Www.cass.city.ac.uk Rosalind Oakley Accountability – an exploration Cass Centre for Charity Effectiveness…

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Rosalind Oakley

Accountability – an exploration

Cass Centre for Charity EffectivenessIntellectual leadership: developing talent, enhancing performance

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Centre for Charity EffectivenessIntellectual leadership: developing talent, enhancing performance


Building Better Governance Seminar SeriesDATE TOPIC LED BY 19 Nov 14

Running effective board meetings

Caroline Copeman

13 Jan 15

Board reports that add value

Mary Chadwick

11 Feb

Board involvement in strategy

Jacqueline Williams

11 March

Using scorecards & dashboards

Jacqueline Williams

22 April

Board appraisal

Fiona Ash

28 May

The relationship between the Chair and CE

Caroline Copeman

23 June

Demonstrating accountability

Ros Oakley

29 July

Federated charities – an exploration

Denise Fellows

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Resources on website

https://casscce.wordpress.com/about-cass-cce/building-better-governance/




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Exploring accountabilityAccountable (noun) • Require to account for one’s conduct

Oxford English dictionary

Various academic definitions of accountability e.g.• Holding one (an individual or organisation) to account for their

actions (Stewart) • Voluntarily( Fry) • Includes evaluation of performance (Boyle et al)• Should include a moral dimension of socially responsible

behaviour (Roberts)

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AccountabilityPurpose of tonight’s session is to explore two basic questions,:

As trustees•Who are you accountable to?•For what?

And a secondary question: How is that accountability carried out? In particular what are the board’s responsibilities?

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Group workAt your table discuss:

•Who is your charity accountable to?

•What are you accountable for?

Staff

SupportersService users

Who

Members

Local authority

Volunteers

Allies

Donors

Beneficiaries – current and

future

Suppliers

Regulators

Neighbours

Partners

Public

Partners

Legislators

Governance

Costs

Investment choices

Fundraising methods

Concerns

Ineffectiveness

Failure to protect the vulnerable

Terrorism

Fraud & theft

Campaigning

Fake charities

Unwelcomeneighbours

Conflict of interest

Unfair competition

Waste

Tax avoidance

Pay

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Accountability• Identifying to whom accountability is due•Understanding and reconciling expectations that may be both legitimate and divergent

•Setting reasonable standards•Providing accessible information by which to assess compliance

•Modelling integrity in decision and actions

Source R.P.Lawry Accountability and Nonprofit Organisations: an ethical perspective 1995

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Accountability and stakeholder theoryLot of the academic literature references stakeholder theory:Positive model linked to legitimacy theoryEmphasis on stakeholders in order to ensure organisation’s success. Shape their perception of the charity.

Ethical modelMoral and philosophical position. Responsibility to honour all stakeholders equitably and ethically via participation (and democracy). Dialogue and learning. Inherent to how the organisation operates

Key method for both: reportingDischarging not-for-profit accountability: UK charities and public discourse Alpa Dhanani

Ciaran Connolly, (2012)

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Charity CommissionParliament has given the Commission 5 statutory objectivesto increase or promote:• public trust and confidence in charities• awareness and understanding of the operation of the public benefit requirement • compliance by charity trustees with their legal obligations in exercising control and management of their charities• the effective use of charitable resources• the accountability of charities to donors, beneficiaries and the general public

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Key charity reporting requirementsThere are different accounting and reporting requirements depending on size and type of charity. Typically:•Annual return (online)•Annual accounts •Trustees Annual report (TAR)•Public benefit reporting (via TAR)•Serious incident report –as required

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Serious incidentsReport any serious incident that results in – or risks - significant:• loss of your charity’s money or assets•damage to your charity’s property•harm to your charity’s work, beneficiaries or reputation

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Serious incidents• Fraud, theft or other significant loss• A large donation from an unknown or unverified source• Links to terrorism or to any organisation that’s ‘proscribed’

due to terrorist activity• A disqualified person acting as a trustee• Not having a policy to safeguard your charity’s vulnerable

beneficiaries• Not having ‘vetting’ procedures in place to check your

prospective trustees, volunteers and staff are eligible• Suspicions, allegations or incidents of abuse of vulnerable

beneficiaries• Investigation by another regulator

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Public benefit reporting•Registered Charities are required to set out in their annual report the activities they have carried out for public benefit

•Two basic requirements:• An explanation of the activities undertaken by the charity for the public benefit

• Statement by the trustees that they have had regard to the Charity Commission guidance

•More info required by larger charities (over £500k)

Source: Charity Commission Annual Monitoring review public benefit reporting by charities March 2015

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% of annual reports meeting public benefit reporting requirementPeriod / % of reports assessed 2011-

20122012-2013

Includes report of activities undertaken for public benefitIncludes statement that had regard to CC guidanceCharities who met both of the above

Source: CC Annual Monitoring Review Public benefit reporting by charities March 2015

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% of annual reports meeting public benefit reporting requirementPeriod / % of reports assessed 2011-

20122012-2013

Includes report of activities undertaken for public benefit

44% 64%

Includes statement that had regard to CC guidance

44% 47%

Charities who met both of the above 27% 35%


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Public benefit reportingPeriod / % of reports assessed 2011-

20122012-2013

Statement of purposesSummary of main activities to achieve purposesDescription of how activities benefit beneficiariesCharities who do all 3 of above

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Public benefit reportingPeriod / % of reports assessed 2011-

20122012-2013

Statement of purposes 81% 88%Summary of main activities to achieve purposes

71% 80%

Description of how activities benefit beneficiaries

55% 65%

Charities who do all 3 of above 44% 64%


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Trust and confidence – things people want to know•96% agree it is important that charities provide the public with information about how they spend their money.

•94% of people agree it is crucial for charities to demonstrate how they benefit the public

•90% agree it is important that charities explain in a published annual report what they have achieved

Source: Public trust and confidence in charities. Ipsos Mori on behalf of the Charity Commission June 2014

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Annual reports triggering risk indicatorRisk indicator No of

concern% explained

Low charitable expenditureHigh fundraising costsSolvency issuesPension scheme deficitsRestricted funds used for unrestricted purposesSignificant loans by or to the charity

Source: CC Annual Monitoring- the quality of charity accounts March 2015

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Annual reports triggering risk indicatorRisk indicator No of

concern% explained

Low charitable expenditure 26 38%High fundraising costs 9 44%Solvency issues 28 61%Pension scheme deficits 7 71%Restricted funds used for unrestricted purposes

3 100%

Significant loans by or to the charity 23 70%

Source: CC Annual Monitoring- the quality of charity accounts March 2015

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Accountability and good practice

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Hallmarks of an effective charity1. Clear about its purposes and direction2. A strong board 3. Fit for purpose 4. Learns & improves5. Financially sound and prudent 6. Accountable and transparent

Charity Commission

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Hallmark 6 : Accountable and transparent • complies with its legal obligations (and best practice)

explaining what the charity has done for the public benefit • explains in its Annual Report how it has achieved its

charitable purposes • has effective complaints procedures • can show how it involves beneficiaries and service users

in the development and improvement of its services• has a communications plan ensuring information is given

to everyone with an interest in the work of the charity

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Code of Good Governance

1. Understanding of role2. Ensuring delivery of organisational purpose3. Working effectively as individuals and a team4. Exercising effective control5. Behaving with integrity6. Being open and accountable

Good Governance – a code for the voluntary and community sector (2nd edition October 2010)

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Principle 6 The board will lead the organisation in being open and accountable, both internally and externally. This will include:• open communications, informing people about the organisation and its work• appropriate consultation on significant changes to the organisation’s services or policies• listening and responding to the views of supporters, funders, beneficiaries, service users and others with an interest in the organisation’s work• handling complaints constructively, impartially and effectively• considering the organisation’s responsibilities to the wider community, e.g. its environmental impact.

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Board accountability in practice• Many nonprofit boards expect their executives to account

for use of their organizations’ resources. However, few boards apply any such expectations to themselves.

• When we asked interviewees to identify the board’s constituencies—those stakeholders whose concerns the board should hear directly and with whom its members should communicate—a surprisingly large number of respondents simply could not identify a single such group.

• Most boards did not do anything to address the matter directly except a few exemplary ones

Board Accountability Lessons from the Field, Thomas P. Holland 2002

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ApproachesThoughtful rather than mechanistic approach to:• Clear expectations – real focus on mission, values, expectations

• Policies on conflicts of interest- avoiding even the appearance of self-dealing

• Identifying and staying focused on priorities • Communications with constituencies• Assessment of meetings• Formal evaluations• Experimenting with new ways of workingBoard Accountability Lessons from the Field, Thomas P. Holland 2002

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Group workAccountability to stakeholders

•What examples of good practice do you have?

•What ideas do you have for good practice?

•What are the challenges?

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AA1000 Accountability principles standardAn accountable organisation will take action to:• Establish a strategy based on a

comprehensive determination of all issues that are material to the organisation and its stakeholders

• Establish goals and standards against which the organisation's strategy and performance can be judged

• Disclose credible information about strategy, issues, and performance to stakeholders

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Global Reporting Initiative• Aims to standardize and quantify the environmental, social

and governance costs and benefits from the activities of those who report

• Guidance on what is reported and how• Founded in 1997• Guidelines now in third version• In 2015, 7,500 organizations used GRI Guidelines for the

sustainability reports• Sector specific supplements including for NGOs • Can report at level A, B or C

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The Accountability Charter• transnational, multi-sectoral code reflecting

the values and priorities of the NGO sector • developed in response to increasing

pressure from the media• founding organisations include Amnesty

International, Oxfam International, Greenpeace International and World Vision International,

• Charter Members required to report annually

- requirements based on GRI .

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The Accountability Charter- 10 commitments1. Respect for Human Rights 2. Independence3. Transparency4. Good Governance5. Responsible Advocacy6. Participation7. Diversity/Inclusion8. Environmental Responsibility9. Ethical Fundraising10.Professional Management

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Global Reporting Initiative - NGOsGRI developed a sector specific supplement. It covers• Program effectiveness including affected stakeholder engagement, mechanisms for feedback and complaints, and monitoring and evaluation• Integration of gender and diversity into programs• Public awareness and advocacy• Resource allocation• Ethical fundraising• Working with volunteers• Marketing communications• Customer privacy

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What is your board’s position on accountability?

•Does your board understand your legal responsibilities and are you meeting them?

•Have you identified the range of stakeholders interested in or affected by your work?

•Do you understand what information needs your various stakeholders may have?

•What voluntary disclosures and engagement do you choose to make, to whom and how?

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Items in the resource bank for this seminar:

•CC guidance on reporting requirements•CC annual monitoring review report•Good practice resources•Other accounting and reporting initiatives and examples

•PowerPoint presentation

Available at https://casscce.wordpress.com/about-cass-cce/building-better-governance/



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Rosalind OakleyPrincipal consultant

Cass CCE

[email protected]

Documents

Www.cass.city.ac.uk Rosalind Oakley Accountability – an exploration Cass Centre for Charity Effectiveness…