The idea of creating a new type of charity for the biggest not-for-profit organisations is firmly on the table after it was endorsed by the voluntary sector’s two most prominent figures.
Sir Stephen Bubb, who has just stepped down as chief executive of charity leaders’ network Acevo, and Sir Stuart Etherington, chief executive of charity umbrella group NCVO, agreed that the sector should start thinking about a different form of governance for charities that have an annual turnover of more than £100m.
Such a change could see the creation of unitary boards as standard for large charities, whereby their top managers would become directors, and the introduction of payment for non-executive directors. At present, this is allowed only by exception and in a handful of cases.
This comes after a troubled period for the voluntary sector in which many of its high-profile problems – fundraising scandals, the collapse of Kids Company and criticism of commercial activities – have been blamed to a large extent on poor governance of bigger charities.
In a lecture entitled Charity Governance in Crisis?, Bubb said one of the most pressing questions facing the sector was whether the conventional charity format of administration by a trustee board was still right for “those large organisations that have grown in size and structure so much that they almost resemble a new category”.
He said that charities with turnover in excess of £100m represented 0.02% of the total number registered, but more than 18% of all charitable income. In the business world, governance of companies of such a size had changed fundamentally over the past 30 years. In the voluntary sector, although the quality of management had improved significantly, that of board leadership and direction had not.
“Do we need a more permissive system that might allow charities that need a different form of governance to achieve that more easily?” Bubb asked. “Should we consider normalising remuneration for non-executives?”
Etherington, responding to the lecture, said there was “probably” a case for running big charities in a different way. It would be complex and he had no ready prescription, but “the taxonomy that all things are the same and should be treated the same is not true now”.
As long as the biggest national and international charities continued to be administered in the same way as the smallest local ones, Etherington said, critics would cling to the view that their managers should “not be paid more than fourpence”.
The lecture was the first occasion on which Etherington, who has led NCVO since 1994, had shared a public platform with Bubb, who led Acevo from 2000 until this spring. The two, sometimes branded the voluntary sector’s “jousting knights”, have not always seen eye to eye.
However, the pair have been collaborating on the planning of Bubb’s new venture, the Charity Futures Programme, which is setting out to review and improve governance and leadership in the voluntary sector. It is being backed by £400,000 in funding from a philanthropist.
