Skip to content

The question of control

Trustees often battle with this question with different answers and approaches. Often conflicts between trustees and management are underpinned by this predicament. Charities are set up by humans and run by humans. The mistake is made when the human factor is ignored. The answer to the question of control lies in how humans normally behave and respond.

When a child is born and throughout the toddler years, parents feed, clothe, hold their hands and constantly check on them. When the same child grows up, becomes an adult and starts university the approach of the parents changes. There is no need to directly feed, clothe or hold hands.

The parents approach changes to now ensuring enough money is in the bank account, direction is set, good university is secured with appropriate accommodation. The constant physical checks turn into keeping an eye on academic results, who the friends are and quality of work experience and references. Same child, same parents, same love but the whole approach changes.

If the approach does not change and the parents remain like they were when the child was a baby or teenager then relationships between parent and child risk becoming sour, challenged and damaged. Charities are the same. When they are set up, they need full attention and involvement of the Trustees, however when they grow large, the whole approach must change. When it does not, this results in relationship between trustees and management to suffer and eventually breakdown.

Like the parents learning from other parents before them, trustees must also learn and apply successful experiences of other trustees and charities. Below are some techniques that have always worked.

Reconciling bank statements to information held by the charity

This should never be underestimated. Tidying up book keeping, preparing good quality year end accounts and picking up fraud, all depends on it. This applies to Charites of all sizes and complexities. Banks are third party organisations and they hold information in a certain way reflecting the instructions from the charity trustees and / or management.

When the bank information is reconciled against information held by the charity which reflects how the charity is run, this has an effect of a third party check over charity finances. This is why a charity with good financial control will always have an effective bank reconciliation process. Trustees should concern themselves about it as it aids control.

Checks and balances on the CEO

A charity with a paid CEO / Manager suggests the charity has grown and requires a different approach. Hand holding by trustees and constant checks should no longer be the case. If this is the case then there is something wrong with either the trustees and / or the CEO. The following are five key checks and balances that have proven to work in larger charities:

1. A robust strategic plan and budget that sets out the framework for the CEO to operate within. Without it, a blind ends up leading a blind, creating issues of trust when difficult decisions need to be taken.

2. A CEO reporting and feedback protocol against the agreed strategy and budgets. The reporting skill of a CEO should be assessed at recruitment stage.

3. A competent legal and audit firm that regularly meets trustees and comments on Management decisions and plans. Trustees should make time for such professionals and should take their advice seriously no matter how difficult it may be to accept.

4. Fair and clear HR policies that dictate how human resource is managed with no trustee or management override. HR issues are often bubbling in the background, if not sorted with good policies and their application, then these bubble burst with ugly consequences.

5. An Audit Committee supported by a professional Internal Audit function. Its not enough to have independent members of the Audit Committee if it is not supported by an competent Internal Audit function.

The key message is that Trustees can remain the same in a charity but the approach must change as the charity grows and enters new challenges.


Author: Nasir Rafiq is a widely experienced Chartered Accountant and a Financial Governance Expert. He has directed large finance, HR, facilities and IT functions in charities. He is the founder and director of Dua Governance, a charity finance specialist accountancy and business advisory firm.


Recommended Posts

No comment yet, add your voice below!

Add a Comment

Your email address will not be published. Required fields are marked *