OPINION: Thinkpiece - Charities must overhaul rules of governance

Third Sector (8 October) raised the important governance issue of whether paid executives could also be trustees ('main board' directors) of charities.

Considering the attention that has been paid to business corporate governance over the last ten years, it is interesting that the NCVO argues for the status quo in charity governance to be based on a model dating back to 1601.

Surely the time is right for trustees of charities, particularly those incorporated as companies limited by guarantee, to be allowed to introduce a board structure similar to that of the commercial sector, provided it incorporates the accepted tenets of corporate governance and the Combined Code. It would, however, be reasonable for theCommission to insist that non-executive directors (trustees) are in the majority, and that the remuneration committee should be drawn from non-executives and chaired by a non-executive director other than the chairman. As to the issue of paying 'employee' salaries to trustees, this is easily resolved. An executive director in business has two distinct roles - a management function and a corporate responsibility on the board. The salaried charity executive should be paid for the former but not the latter.

The advantages for a major service charity like St Andrew's of having a unitary main board are self-evident. Proper debate among equals with shared responsibility and accountability is far more effective, and it must be right for charity top executives, by becoming directors, to be as accountable as commercial company directors. How can it be argued that they should be allowed to hide behind their over-cosy position of being 'servants of the trustees'? A charity senior executive, and particularly a chief executive, unwilling to accept trustee responsibility is, in my view, not worthy of the job.

This debate on charity governance must continue, as I have yet to hear a convincing argument as to why, 402 years on, the larger not-for-profit charitable limited companies shouldn't adopt governance arrangements that mirror the 'for-profit' sector. There is no evidence to indicate that business corporate governance has proven less efficacious than that currently favoured by the Charity Commission. Sir John Brigstocke is group chief executive of St Andrew's Group of Hospitals and a director of the Independent Healthcare Association

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