe, secure and

affordable home.

Purpose: We will strive every day to give people the help

they need and campaign relentlessly to achieve our

vision of a home for everyone.

www.cass.city.ac.uk


How?

www.cass.city.ac.uk


The Strategy Toolkit1.Getting the

Direction Right

3.Options and

Choices

4.Planning

5.Implementation

6.Evaluation

2.Environmental

Analysis

Ref: Tools for Tomorrow 2012

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Key documents

• Strategic Plan - broad strategic direction, budget

• Strategy Map – the few select things you must do – key

strategic objectives. Summary of strategy that leads to…

• Strategy Matrix – list of key initiatives, who, success

measures; focus on important data that leads to…

• Balanced Scorecard – regular report showing

performance against indicators and targets. Linked to….

• Regular Board reports – enables stewardship

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What does board involvement in strategy look like in

practice for your organisation?

……..How do you do it?

• What do you do well?

• What could you differently?

Take a moment with a neighbour to consider..

www.cass.city.ac.uk


How does good strategy happen? Effective meetings, purposeful agendas and papers, away days, an on-

going conversation (not a one off exercise) – 30% of meeting time

Briefings on the external environment / horizon scanning/ bringing the

outside in as trustees

Understanding of risk – what might get in the way?

Clear organisational values to guide decision making esp. in tough times

Conversation, time, engagement

Focusing on the impact you achieve for those you serve

Strong skills mix on the Board – no expertise gaps

www.cass.city.ac.uk


Warning signs….pay attention if your Board is….

• Losing sight of the people you serve

• Giving undue weight to those who are most vocal

• Fudging or avoiding key decisions or where there is too little debate

• Thinking that success is easily achieved

• Complacent about a platitudinous set of values that don’t guide

practice

• Losing touch with the core values of the organisation

• Making decisions that don’t advance the core purpose

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When should you be thinking strategically?

www.cass.city.ac.uk


Working in 3

governance modes

Fiduciary Mode

(ensuring proper stewardship of

tangible assets)

Strategic Mode

(in partnership with management)

Generative Mode

(being supportively

inquisitive, creative,

out of the box

thinking; source of

leadership)

3. Making sense of our world

2. Making sure we are doing the right things

1. Ensuring things are done right

Copeman on Governance as Leadership, Chait, Ryan & Taylor 2005

www.cass.city.ac.uk


Type 3: Generative Thinking

• Staff more used to generative thinking as part of their

everyday roles; but

• Boards are often not present when and where the most

important action occurs

• Sense making, reflective, different way of thinking,

different view and mind-set, board as an asset

www.cass.city.ac.uk


The Generative CurveOpportunity for generative work

Time

Typical Board’s

involvement

curve

The opportunity

for influence

declines as

issues are framed

and converted

into strategic

options and plans

over time

Sense making and

problem framing

Strategies

and policies

Plans, strategies,

execution

www.cass.city.ac.uk


Second curve thinking

Ref: Charles Handy, the Second Curve 2015

www.cass.city.ac.uk


Some characteristics shared by effective

boards: Constant conversation

about the future

Foster an adaptive capacity

Structure a focus on

generative thinking

Review own performance

Trustees who are both

specialist and generalist

Open two-way communications

Ref: Caroline Copeman

www.cass.city.ac.uk


• Have clarity about purpose, value and impact

• Engage those you want to play a part

• Listen for wisdom

• Create and update your mental map

Thinking

• Keep it simple & flexible

• Provide explicit one liners that can be translated into ‘great music’

• Have contingencies

Planning • Integrate into the day to day

• Evaluate against success criteria

• Revise and re-evaluate

Action

John Adair on strategic thinking, planning and action

Copeman on Adair 2010

www.cass.city.ac.uk


Senior staff Board

Policy origination

Policy approval

Policy implementation

Monitoring

Review and amendment

Copeman on Carver in Fishel 2003

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Strategy as a dynamic ‘real time’ conversation

• Dynamic because we can’t stand still and must always look

ahead with energy for our beneficiaries

• Real time because we live in a changing world and our mental

maps need to be constantly adjusting: strategy is always a work

in progress and must adapt to emergent needs

• Conversation because strategy is also the organisation’s story,

both backwards and forwards, and will enable us to soar if we

invest time in challenging, sharing and building

Ref: Copeman on La Piana 2005

www.cass.city.ac.uk


Group work - At your table consider:

When your Board has strategy discussions and

makes strategic decisions:

• How often do these discussions happen?

• Do you feel that that amount of time spent is:

• Just right?

• Too much?

• Not enough?

www.cass.city.ac.uk


Strategy screen – making decisions

Option 1 Option 2 Option 3

Fit with our mission and values

Impact on beneficiaries

Filling known gap

We are best placed to do this (no-

one can do it better)

Capacity to pursue

Impact of change on the organisation

Sustainability

www.cass.city.ac.uk


What are your decision making criteria?

…….What would you add to your strategy screen?

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Type 3: Generative Governing - how might Boards

position themselves better? By using the advantages

at their disposal:

Power Board has the power, authority, legitimacy and indeed

the obligation to perform generative work

Plurality Involving stakeholders i.e. those with different

perspectives and angles of vision leads to perceptive

reformulations and keen insights: Including Boards

Position Trustees are well positioned at the edge of the

organisation i.e. near enough to the operating core but

far enough to have perspective and detachment. See the

larger picture and overall patterns. On the ‘balcony’

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Summary

Why should the Board involve itself in Strategy?

Because it is core to why we exist and what we stand for, and part of our

fiduciary responsibilities

How should the Board involve itself in Strategy?

Through effective meetings, good board papers , conversation, information

When should the Board involve itself in Strategy?

Consider generative thinking and the generative curve / the second curve

www.cass.city.ac.uk


Strategy in your organisation

• In your table groups, identify one or two changes or

actions you are able to make on your return to work to

enable you to build strategy into your governance more

effectively.

• What could you do more of, less of, or differently?

www.cass.city.ac.uk


Items in the resource bank for this session

• Good practice guide

• Slides

• Notes of your conversations (to follow)

www.cass.city.ac.uk


Final reflections on day 1

Close at 4pm

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