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Trustee oversight

14 March 2016

One of the key issues highlighted in the PACAC report was that there was ‘negligent’ trustee oversight of senior management, particularly with regard to the charity’s financial health. Trustees have to be comfortable with number-crunching and ensure that there is a suitable reserves policy in place (see our article on top tips for charity trustees which provides updated finance guidance).

Beyond the finances, trustees remain ‘jointly and severally’ accountable for the organisation and, as such, have a duty to challenge decisions across all areas of its operations.

A good relationship between the chair and the chief executive is the cornerstone to effective trustee oversight. For this to be in place, there must be clarity over their respective roles but sufficient trust for the delineating point to ebb and flow as circumstances dictate.

The chair needs to understand when it is appropriate for the trustees to step in and challenge decisions (for example, by ensuring that they receive regular and comprehensive reports), but equally an overbearing chair can alienate an otherwise enthusiastic chief executive. Similarly, the chief executive must not view the trustees as a nuisance but rather as stakeholders to whom he is providing a service and, one would hope, as experts in the sector upon whom he can rely for support.

Personalities will, to an extent, influence the precise nature of the relationship but the chair needs to be aware of his role and responsibilities, even where the chief executive appears to be extremely competent. Alan Yentob, the chair of Kids Company, has come under particular scrutiny in this regard since it was felt that the chief executive’s domineering and confident personality contributed to his rather passive approach.

Trustees may like to consider organising a short training session where there has been a recent change of senior staff or trustees, or where relations have become a little strained, to remind the key players of the importance of a strong governance structure and to remind the trustees of their duties and responsibilities.

Associate, solicitor Laura Davis advises owner-managed businesses, local and national SMEs and not-for-profit organisations on all areas of employment law. Her expertise includes the conduct of tribunal claims, drafting policies and contracts, advising on appointments, disputes and severances, the planning and implementation of restructures and changes to terms and conditions, including via collective consultation. She also handles whistleblowing, family-friendly rights, employee competition, confidentiality and employee health issues.

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Jenny Hawrot LLB (Hons)
Senior associate, solicitor
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