Report highlights divisions between CEOs and Chairs

A mismatch between the views of chief executives and board members has emerged as a key issue in an investigative report into the ‘behaviours and effectiveness of the modern charity board.’ The report, ‘Governing with Intent’, finds that in general, governance is “much improved” compared to the picture painted in a key Charity Commission report from 20 years ago, but there are a number of areas where boards and their chief executives appear to be at odds.

Produced by solicitors Bates Wells Braithwaite, the report notes that the study’s findings “confirm the perception that board members pay more attention than they should to what is happening in their organisations” and can be “subtly drawn” to micro managing, instead of macro governing. This was perhaps the biggest issue for the boards, alongside a general unwillingness to submit to self-evaluations, whilst readily supporting assessments of chief executives.

Among responses from 300 trustees, chairs, chief executives and senior managers, only 15% of chief executives thought that their trustee board took risks, compared to the significantly larger 37% of board members who felt the same. More than a fifth of chief executives believed that trustee boards are risk averse – which, in an age of “growth in social investment”, and with a recognition of “the added value brought about by healthy governance” prompted the report to issue a strong recommendation for “further exploration” of risk.

There was an equal mismatch in opinions about the relationship between the chair and the chief executive. 87% of chief executives, compared to 74% of board members felt as if the chief executive’s performance became stronger when working with a chair; and almost a fifth of trustee board members did not think there is candour in the relationship between the chief executive and the board. The report recommends a re-alignment, with bridges built between management and governance, noting that it is ‘crucial’ that a greater number of board members appreciate the significance of the relationship between the two.

The report coincides with the release of updated guidance from the Charity Commission, clarifying the legal obligations of a trustee. The new guidance, in its publication ‘The Essential Trustee’, aims to ensure that all trustees are aware of their duties – in particular to sharpen the distinction between what a trustee ‘must’ do, and what a trustee ‘should’ do, given that these two have different legal consequences.

The guidelines apply to any director or trustee of any charity, whether required to register, not required to register, or required to register but having not yet done so. They echo the findings in ‘Governing with Intent’ when noting importance of the dual relationship between the chair and chief executive, describing this as  an “integral ingredient” in the success or failure of an organisation, and saying that “a dysfunctional relationship can cause serious damage.” Reference is made too to concerns about an inwardly-focused board, and the document reminds trustees that they must ensure their charity is carrying out its purposes for the public benefit: “You and your co-trustees must make sure that everything your charity does helps (or is intended to help) to achieve the purposes for which it is set up.”