In a session at our virtual Small Charities seminar in October, Edwina Turner, an experienced legal adviser and interim manager for the Charity Commission, shared where small charities can go wrong when it comes to governance. In this article based on Turner’s session, we highlight common governance pitfalls and help you avoid them.

The Charity Commission has the power to open a statutory inquiry and appoint an interim manager (IM) if there are serious concerns about a charity’s governance. This often happens when trustees don’t cooperate with the regulator, so be sure to engage positively with the Charity Commission or IM during an investigation. Don’t shirk your responsibility as a trustee and respond to their requests in a timely manner.

Turner distilled her experience as an IM into four key lessons for trustees of small charities.

Trustees of small charities have the same responsibilities as trustees of large charities, and all the regulator’s guidance applies to charities of all sizes. The complexity may be reduced for small charities, but all charities need financial policies and procedures, appropriate safeguarding policies, a conflict of interests’ policy and other key controls.

This includes:

• filing accounts on time – persistent late filing triggers the regulator to have a closer look,
• ensuring that lines of accountability are effective and documented – the buck stops with the trustees,
• recruiting trustees objectively, based on their skills, manage conflicts of interests and beware of dominant trustees.

Minutes are your friend – they can serve as evidence of considered decisions and appropriate actions. Document conflicts of interests and how they were managed in the meeting, refer to supporting evidence and keep the supporting evidence with the minutes, and ensure that the minutes are approved at the next meeting, signed and retained. Also retain other records, such as:

• terms of reference for sub-committees and when they are reviewed,
• policies and procedures and how trustees ensure they are up-to-date, implemented and effective,
• serious incident reports filed with the Charity Commission – these are expected by the regulator for most charities at some point.

The board as a whole and trustees individually are collectively responsible for the charity. While tasks can be delegated to one trustee, a committee or an executive manager, trustees are responsible for ensuring that the task has been carried out effectively. Beware of the following common pitfalls:

• founder syndrome – founders with excessive control, making decisions that are not in the charity’s best interests,
• figure head trustees (for example, celebrity trustees),
• rubber stamping (of accounts, for example).

• Watch Edwina Turner’s session ‘Governance pitfalls – lessons from an Interim Manager’ (part of our half-day webinar ‘Small charities – tackling financial governance challenges’)