Charity Commission's governance 'risks disconnect between board and organisation', says review

A summary of a review of the regulator's governance, written by Alan Downey, formerly of KPMG, says there should be comprehensive induction and development programmes for new board members

Regulator: recommendations of review accepted
Regulator: recommendations of review accepted

The governance structure of the Charity Commission means there is "a risk of a disconnect between the board and the rest of the organisation", according to a summary of a review of the commission’s governance framework and board effectiveness.

Because of this, the summary says, "the board, the chief executive and the directors should focus on achieving a strong sense of connection and common purpose".

The two-page summary gives no further explanation and the commission has declined to publish the full review, conducted by Alan Downey, a former partner at the financial services firm KPMG and a member of the commission’s audit and risk committee.

The summary says the commission should put in place a comprehensive induction programme for new board members and a programme of board development activity, focusing on board performance and key strategic challenges.

The recommendations of the review have been accepted by the commission and built into a revised governance framework, published today. The framework sets out procedures for the conduct of its business and the roles of the board, chair, chief executive and directors.

The review was recommended by the National Audit Office, which warned in January that the board’s "continuing close involvement in executive matters" could become the norm. "There is a risk that if the board is too involved in executive decisions for an extended period, the important separation between executive and non-executive becomes blurred, impairing the board’s independence, which is critical to its role of holding the executive to account," it said.

The summary of Downey’s review says that the board has overall responsibility and can, under charity law, decide which functions to reserve to itself and which to delegate to staff. The distinction between reserved and delegated functions is broadly similar to that between non-executive and executive functions in other public bodies, it says.

"But the board is not obliged to observe that distinction in deciding what to reserve and what to delegate," it says. "It has the authority to intervene directly in operational matters, particularly those which affect the commission’s reputation and performance.

"For reasons of accountability and transparency, however, it is important to maintain a distinction between the exercise of delegated functions and the oversight and scrutiny of how they are carried out. It should always be clear whether the board is exercising a function itself, or overseeing the conduct of a delegated function."

The summary says that the number of days board members may work, which was more than doubled in January to a maximum of 44 days a year "for the foreseeable future" by the Minister for Civil Society, Rob Wilson, "appears to be consistent with the legitimate workload of board members".

The revised governance framework says that commission directors should escalate "high-risk or high-impact cases" to the board, including those involving test cases, complex litigation, significant controversy or political sensitivity, issues raised by the Office for Civil Society or personal impact on members of the commission.

Directors should also, it says, escalate matters involving "damage to the charity or the commission’s reputation or to public trust and confidence, such as adverse events or negative media interest".

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