For small to medium-sized charities, governance and management can be two big grey areas with many misunderstandings as to what these two functions include and mean to individuals and teams, especially as your charity begins to grow.
We like to summarise the two as:
Governance – focuses on strategy
Management – focuses on operations
If we break it down further, good governance ensures that the job gets done, but it is not necessarily about doing the job; that is the role of management.
Charity Governance vs. Charity Management
Good operational processes rely on a robust and well thought out, sustainable strategy, with the charity’s strategic direction set by the results of management.
This diagram shows the vital role that everyone plays in the successful running of a charity and how by understanding the roles and responsibilities within each area, you can achieve effective ownership and charity growth.
We believe that both boards of trustees and management teams must design and apply effective governance and management systems based on sound knowledge, evidence, and learning if the charity is to grow.
Getting down to business….
Trustees and your charity board are those who are responsible for charity governance. A trustee position is generally an unpaid role, but one that can make a big difference to a small charity. Often trustees come forward because they care about your charity’s cause or are chosen for their skills and knowledge to support your charity and its future growth.
This is a big role with even bigger responsibilities.
Trustees have independent control over and legal responsibility for a charity’s management and administration. However, they must act in the charity’s best interests at all times, acting with reasonable care and skill and ensuring the charity is accountable, i.e., is the charity carrying out its purpose for the public benefit?
- Setting strategic direction and objectives, agreeing on purpose and strategy.
- Establishing policy.
- Monitoring and planning activity against strategy.
- Approval of participation in government programmes.
- Holding personnel to account – yes, this can be a source of tension, but it doesn’t have to be with the right procedures for safe and effective operations in place. Policies and procedures that cover:
- Terms and conditions
- Job descriptions for senior members of management
- Appointing senior members of staff
- Conducting appeals, working with grievance and disciplinary procedures
- Performance reviews of senior staff, etc.
- Protecting the charity’s reputation, making sure it is compliant, well run, and problems are dealt with effectively and efficiently.
- Managing resources responsibly.
- Ensuring compliance with the charity’s governing documents and compliance with the law.
- Financial obligations, such as:
- Approval of annual budget
- Agreeing on any changes to budgets
- Setting financial controls and reserves policy
- Responsibility for bank accounts, including signatories.
Good governance helps to fulfil a charity’s mission and vision. Helping to secure the long-term direction of the charity, ensuring policies and activities achieve these goals, and that the charity runs legally, responsibly, and effectively.
The Charity Governance Code contains a vast amount of information to support UK charities. Helping to develop high standards, abiding by the code is not a legal or regulatory requirement, but it is a great guide. With principles and recommendations included throughout, it is an excellent reference document when looking at continuous improvement.
Charity management focuses on the operational, day-to-day running of a charity. It is the role of senior managers to focus on implementing strategy and the activities required to achieve set objectives.
Designing and implementing operational and project plans that work alongside policy and budgets.
Note: Trustees can carry out operational activities and, in these instances, policies must be in place to include supervision and appropriate checks of such activities to ensure accountability and compliance.
Charity management is responsible for:
- Policy development
- Carrying out project plans to a high standard
- Carrying out, managing, and monitoring all operational activity
- Carrying out staff recruitment and appointments. This includes producing job descriptions and also staff dismissals.
- Managing staff and teams (including volunteers). This includes checking training priorities.
- Monitoring and managing changes to pay and conditions.
- Financial obligations such as:
- Approving grant applications and accepting grant offers
- Approval of budgets and spend
- Monitoring and checking direct debits, standing orders, and bank transfers, etc.
- Maintaining good and accurate financial records.
How we can help
It’s vital to understand the roles and responsibilities between governance and management. Not only can it help to avoid tensions in the workplace (especially if you have a trustee retaining an operational volunteer position), but it also keeps you on the right track, allowing the charity to grow and flourish.
It’s about understanding the boundaries while communicating clearly and effectively at all stages to help you continue to build successful relationships.
If you don’t have robust governance policies in place or clear guidance on roles and responsibilities, don’t panic; let us help.
Our governance team can help create policies that perfectly fit your charity’s goals, aims, and objectives.
To find out how more, email firstname.lastname@example.org or call 01204 582 104 – we’d be happy to help.