For charity organisations, the board of trustees acts in unity as the backbone of the organisation. The board oversees that the charity has a clear set of actionable and attainable goals that are in line with its vision. Trustees are also responsible for appointing heads of staff and making sure that the organisation it is meeting all financial and legal obligations. As volunteers, trustees are not compensated for their work, though they are held legally responsible for the charity organisation they oversee.
As such, trustee members have much on their plates and much to lose – as does the charity organisation does by selecting them. Charities depend heavily on the trustees for their success, so establishing and maintaining a strong board is of great importance to charity organisations.
Whether your charity is in the process of establishing or strengthening the board, here are five steps to achieving the financial savvy you need in a successful charity organisation.
- Diversity is key
If you’re establishing or building upon your board of trustees, selecting a diverse group of individuals with distinct skills is a top priority. By forming a board of people with different backgrounds and expertise, your trustees will be able to solve problems from a broad perspective.
Even if your board is already in place, you can enhance the diversity of the board by offering invitations to training courses designed specifically for trustees. You can also highlight the specialties that your trustees already have by sharing information about each individual trustee and their backgrounds. By bringing their differences into focus and highlighting what makes each member unique, trustees can work off of one another’s skills.
- Spread the responsibility
A strong board of trustees is both collectively willing to take responsibility for managing their charity’s resources. While individual trustees might take the lead on various tasks, a strong board is unified in its approach on all fronts. When there is a balanced share of responsibility amongst board members, regardless of who is leading a specific task, there is lesser risk of oversight or mismanagement, including fraud and theft.
An organisation can help the board feel more confident in taking responsibility for progress by highlighting their individual contributions and collective achievements within the organisation.
- Share the knowledge
Relying solely on a treasurer for all financial management is a risky strategy. Each trustee role requires a lot of organisation and attention. By taking a unified approach to each aspect of general management takes some of the pressure off of the members. If something is overlooked, another member can catch the mistake before it’s made. When there is only one pair of eyes looking over all financial matters or any other matter, errors are more common and often have larger consequences.
Decisions are also better informed when more than one contributors express input. This goes back to encouraging a broad perspective for approaching specific concerns. Board members who invest time in learning more about each aspect of their charity organisation are more able support one another.
- Adapt your resources to your organisation
Often times trustee members are elected because of their experience and interest in other realms. It is important to either include board members who are familiar with the rules and regulations specific to charities, or to educate the board on such particularities – or better yet, both.
The areas that small charities often struggle with are those specific to charity finances, like VAT exemptions and restricted funds. It is necessary to utilise the knowledge and skills of all those involved in charity organisations, but also to adapt these resources to the context of charity work with great attention.
Depending on the resources available, the amount of outsourcing roles and tasks will vary. However, some level of outsourcing should always be a priority. Whether you find an expert willing to donate some time to look over your finished paperwork, hire an attorney for one hour to analyse and translate the research you’ve already done, or hire an accountant to manage your charity’s funds entirely – outsource regularly to make up for the skills your board is lacking.
After all, no board is perfect. But most want to see an organisation succeed at the highest possible level. Assess and utilise the skills and resources available to you, and don’t hesitate to consult outside sources to fill in the blanks.
About the Author: Nick Brown is a partner and Head of Charity Audits at Brighton Accountants Plummer Parsons. He has been a chartered accountant since 1983 and, as well as being a member of the Information Technology Faculty of the Institute of Chartered Accountants, he is also an expert on the charity and not for profit sector, holding a diploma in Charity Accounting.