14 March 2022
There is a Chinese curse, “May you live in interesting times” which may sound like a blessing, however, the expression is normally used ironically; life is better in “uninteresting times” of peace and tranquillity than in “interesting” ones, which are usually times of trouble. We are certainly currently living in interesting times. Just as are we beginning to hope that the worst of the global Covid-19 pandemic was over, the world has been hit with a geo-political crisis as a result of Russia’s invasion of Ukraine and the humanitarian catastrophe it has created.
The crisis in Ukraine adds another layer of complexity to the many governance challenges and potentially funding challenges that organisations need to address in 2022. For charities in Ireland in particular, there are a wide range of governance challenges and developments to be addressed in 2022, but the major ones in my opinion, are the following;
- Grappling with the “new normal” and the implications of hybrid working models for the organisation and delivery of charitable activities
- Recruiting and retaining staff and volunteers in an increasingly competitive environment
- Succession planning, trustee development and recruitment
- Ensuring that the charity is in compliance with the Charity Governance Code standards
- Getting ready for the SORP for Charities financial reporting standard
Grappling with The “New Normal”
The removal of almost all of the Covid-19 restrictions, has triggered a slow but steady flow back to the office for many organisations. Some firms are offering meals and other perks to entice their staff back to the offices. Charity trustees and managers don’t have the same latitude to offer similar enticements but they urgently need to think through and plan for their future working operating model that will need both appropriate flexibility and sustainability.
They will need to organise staffing rosters that will have the necessary staff and volunteers in place to ensure continuity of delivery of quality services and supports. Another key consideration will be how to maintain the ethos, culture and values of the charity in an era of hybrid and remote working. They also need to return to having in-person board meetings and re-engaging with their fellow trustees in ways that are not really possible with online meetings.
There was a certain amount of tolerance or acceptance for the imperfections and constraints that working from home created, but this tolerance is finite and the Board needs a clear, thought-through strategy and plan for how the “new normal” will operate in their charity and this will need to be communicated to and be bought into by staff, volunteers and beneficiaries.
Recruiting and Retaining Staff and Volunteers
There is considerable commentary on the recent phenomenon of the “great resignation” as many workers across the globe decide following an extended period of working from home to resign from their jobs and do something different. The reasons are varied but the impact is that employers are being faced with the additional challenge of trying to recruit workers in a very competitive environment.
The charity sector is also impacted by this and also faces the additional challenge of not being able to compete against the higher salaries being offered by for profit and public sector organisations. The USP for charities is their purpose, the difference they make in society, their values and their ethos. Charities need to communicate and demonstrate these points of difference in the battle to recruit and retain staff and volunteers.
However, there are many charities where these are unclear or unconvincing and this will require Boards to reflect and refresh their purpose and values and tell their stories with conviction and authenticity.
Succession Planning, Trustee Development and Recruitment
As well as considering and developing its staff recruitment and retention strategies, charity boards will also need to look at their own composition in terms of skills, diversity and tenure. They need to objectively assess what changes to the board’s composition and skills development are required to enable the board to effectively address the evolving challenges facing their charity and ensure its future sustainability and success.
Compliance with the Charity Governance Code Standards
Compliance with the Governance Code is now a requirement for all Irish charities. It is not simply a tick box or form filling exercise. Compliance with the governance standards goes to the heart of how the charity operates, how it does its business, how it engages with its beneficiaries, how it oversees and manages its resources and how it provides accountability and transparency to its stakeholders.
Many charities have put in considerable effort in getting ready for compliance with the Code but there are many other charity boards that have not properly engaged in the compliance process and have delegated responsibility to staff or ignored the Code and its implications. Charities need to be prepared for a random compliance audit by the Charity Regulator. The Regulator has commenced the process of selecting charities for audit to verify the charity’s actual compliance with the Code’s standards in terms of performance and effectiveness.
SORP for Charities
Complying with the SORP standard for financial reporting is only voluntary for now in Ireland (it is mandatory in the UK) and only a very small percentage have opted to apply the standard. Finally, after many years of it being promised, a Charities Amendment Bill will shortly be introduced in the Oireachtas. One of the amendments, will give the Regulator the power to specify the financial reporting standards that all charities must adhere to.
This is expected to pave the way for setting SORP for Charities as the required standard for charities with annual income of over €250,000. For relevant charities who do not currently apply the SORP standard, they need to start the planning process now to be ready when it becomes a mandatory requirement.
There are many other challenges specific to the charity that the boards and management will also need to address in addition to those listed above. The task for all charity boards is to assess the challenges and opportunities for their charity and develop the responses and strategies to ensure that they are effective, impactful and sustainable.