Avoid scandal with good governance

When charities are in the news, it can often be because something has not been properly dealt with around the board table. Lack of good governance in an organisation can not only lead to internal turmoil, it can also have far reaching effects on an organisation’s reputation, success, and its long term future. On the Information Service we have recently dealt with a small local organisation at war as individual trustees fight over who is in management and control, with allegations of misrepresentation and discrimination. There is also a recent case in the news of a valuable service for sexual abuse victims having to close down after being ordered to pay out almost £20,000 at an employment tribunal. Both are extremely sad cases for both the sector and the wider community, and no doubt really stressful for all involved. Whilst this is not the place to go into the rights and wrongs of these particular disputes, cases like these can be a useful warning shot for boards to take stock and think about what lessons can be learnt, and how to avoid damaging internal conflict.

As with all things involving people, relationships can get fractured and misunderstandings arise

Charities and voluntary organisations don’t get set up by people who think that everything is ok. They attract passionate people who feel strongly that they can do something about health, social or environmental problems. As with all things involving people, relationships can get fractured and misunderstandings arise. Charity trustees, staff and members can sometimes disagree with each other. It would be unrealistic to expect this never to happen, indeed it can be positive to have a wide range of opinions to inform decisions. But where this leads to a dispute which has a negative effect on the functioning of an organisation, then it is a problem for all involved. A serious disagreement within a charity has the potential to lead to loss of staff, members, trustees and income, and can damage an organisation’s reputation, often irrevocably. So it is the responsibility of every board member, both individually and collectively, to resolve disputes within their organisation. A useful reference point to consider would be to include a ‘disputes clause’ in your governing document, with procedures on how to deal with disagreements. SCVO’s Information Service and free legal advice service can help with this. If this process breaks down, or there is further disagreement on the interpretation of any written procedures, then it may be useful to look externally for support. An independent third party can look at both sides of an issue and can come up with a fresh perspective and possible resolution. Who an organisation approaches will depend on the nature of the dispute. If a dispute concerns internal governance, then the organisation could approach its national body, or a regional or national umbrella body, or its local Third Sector Interface. For disputes with employees, ACAS is a useful first port of call. Mediation should also be considered. This is a more formal way to settle disputes and is a private and confidential process in which an independent person meets with both sides, helping them to reach a solution that everyone finds acceptable. When all else fails, individuals often threaten to involve the Office of the Scottish Charity Regulator. However, OSCR will only deal with questions that relate to charity law, such as if there is a risk of significant damage to a charity, its assets or beneficiaries, or where charity trustees have breached their duties or have been involved in serious or sustained misconduct. Charities are independent organisations run by charity trustees, and OSCR won’t get involved if a dispute is about trustees’ decisions or policies. Trustees are free to make decisions for their charity, as long as they are acting within the law and within the rules of the charity’s governing document. OSCR have published information on when they will and won’t get involved in charity disputes, and will usually not get involved in matters such as contractual employment issues, disputes between charity trustees, or even criminal activity, which is a matter for the police (though OSCR would want to know about any actions the charity trustees have taken to address such matters). So ultimately it is up to trustees to act in the best interests of their organisation both collectively and individually. Good governance is a subtle, ongoing and potentially difficult process, but who ever told you it would be easy?