ICSA identifies red flags that can act as an early warning system for charities

London, 5 May 2017 – ICSA: The Governance Institute has published a report that identifies markers that could help charities to avoid governance problems resulting from a flawed organisational culture. Launched by Louise Thomson, Head of Policy (Not for Profit) at ICSA last night, the report identifies behaviours and practices that may indicate a poor organisational culture that does not match the stated values of the charity.  

‘Few charities explain well what they do and how and why they do it, but if a charity is to inspire trust amongst its users and supporters, a desired and stated culture must be evident. This report provides charity bosses with the tools to think about their culture and provides practical insights into how culture can be assessed, measured and improved,’ says Louise.

The report identifies 13 areas that charities should implement or avoid:

  • Considered and reflective board discussions about culture, values and ethics: where a code of conduct for staff and volunteers is actively upheld and monitored, along with regular discussion of the ethical impact of decisions at board level, there is a double reinforcement that doing business in a considered manner is important to the longevity of the charity and its ability to achieve its purpose
  • Ensuring that doing things right leads to doing the right things
  • A strong commitment to good governance: where the need for good governance is not acknowledged, a culture may develop that rewards mavericks or those that act independently of the charity’s standards
  • The value of delivering public benefit: a charity that can tell its story well and provide the evidence to support it will take its ethics, values and behaviours seriously and protect them to the same degree as other assets
  • Strong, ethical and considered leadership: a charity that empowers all staff and volunteers to be leaders, aligned to the agreed standards of the organisation, is better able to demonstrate and live the values it espouses and deliver the culture it desires. Leadership, however, requires training, from front line service provider to trustee, whether paid or not
  • Origins: as society changes it may be that some aspects of the original cultural premise need to be amended to adapt to contemporary values
  • Membership charities: a charity with an engaged membership may demonstrate a stronger culture where the opinions of its members are valued, but the rights of members must be balanced with the legal duties of trustees. They must act independently in their decision making
  • Role of funders: a board that understands its role and the importance of independent decision making should be alert to the dangers of undue external influence
  • Existential stress: a lack of consistency and a ‘sticking plaster’ approach to major challenges does not engender an environment where a positive culture can be seen as necessary to the survival of the organisation, or the quality of services provided. Boards with a Plan B are better able to respond to crises in a planned and considered manner
  • Remuneration practices: transparency and a commitment to ongoing dialogue as to why remuneration packages are deemed reasonable and necessary should help counter some of the potential dangers
  • The power of personality: a strong personality may be able to unduly influence and overpower the  better instincts of those around them
  • Competing cultures: as charities grow different cultures can develop or the established culture fracture, particularly where staff and volunteers operate in different locations or local customs and practices make it difficult to maintain the culture. Trustees need to ensure that agreed performance indicators for one department do not run contrary to those agreed for another
  • Pressure to increase funds to support the cause: this single-minded focus can lead to decision and actions that might otherwise be deemed questionable. A board that takes decisions in the round is more likely to contribute to a culture that is attuned to its stated values and ethics.

‘It is hard to measure culture, but there are some markers that can evidenced by hard data such as user complaints, high staff turnover, employee satisfaction and regulatory infringements. Boards need to question whether or not they have managed to implement a positive culture in their organisation and whether good governance practices are in place. Charity governance is most effective when it provides assurances not just that legal requirements are met but that the behaviour of people working for the charity, and those who come into contact with it, is proper and ethical. Culture, alongside good governance, can be pivotal to whether a charity achieves its stated objects,’ adds Simon Osborne, Chief Executive of ICSA.

 

- Ends -

 

For further information, please contact Maria Brookes, Media Relations Manager:

mbrookes@icsa.org.uk

+44 (0)20 7612 7072

+44 (0)7890 649 143

 

Notes to Editors:

1      ICSA: The Governance Institute is the professional body for governance. We have members in all sectors and are required by our Royal Charter to lead ‘effective governance and efficient administration of commerce, industry and public affairs’. With over 125 years’ experience, we work with regulators and policy makers to champion high standards of governance and provide qualifications, training and guidance.
Website: www.icsa.org.uk

The full report can be viewed at www.icsa.org.uk/charitiesculturalmarkers

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