Peter Stanford: Are our checks and balances working properly?

The essential flow of power backwards and forwards is missing from the relationship between the Charity Commission and the sector, writes our columnist

Peter Collins
Peter Collins

The United States constitution is rightly proud of its checks and balances, designed to restrain any of the three branches of government – legislative, executive and judicial – from becoming too powerful. Quite how well those checks and balances work in practice is a story that will run and run in the weeks and months ahead with the arrival in the White House of a president, in the shape of Donald Trump, riding a popular wave and intent on getting his own way and getting it now.

The unfolding drama prompts me to reflect on what checks and balances we have in our own sector between the various branches of governance. How easy is it, for example, for a charismatic chief executive to ride roughshod over the trustee board? The case of Kids Company seems to indicate that it can happen. And there are plenty of boards that, often with the best of intentions, so micromanage the senior management team that they lose sight of the essential role of trustees to take the longer, strategic view.

I’m not quite sure if we can properly characterise the Charity Commission as our sector’s judiciary, especially when its board members utter such un-judge-like instructions to charities as "stick to your knitting", as the academic Gwythian Prins did when he was on the board. But cut me a bit of slack for the sake of argument. It is, after all, at the commission’s door that problems in the other two "branches" land when chief executives and boards get themselves in a tangle.

In general, I would suggest, the checks and balances between trustees and management teams work reasonably well. The message that the biggest cause of chaos and failure in a charity is when the chief executive and chair fall out appears to have finally got through. However, because so much of what goes on in charities, especially the smaller ones, still depends on decisions being made in an atmosphere of trust and mutual support, it only takes one narcissist (a word we are hearing a lot of late) to throw a spanner in the works.

And our "judiciary"? The Charity Commission’s focus has certainly shifted under William Shawcross’s leadership – partly because of cutbacks in its budget and partly out of inclination – from being a smoother-over, a provider of good counsel and gentle nudges towards better behaviour when charities are getting near the cliff edge, to something tougher and more business-focused. Among three new members announced last November are Paul Martin, a security adviser, and Catherine Quinn, from Oxford University’s Saïd Business School.

The most senior judicial appointments in the US are, of course, subject to confirmation from other arms of its system of checks and balances. Neil Gorsuch, Donald Trump’s choice for the vacant seat in the Supreme Court, is now facing scrutiny by Congress. An essential part, then, of the checks and balances is that flow of power backwards and forwards.

And that is potentially also just as applicable to our own sector. Trustees have to involve the management team in their big strategic decisions if they aren’t to appear arbitrary. The other way round, it is no good chief executives going out on a limb on major initiatives without winning the trustees’ approval.

But what role should charities themselves – whether it be the senior management teams or the trustees – play in the composition of the Charity Commission? At present power flows only one way: down from the commission to the sector it oversees. What if it went both ways, on the US constitutional mode? Hard to envisage, but I would suggest, if such a three-way exchange was in place, the commission might not have become filled as it has of late with board members whose main qualification appears to be that they are outsiders to our sector.

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