Monday, 6 October 2014

What constitutes good governance? - from David Gold, CEO of Prospectus

Earlier this year Barclays launched a new, comprehensive guide to support its Philanthropy Service for its high net worth clients. Philanthropy: Your Guide to Giving provides step-by-step advice and answers questions about all aspects of charitable giving.

The guide, the first of its kind from a UK private bank, will be used by Barclays as part of the broader Philanthropy Service that aims to engage, educate and support clients with their desire to become more engaged contributing charities – financially and beyond.

David Gold, CEO of Prospectus, was interviewed to provide his insight on “What Constitutes Good Governance?” drawing on his extensive experience of Trusteeship and governance, having served on a number of boards throughout his career.

You can read the full extract below as well as on the Prospectus website. Find further information on Barclays Philanthropy Service here and find further information on our governance services here.

What Constitutes Good Governance?

In our view, at the most simple level good governance ensures that a charity is focused closely on its mission, that it meets its charitable objects to the best of its ability, and that it complies with the controls and regulations required of it.

However, for some deeper insights on this topic we interviewed one of our contributors, David Gold. David has worked in the not-for-profit sector for many years, running a recruitment company, Prospectus, which places CEOs and Chairs in charities; and he has been a Trustee on various charity Boards throughout his career. He draws a very clear picture of good governance, defining it as, “falling into three primary areas: generative thinking strategic and fiduciary responsibilities.” So firstly, what does he mean by generative thinking?

David responds: “I mean a Board that stands back occasionally and looks widely at the issue or cause they are dealing with to consider the status of it today rather than how it was years ago. Has the cause focus altered or shifted? Is technology influencing or advancing it? Who is doing new work? What are the new challenges? This could be termed a ‘blank piece of paper’ approach.

Then you can consider how your own organisation is contributing or responding to that external view. Is it taking account of the current environment? Is it building links with new entrants, or undertaking new or adapted research, or even eliminating programmes that have become obsolete or that duplicate those of others? The point here is to ensure that you don’t just view the cause in a narrow frame from your own organisation’s perspective, but that you continually look at its wider profile, achievements, changes and impact, and use that broader perspective to set the context and benchmarks for your own activity.”

David believes that good governance also means being strategic. Here he stresses that it is the CEO and the senior management who really determine the organisation’s strategy. “The job of the Board is to support and constructively critique the strategy, and to request additions or refinements before signing it off, but not to invent it themselves. Of course they should regularly monitor progress against the plan, and expect the CEO to monitor and report back to them. Another vital role in the implementation of strategy is to ensure that the CEO has the resources (people, money, infrastructure) to be able to execute the strategy effectively. All too often Boards ask for growth on the one hand and then take a penny-pinching stance on staff costs on the other. So be conscious of how you support your CEO and how you can make life easier for him or her and for the clients of the organisation.”

David’s final requirement for good governance is the capability to manage fiduciary responsibilities well. “Obviously you need to pay attention to your compliance with charity laws and regulations on accounting, financial management and reporting. One way to manage the detail of all this is by setting up a financial sub-committee of the Board, so that only policy level discussions on finance are taken on the main Board agenda. Too many Boards end up discussing operational finances like photocopier contracts and telephone charges when this can be done by a small sub-group of Trustees who have the requisite finance skills and knowledge of risk and compliance.”

David sums up what makes a good Board in his opinion: “A good Board is one populated by those who are strongly committed as Trustees, all marching in the same direction, and full engaged with the charity. The trick is to pick people from diverse backgrounds who really care about your mission and have some passion for it. Above all it should be an opportunity for everyone participating to learn and to have fun. And finally, Boards operating really well show faith and trust in their CEO and senior management team.”

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