By Kate Goldberg

[Editor’s note: While this essay isn in response to specific updated legal requirements in both the UK and EU, the important issues of funder governance raised are applicable world-wide.]

After the very public collapse of Kids’ Company in 2015 and more recently the Oxfam and Save the Children crises, concerns over public confidence in the nonprofit sector have resulted in a firmer hand from the UK charity regulators. As a result, governance of charities is under scrutiny, as is governance across all regulated sectors. Charities are judged appropriately by ever higher standards, and for yesterday’s decisions in light of today’s regulatory requirements and public opinion.

So How to React?

Last summer the Wohl Foundations’ lawyers efficiently handled the changes necessary to comply with the Common Reporting Standard, but this time around we chose to use the opportunity to ‘lift the bonnet’ and thoroughly review and test all our governance policies, processes and procedures in a bid to anticipate future requirements. Recognising our role as a leading charity in the Jewish sector, we also believed that we could not demand of our grantees that which we were not willing to undergo ourselves, and that our experience could add value and voice to others implementing their own processes.

What Did We Do Differently?

In November 2017 we began to feel the quiet, yet ominous, drumbeat of GDPR legislation. At that point we could, at significant expense, have turned to our lawyers and asked them to create policy and guide us through. Or we could have buried our heads in the sand, chosen to ignore the drumbeat and hope for the best. The latter was clearly not an option. As CEO with a small staff team, I decided to drive forward the process internally and lean heavily on resources easily available from ACF and other membership organisations, touching base with our lawyers as and when necessary to edit and for their seal of approval. We chose to start with and underpin our work with the Charity Governance Code, highlighting areas in which we needed to improve, tidy, tweak and develop to ensure robust governance; proceeding from there to the weighty matters of safeguarding* and GDPR compliance.

In the midst of every crisis, lies great opportunity.
Albert Einstein

So What Did We Learn?

Follow the code. The Charity Governance Code is aspirational, yet it is a great practical guide. Our foundation has evolved significantly over the past 10 years and has developed its own methodologies and processes. The code is a refreshing reminder of what we are trying to achieve, of best practice, and an opportunity to review and improve where necessary. We developed a clearly documented process of review for each section, identifying weaknesses and clear timelines for improvement. Research also highlighted internal processes, however small, that we may have overlooked, allowing the trustees to consider potential additional risks that we may not yet have considered. One size doesn’t fit all. Research highlighted plenty of examples of best practice across the industry and robust industry standards. Drawing down available policies and reflecting intensely on our own unique perspective allowed us to consider, and on occasion argue and amend, seeking to achieve the best policies and procedures for our foundations. The board can still surprise…

Despite having a highly experienced and professionally qualified board of trustees, our proven ability to jointly engage deeply in matters of importance, and their long-term interest in and concern for governance, I was positively impressed at the level of enthusiastic engagement in the detail of key governance conversations and trustees’ desire to refine further and reflect both the ethos of the foundation and charity best practice … and so can the Charity Commission. Without warning, safeguarding came to the top of our agenda in January 2018, as it did for so many. As we were already undergoing this review process it allowed for a robust conversation, facilitated by external expertise, in the boardroom. We reached out to colleagues and experts in the sector and took opinion. We debated the nature and extent of our safeguarding policy and procedures, and indeed our responsibilities. While clearer guidance is still needed, particularly for our overseas grants, we believe we have a better understanding of the issues. While we do not deal with vulnerable populations directly, we are able to insist that potential grantees take this matter seriously and ensure clear guidance and training for their own staff and trustees.

On a Journey

Have we got it fully right? Not yet. But we are on the journey. While the Charity Governance Code is ambitious we are now able to ‘comply or explain,’ and we will review our progress annually. The board is the apex of the organisation accountable for the decision-making and allocation of organisational resources.

It was always thus, but now I have no doubt that our cohesion and performance as a board has improved as a result of this process. We have a raft of policies and procedures that I believe to be more robust than ever before – Conflict of Interest. Safeguarding, Privacy, Whistleblowing – and while we hope never to have to rely on them, we are confident that they will guide us.

Has the Charity Commission Got this Right?

Like all regulatory bodies. I suspect it is also on a journey and believe that while it may not seem fair that errors of the past become causes celebres of the present. It is a necessary corollary of a legitimate endeavour to raise standards across the entire field and ensure that we are truly protecting the vulnerable and those at the margins of society that we seek to help. That said, going forwards the Charity Commission will have to decide what it wants from foundations: will it demand that we take on onerous and costly additional guardian responsibilities for the sector as a whole; and what of our grantees overseas?

Imperative

While we charitable foundations instinctively tend to want to bury our heads in the sand at the mention of ‘governance and compliance’ and want to get on with what we see as the ‘real impactful work,’ it is clear that in today’s environment having effective governance is an imperative for success. We demand this of our grantees, and it is right therefore to demand it of ourselves. And what of our grantees? Our process has been a lengthy and expensive one. We know that our smallest grantees can neither afford the time nor resources. Yet we demand strong governance as part of our due diligence. If we foundations believe that part of our remit is to strengthen the sector, then surely it is incumbent on us to consider an industry-wide solution.

The Wohl Foundations chose to seize the opportunity in the current crisis of confidence to take a good hard look at our own governance, processes and procedures. Without a doubt, this experience has made us stronger and, we hope, better equipped to face future challenges in a productive, transparent and responsible manner.

*Safeguarding – The Charity Commission for England and Wales’ Regulatory Alert December 2017: “Safeguarding should be a key governance priority for all charities, not just those working with groups traditionally considered at risk… Everybody has the right to be safe, no matter who they are or what their circumstances are, and the public expects charities, quite rightly, to be safe and trusted places.”

Kate Goldberg is CEO of the Maurice Wohl Charitable Foundation.

This article was originally published in TFN (Trust and Foundation News) @ACF. Reprinted with permission.