At MBS, we’re best known for our work advising businesses in the consumer-facing sector. As specialists, we’ve been placing leaders at the helm of consumer organisations for well over thirty years. But, for us, some of the most rewarding and personally fulfilling searches are for the charitable organisations that are saving, sustaining and enriching lives in the UK and around the world.
Over the last few years, we’ve had the privilege of working alongside some of the UK’s most preeminent charities, to help them build Boards of Trustees which can ask the right questions, drive organisations forward, and bring about lasting positive change in society.
And today, there’s never been a greater need for a strong board. In the UK, the charity sector has faced something of a perfect storm, as shrinking funding for critical public services has combined with a rising cost-of-living crisis. Charities have less capital to meet dramatically increasing demand from beneficiaries. There’s also the question of competition: the UK charity sector is a highly crowded market – there are 166,000 registered charities – with many organisations going after the same funding to support the same groups.
So, what can Boards do to navigate this landscape? What questions should trustees be asking? And what lessons can charity Boards learn from corporate organisations? Over the last few weeks, it’s been fantastic to catch up with Chairs, Trustees and NEDs from right across the sector, to explore how charities can build Boards which combine a deep altruistic commitment with the necessary skillset to effectively run an organisation.
After all, the role of a charity Board is not straightforward. Many of the non-executives that we spoke to noted that the function of a corporate Board, at its most fundamental, is simple: to make money for the shareholders. In a charity setting, Boards are looking to deliver impact, rather than profit, which can be harder to execute, and much harder to measure.
Like any Board, the top priority is composition. Charities need a balanced team, which features central competencies like finance, legal, risk, and audit expertise, alongside the skills tailored specifically towards that charity.
“Like any Board, the top priority is composition. Charities need a balanced team, which features central competencies like finance, legal, risk, and audit expertise, alongside the skills tailored specifically towards that charity.”
The most effective charity Boards, for example, include a beneficiary representative – someone to act as mouth-piece for the group the organisation is supporting; they need someone adept at external stakeholder engagement, who can make introductions in the political, fundraising, media spheres; and they need true subject-matter experts, who have deep domain expertise within the specific focus area, for example housing, food, or education.
But identifying and appointing the right combination of Board members – who are both purpose-driven and sufficiently qualified – isn’t always straightforward. Charity boards are expected – rightly – to provide a high level of complex governance, oversight and regulation, but the difference between charity boards and corporate boards, is that charity boards don’t have the capital to pay the very best people.
In particular, said one NED, it can be a challenge to identify the right stakeholder champion to sit on a board. “It can be hard to find someone who effectively represents the beneficiary,” they reflected, “but who is also equipped to navigate the weightier responsibilities of a board member, like governance requirements.”
Beyond composition, a great charity Board is one that can look beyond the now. “The low risk tolerance that is essential in most charities can lead to them getting stuck in their ways a bit,” said Orna NiChionna, Chair at The Eden Project and SID at Burberry. “Especially when they’re run by long-time staff members, who are deeply passionate about the topic. It’s the Board’s role to ensure that the organisation is considering how to achieve the best impact today, and in the future, rather than relying on what worked well ten or twenty years ago.”
As part of this, charities need to be actively thinking about the forces shaping our world – from geopolitics and the climate emergency to advancements in AI. “Charities need to be asking what the world will look like in 2030,” offered Tom Ilube CBE, incoming Chair at the Prince’s Trust, Chair at the RFU, and non-executive director at WPP. “What does society look like, and where do we fit in?”
“As part of this, charities need to be actively thinking about the forces shaping our world – from geopolitics and the climate emergency to advancements in AI.”
For Tom, every charity Board must be thinking deliberately about what developments in technology and AI will mean for them. “The biggest driver of change that will happen over the next period is AI. Any charity that doesn’t have or doesn’t develop an AI strategy could find itself in a difficult position in two or three years,” he said.
To achieve this sort of forward and lateral thinking, Boards need to promote diversity of thought, by incorporating the views of directors from a range of personal and professional backgrounds. But somewhat ironically – considering that it’s the mission of so many charities to bring about a more equal society – some of the NEDs we spoke with noted that charity Boards have not been quick to respond to the growing call for Board-level diversity. On this issue, commercial Boards are far ahead of the game.
But what makes a good charity Board member? Throughout our conversations, almost every leader noted the need for a personal commitment to the charity’s cause. “It’s not unusual to see people join charities for the wrong reasons,” mulled another Chair, “It might be as a training ground as a board. It might be to enhance their CV. It might be to make connections through membership of the board. None of these are to be negated, they’re all important, but Board members should really be driven by purpose.”
While altruism is certainly a leading factor, for a director to succeed on a charity Board, they must also bring a unique and valuable skillset which makes a genuine impact.
“While altruism is certainly a leading factor, for a director to succeed on a charity Board, they must also bring a unique and valuable skillset which makes a genuine impact.”
Doug Gurr, Chair at the British Heart Foundation and The Alan Turing Institute, and Director at the Natural History Museum, furthered this point when we caught up, describing what he called the ‘T-shaped model’. “If you’re an NED, then you can think of your overall contribution as the horizontal part of the T: the breadth of view you take, and how you contribute to the collective cause,” he explained. “The vertical part of the T is your domain expertise: the one or two areas that you can deep-dive into, and provide unique value. When deciding to join a charity board, NEDs need to make sure they have something to add in this domain area – that they have enough specific expertise to fulfill the vertical part of the T model.”
It will be interesting to see how conversations around charity Board tables evolve in the months and years ahead. Thinking broadly, we’ll no doubt see the appointment of more digital and AI experts. In the UK specifically, a new government could bring in a fresh set of opportunities and challenges. Above all, self-regulation will be key. Charities must ask themselves the uncomfortable questions about governance, about operating costs, and even about their own existence, to ensure that they are always acting in the best interests of the beneficiaries. Impactful Boards, who can look to the future, have never been more important.
moira.benigson@thembsgroup.co.uk | liana.osborne@thembsgroup.co.uk | @TheMBSGroup