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Being a good charity manager includes being a good people manager, as the articles below show.

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Avoiding media attention by having better governance

A story about an underperforming charity is nectar to a journalist; it usually has everything needed to promote the newspaper. A touch of righteous indignation about the expenditure of public money and errors of the charity goes a long way to obscuring many of the real issues faced by a charity leading to both loud headlines and adverse social media trending.

A trawl for positive charity stories reveals such items as:

  • Charity rankings in the annual Stonewall list of the best LGBT+ employers.
  • Inclusion in the best UK charities to work for in The Times annual list.
  • Centrepoint’s helpline for the young homeless.

However, the negative stories outweigh the positive in column inches.

A common factor in all media stories is that they can often be tracked back to management or governance issues. Taking a rather sweeping look, the main negative stories of the last three years are the fundraising scandal, charity data protection financial penalties and the failure of Kids Company. All have at their roots massive management and governance failures.

Notwithstanding the media, the vast majority of charities trundle along without making national headlines, achieving their objects and making a considerable difference in their communities. Is this because they are lucky or because they have established an effective management regime?

Ultimate responsibility

Whilst effective charity management is usually a matter for the chief executive, ultimate responsibility for the charity resides with the trustees. It is the duty of the trustees to ensure effective governance, and one strand of this is effective management.

Being a charity trustee is not easy. As charities get larger, reduced trustee involvement in delivery and an increased number of staff means a balance must be achieved between trustee duties such as ensuring effective governance and not overstepping their bounds and getting involved in day to day operations delegated to the management team.

Setting controls can be complex and whilst most trustees are excellent at delegating financial controls and ensuring that there are limits on financial decisions which can be delegated, this is not the sole area where controls should be set. Where trustees have not been as effective is the delegation of the approval of risk across the organisation. Risks have to be actively managed and many charities have not properly undertaken this task.

Following the tragic death of Olive Cooke, a fundraiser of many years’ experience, it became clear that many charities had entered into a wide variety of arrangements, including data sales and contracts with professional fundraisers, where risk was not effectively managed. The risks which had been ignored were wide ranging including items such as a lack of contractual supervision, a failure to obtain legal commitments to comply with codes of practice, poor control of personal data and reputational vulnerability.

In the aftermath it became clear that trustees had delegated the power to sign contracts with considerable risks to operational managers within the charity without properly managing those risks. This was not only a wake-up call for trustees at many charities, but resulted in a change in governance throughout the sector.

The main lesson that was learned throughout this process was that delegation is acceptable, but only when this is accompanied by follow-up, examination and audit. Trustees in many charities have now changed procedures to ensure that they are much more involved in setting policy at all levels of the organisation and also building reporting, review and audit elements into their procedures. However, this only goes so far and really to achieve effective management, trustees also need to ensure they do take action when this is required.

Implementing good governance

Trustees have ultimate responsibility for all activities of a charity, and good governance is not only setting policies and parameters, it is making sure that these are properly followed. A trustee’s role is not simply to attend meetings, but amongst other activities, to set strategy, ensure the correct governance structure is in place and to make sure that this is being carried out effectively.

A trustee's role is not an easy one, as they must balance their control with not interfering unduly in the day to day operations of a charity. They are there to oversee and to protect the assets and reputation of the charity and set the overarching aims, whilst not to get too involved in the minutiae of running the charity.

A trustee's role gets harder when the trustees are elected by the membership as often competing pressures make achieving balance harder. This can also be compounded by not achieving a skills balance on the board and a lack of governance experience. This can result in disputes between the board and the CEO. Often these can be managed appropriately by professional advice and resolution achieved. However, this is not always possible and the issues can become public, the most recent example being the breakdown between the CEO and board at the RSPCA.

The Charity Commission

The overriding issue within a charity is that the trustees, who may not be following good practice, are responsible for ensuring good practice and making the changes necessary to bring the charity back in line. The Charity Commission is not permitted to make decisions in place of the trustees. Therefore, whilst the Commission can advise, it can only take action when the issues become serious and its advice has been ignored. Only if the charity is not capable of running its own affairs can the Commission remove trustees or appoint a charity manager to run the charity.

Where a trustee has been removed, the Commission may ban that individual from being a trustee of any charity in the future, permanently or for a specific period. Where a charity manager has been appointed their role will be to bring the charity back into line before appointing a new board to continue operations or to wind up the charity, transferring its activities to another charity.

Help for trustees

Good governance in charities is important for the overall health of the sector. A number of bodies are in place to achieve this aim. Assistance for charity chairmen is available through the Association of Chairs and assistance for Chief Executives is available through ACEVO. Both of these organisations have been working on a Charity Governance Code which has recently been published by the Good Governance Steering Group.

The code describes itself as not being a legal or regulatory requirement. It draws upon, but is fundamentally different from, the Commission’s guidance. It sets the principles and recommended practice for good governance and is deliberately aspirational. It was created with the assistance of over 200 charities and the Commission was an observer at meetings of the group that developed the code.

By far the majority of charities are run well. The fact that they have not attracted unwelcome media attention, is due to the commitment of trustees and not luck. Using the resources which are available to charities along with appropriate legal and governance advisers, charities and trustees will continue to go from strength to strength. The most important thing is not to leave governance and management on the back-burner, always review, challenge yourselves and your teams to be the best version of the charity that it is possible to be.

We have one of the most vibrant and ethical charity sectors in the world and should continue to develop these skills into new and innovative management structures.

McCarthy Denning's Benjamin James - it is the duty of the trustees to ensure effective governance, and one strand of this is effective management.
"A trustee's role is not an easy one, as they must balance their control with not interfering unduly in the day to day operations of a charity."
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Safeguard your charity from fraud

The long term ramifications of being a victim of fraud can be devastating for charities – especially as a damaged reputation can discourage donors from making future contributions. Therefore it’s paramount for trustees to make themselves aware of the evolving risks - what the latest scams are and the preventive solutions now available, so that the opportunity for fraud is managed and minimised at every level.

Charities of all shapes and sizes face increasingly sophisticated, targeted, fraud that can be categorised into two types - internal and external. External fraud involves an outside body attempting to extract money from a charity. For example, this could include issuing and receiving payment from a false invoice, unauthorised fundraising under the charity’s name and phishing emails.

Internal fraud examples

Internal fraud is committed by a connected party – it could be an employee in a senior position within the charity, or any person who has access to the financial systems or assets. Scenario examples could include a CEO or finance director siphoning away or running off with significant funds, the capture of donations by an employee, wrongful access to finance systems and distribution of funds, or staff claiming false expenses.

However, there should be a clear distinction between fraud and poor internal controls that may give the appearance of fraud - but actually turn out to be either a compliance issue or a procedural policy not being followed.

All charities are expected to have finance policies in place to minimise the risk of fraud and ensure that relevant controls are implemented to stop it from occurring. However, typically these controls are only tested retrospectively, so the potential for fraud is still high. Proactively countering the scope for fraud is a much more effective option than retrospective testing.

The responsibility of trustees

Ultimately it’s the responsibility and legal obligation of the charity trustees to safeguard their charity’s finances and drive any system or process changes to counter the dangers of fraud. The trustees need to have absolute confidence that internal and external fraud is guarded against and therefore ensure that accountability measures are introduced at every management level.

Increasingly, more charities and their trustees are turning to sophisticated, multi-featured, finance systems to help them fulfil organisation-wide requirements. These systems can help you put in place and enforce highly effective measures and financial controls to deter fraudsters.

To ensure the robustness of a charity’s financial controls, finance systems should enforce three key areas: staff access being limited to their authorised duties, segregation of duties and control over any changes to master records. If an employee has access to all aspects of a charity’s financial data, the potential for fraud is greatly increased. Controlling access security to particular processes or modules within your finance system helps align system needs with the prescribed tasks across the job roles throughout your finance team.

Implementing a segregation of duties control ensures that one finance team member can’t complete all stages of a particular process - whether it’s a payment or receipt, so at least two team members become responsible for this action.

Examples include: staff entering purchase orders cannot enter purchase invoices or authorise purchase ledger payments, and staff who raise sales invoices do not record or collect the money received. Another could be that all cheques above a certain amount should require at least the signature of the chairman of trustees and such expenditure should be reported at trustees' meetings.

Workflow management system

To achieve this, you must choose a financial management system with a workflow management engine to restrict staff completing the combination of actions required to make a payment or transaction. A workflow management engine allows bespoke business processes to be modelled.

With higher level finance systems, workflows can be initiated from a number of different places within your finance system, on an event trigger, an accounting rule or an action. Therefore approval scenarios can be created and predetermined actions performed, to make your financial processes secure - with a full audit trail.

For example, if a bank transfer is made over a prearranged limit, email alerts and approval requests are sent to the designated recipients - so staff cannot bypass the organisational chain of approval.

A workflow engine also protects charities’ master records. Using a comprehensive financial management solution, charities can limit the number of users who can access and edit master records – eliminating any unauthorised access. On top of this, many charities will design a system workflow to ensure that all changes are verified by at least one administrator.

A good finance system will also provide secure password encryption and regular forced password changing as a standard, reducing any unauthorised access to the system – internally and externally.

Monitor and detect

Proactively analysing financial data and identifying anomalies holds huge importance when it comes to detecting fraud. Active monitoring helps deter fraudsters while at the same time charities gain better control of their finances.

With a modern, integrated finance system, charities can gain real-time insight on financial information through one source, enabling senior staff members to dig deeper into data to prevent and detect fraud.

Budget checking is made a lot easier and efficient too. Budget holders can self-serve and obtain specific reports, receive email alerts regarding budget notifications - enabling them to discover anomalies far quicker than the norm. Thus swift, preventative action can be taken.

Key actions checklist

Here is a checklist to make your charity safer:

  • Implement access security – ensure that staff members can only access areas of the system that they need. Don't have a blanket "one size fits all" approach.
  • Implement system authorisation or multi-staff process for changes to master records, e.g. supplier/staff bank details.
  • Verification processes must be adhered to when changes are made to master records, e.g. independently contact supplier/staff, and request written confirmation for changes.
  • Segregate duties – staff members must be restricted so that they are unable to complete all stages of a particular finance process. If this is not possible due to staffing structures, data sourcing authorisation and review is vital.
  • Regularly review processes for potential loopholes and have random spot checking of audit trails to ensure compliance.
  • Reassure staff that these controls are in place to protect them and the charity rather than reflecting any doubt of their integrity.

PS Financials' Mat Smith - sophisticated, multi-featured finance systems can help charities put in place and enforce highly effective measures and financial controls to deter fraudsters.
"Implementing a segregation of duties control ensures that one finance team member can't complete all sections of a particular process..."
"A good finance system will...provide secure password encryption and regular forced password changing as a standard..."
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Giving priority to charity employees' mental health

Recently, I have visited a number of organisations to discuss their healthcare insurances and when I’ve raised the topical issue of mental health, the response has been along the lines of “We’re all mad here!” It always draws a smile but there is a serious side to employee wellbeing and the stresses of work and home life. Unfortunately, it is a subject that many employers chose to ignore or do not fully understand.

This is very unfortunate, particularly in the charity sector. So many people in the sector, especially those in the frontline of provision of care, advice and treatment of people with demanding situations, face stress and other mental health pressures themselves in an environment of increased workloads, diminishing adequacy of resources and adverse pressures on morale.

In many charities where there are field workers there exist trends of having these workers operate more on their own, with a reduction in personal physical contact with a central, regional or district office. While undoubtedly saving on premises and travel costs, and often being more convenient for field workers, operating from home can lead to them feeling more pressurised - with more responsibility and less physical contact with managers and support staff.

Still big factor

Evidence suggests that there has been a decline in general work absence from stress over the last decade, which is very encouraging. However, statistics still demonstrate that this is one of the largest single factors for sick days, accounting for 37% of work related ill health and 45% of days lost in 2015/16 alone. Put into perspective, this represents 11.7m days per year (2015/16) in the United Kingdom. 

The charity sector has a particular problem in that the demand for so many of its services is increasing in the face of pressures on its ability to deliver those services. This doesn't just affect field workers but also, for instance, contact centre staff, who will have the psychological pressures of not only a more intense work day but also the worry of knowing that the ultimate level of service may not be satisfactory.

Then, of course, there are the pressures of working under time limited contracts with third parties to deliver services and meet targets in conditions which may well have changed, with the worry that such contracts will not be renewed - followed by staff reduction within the charity.

So overall, no wonder stress and other mental health issues are inevitable issues of concern for charity managers - as long as they see them as such. It can be too tempting just to plough on regardless intently focused on the needs of the people the charity is trying to help, rather than thinking also of one's own employees.

The wider issue

Absenteeism and reduced levels of productivity have great financial and organisational consequences for any charity. Ignoring mental health and the reservations that surround the issue is ignoring a vast and damaging effect to our society – exacerbating the notion that mental health is different from or less of a priority than physical illnesses. With so many charities trying to change attitudes towards certain matters, the sector must stop itself falling into an attitude which needs to be changed.

Stiff upper lip

Close to a third of UK workers say they are not able to talk openly with their line manger if they are stressed and just 45% of those that have been diagnosed had told their employer.

After being diagnosed, 40% of individuals admitted they wouldn’t convey it to their colleagues because they don’t want to be treated differently. The stigma surrounding mental health and the consequent marginalisation of mentally ill people within society means that employers have “typically neglected to address it and still struggle to see mental health in the same way they see physical health.” (Simply Health – "The importance of addressing mental health issues in the workplace".)

Are we beginning to see a change in the way we deal with this issue? Certainly the right noises are beginning to be made and there have been some valuable initiatives. Following the launch of the Business in the Community Mental Health Toolkit last year, Dr Justin Varney, national lead for adult health and wellbeing at Public Health England, said: “All employers have a responsibility to support the health and wellbeing of their staff.”

Attitudes are changing across the UK and we are hearing more stories about how organisations are developing a workplace culture and prioritising the mental health of employees. It may seem burdensome to some employers who are under pressure to get the day job done and remain efficient. However, certainly for charities, healthy and productive employees are crucial to an organisation’s success.

Employees (and volunteers) are the biggest asset and make a charity what it is. It functions better when its people feel valued and comfortable by being supported financially, professionally and personally by their employer. This can only ease the situation, reduce absenteeism, increase productivity and motivation.

The role of insurance

There are insurance related solutions operated on a group basis which can be utilised by charity employers where facilities are provided for addressing health problems before they lead to significant or permanent absence from the workplace. Stress and more serious mental health issues, particularly when they are caused or exacerbated by work, should be addressed by charity employers as soon as they arise.

Resort to medically related insurance solutions can be tailored to a charity employer's circumstances and facilities should be in place as early as possible as part of the general risk management programme. Their availability to help employees, including those suffering from stress, should be properly publicised within the charity.

Many organisation benefit schemes are not used to their full capacity. Up and down the country information about Employee Assistance Programmes are pinned to a canteen noticeboard only to be covered over by staff driven miscellanea. These organisation paid facilities could be the difference between someone having a bad day or four weeks off where they have bottled up their anxieties.

Most group private medical insurance policies will have a 24 hour "healthline" available to their members. If you have one or are considering implementing one, income protection insurers encourage early intervention and have the tools and staff available to intervene before the situation becomes more difficult to look after.

Committing to good mental health

Here are some easy steps for your charity to follow about addressing the problem of mental health:

  • Consider whether any mental health stigma exists within your charity and question why.
  • Train line managers and senior management so they are comfortable to talk openly about the subject.
  • Improve the awareness of the issues: conduct staff surveys, launch awareness campaigns and champion non-judgmental attitudes.
  • Utilise existing or introduce a group private medical policy, health cash plan and/or employee assistance programme to offer a number of wellbeing benefits to your staff. This includes counselling, debt management, legal advice and information on eldercare or emotional and work-life issues.

Sutton Winson's Chris Hickey - mental health is a subject that even many charity employees choose to ignore or do not fully understand.
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