We are punch-drunk in Ireland and across the globe by cases of catastrophic and hugely damaging failures in corporate governance. Every decade brings up a new batch of even more spectacular breakdowns in governance, where those charged with the stewardship and oversight of their organisations, seem to have been asleep at the wheel or even worse having their hands in the till. In this post I ask the question “Can we trust our charities?”
Can We Trust Our Charities?
We in Ireland are painfully aware of costly governance failures in the banking sector that has brought the country to brink of economic collapse and has done untold damage to our national reputation. The State sector has also had its share of examples of weak and ineffective corporate governance that have left society picking up the tab while those entrusted with responsibility which they inadequately or incompetently exercised, appear to have gotten off relatively scot-free.
The Charities sector also has had its corporate governance failures, where control systems have broken down or have turned out to be illusory. Some of these failures have made it into the public arena. But others are hurriedly pushed under the carpet and hushed up for fear of the damage to the organisation’s good name and its future ability to raise funds. Charities are one of the few remaining pillars of society, where the public’s trust has not been crushed by repeated damning failures.
Trust is a Delicate Flower
Our trust and confidence in the Banks, the Catholic Church, the political system and various organs of State, have been eroded by a series of scandals arising from poor controls, arrogance and lack a character. But trust is a delicate flower. It can very quickly perish without careful attention and nurturing. We in the Community, Voluntary and Charities sector are not immune to the harmful damage that a major failure in corporate governance would have for our organisations and our sector. We cannot afford to pay lip service to the need to have robust and monitored governance systems in place.
It is not acceptable to opt out and leave it to others to worry about the need to adhere to good practice. It is in everyone’s interest to ensure that there are robust and effective governance practices in place and that these are regularly reviewed. A single event of poor corporate governance can severely damage a reputation that has taken years to build. Your personal reputation as a manager or as a board member can be at stake as a result of a corporate governance failure in your organisation. Ineffective corporate governance can not only destroy personal and organisational reputations but they also can seriously damage a sector’s or even a country’s good name and reputation. The development and adherence to good governance principles is a collective responsibility of the Board, the CEO and the Management team.
Other stakeholders such as funders and regulators have a certain role and responsibility, but ultimately, and ethically, the prime responsibility rests with the organisation itself. Corporate governance is about the methods and processes we put in place to provide for the proper guidance and oversight of management. It is the systems that set out what we want the management of the organisation to do, the rules or policies they need to adhere to and how they need to account for the deployment and use of the organisation’s resources.
It is about how the organisation is directed and controlled. How decisions are made and how the organisation reports on the impact of those decisions. It is critical to the effectiveness of the organisation and those involved in it. Good corporate governance has to be at the heart of the organisation, constantly reviewed, evaluated and improved. Implementing and complying with good practice codes such as the Governance Code for the Community, Voluntary and Charity sector (see www.governancecode.ie) is a very useful and helpful tool for putting these issues on the table on an objective basis. Good governance is a continuing journey where you constantly aim to apply good practice principles and check regularly on how you are doing.
It is not a tick box exercise or about producing big binders of policies and controls that nobody pays attention to. It is about leadership, compliance, accountability, transparency, effectiveness, honesty and fairness. It is about seeking to do the right thing at all times. Has your Board decided yet to adopt and comply with the Governance Code to protect the good name of your organisation?