Checklist: Business-charity culture clash

By governance expert Mike Hudson

Mike Hudson
Mike Hudson

Trustees from business backgrounds can add value to a board, but they need to understand that business directors and charity trustees perform different roles.

Businesses have boards, with executive and non-executive directors sharing the same legal responsibilities. They have a duty to maximise shareholder interests and they meet more frequently than charity boards. But in charities trustees carry ultimate responsibility. Their primary duty is to deliver charitable objectives and they are more concerned with policy and strategy.

Business and charity boards both use the language of strategy, performance and governance, so it is often assumed that their roles are similar. In fact, they are subtly different: charity boards don't have profit as a measure of success - they have to consider more stakeholder groups.

These differences can lead to tensions when trustees from business and charity backgrounds make different assumptions about their roles. However, I have found that exploring these differences in an open and inquisitive way enables charities to benefit more from business perspectives and gives business people new insights to take back to their companies.

Topics:
Governance Advice

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