Finance: Advice Line - Pesh Framjee on finance and governance

Q: We have a large board and a smaller executive committee - what is the right size for a trustee board?

My experience is that the optimum size of a board is about 12, plus the members of the senior management team that take part in the discussions.

A: larger board usually becomes an information-receiving body rather than an effective decision-making team.

The option of a large board with a smaller 'executive committee' was once seen as the correct answer, but is increasingly being rejected because it creates an inner cabal that marginalises the main board. The Deakin report Meeting the Challenge of Change stated: "A common problem is created by trying to resolve composition dilemmas by adding more people. Experience in many settings has shown that large boards are generally ineffective. Once numbers rise much above 12 to 15, discussion and debate becomes difficult. What generally happens is that an inner caucus emerges that takes the key decisions and presents them to the board for ratification.

This leaves the board with responsibility but not power, and is generally ineffectual. While some have gone further and set up two-tier structures of a council and an executive committee, the result is rarely satisfactory and can not withstand the tension of a crisis."

A survey commissioned by the Charity Commission showed that about 92% of the respondents had boards with 15 or less trustees. The thinking is that less is often better, and other skills and competencies can be provided through management, ad hoc working groups and professional advisors as and when they are needed.

- Pesh Framjee is head of the non profit unit at Deloitte and special advisor to CFDG. No liability arises to the author, his firm or Third Sector.

Send your questions to pesh.framjee@haynet.com.

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