Advice on how to assess the performance of charity trustee boards is offered in a new report from New Philanthropy Capital (NPC) to help funders identify effective governance and aid foundation trustees in assessing their own management structure.

Stories from the Boardroom is based on a series of seminars held this spring by NPC and The Clothworkers’ Company on key areas of governance.

Clare Yeowart, senior consultant at NPC says: “Trustees we spoke to emphasised that charities should look carefully at the blend of skills, personalities and experience on their boards. They need to review whether the board has evolved to meet the changing needs of the charity or whether it needs to bring on new expertise. This is something that funders should consider too—it’s important to check that a potential grantee has an effective board that will be able to provide support and strong leadership during challenging times.”

The report includes case studies of how boards of large and small charities have evolved during the economic crisis. These include Macmillan Cancer Support, the National Trust and Tomorrow’s People, through to smaller charities including Mind in Bradford and The Broomhouse Centre in Edinburgh. It also looks at mergers and collaboration and says trustees need to take responsibility for deciding if a merger or collaboration is appropriate. 

The report said there should only be one legitimate reason for merging: to increase impact for beneficiaries. It also outlined best practice, for example, agreeing a common vision and defining a method to achieve that vision and that trustees need to put time and effort in to tackling culture clashes.

 These include:

•  Are we clear about our strategic priorities and unique selling points?
• Are we providing strong and supportive leadership?
• Are we keeping a sharp enough focus on our finances?
• Do we have the right blend of people on our board for current circumstances?
• Are we prepared to ask ourselves challenging questions?

 Each question is then followed by more in-depth questions, which can be used to probe the board.

Key issues include the strength of the chair, the quality of the relationship between the chair and chief executive and the size of the board. Mike Hudson, founder of management consultancy, Compass Partnership, and chair of one of the seminars suggests an optimum number is around 12.

Pat Chapman-Pincher, who has been on the board of the Friends of the Earth Trust since 2006, recommended asking a series of questions to assess whether boards have a good balance. These include:

1. Do your trustees have a broad mix of skills?

2. Are they challenging?

3. Are they knowledgeable?

4. Are they engaged?

5. Do they have time?

6. Do they work together as a team?

Chapman-Pincher adds that strategic planning needs to be quick and flexible. The report warns: “There is sometimes a risk that a charity can spend months and months producing a five-year plan that is not worth the paper it is written on by the time it is published.”

How management information is handled is also a focus of the report. Rachael Bayley, trustee of Barnardo’s, explained that the charity has recently introduced the idea of a dashboard showing graphic displays of management information. This compares data over time for key areas, for example, levels of statutory and legacy income, average sick days, headcount and business won and lost.

In the report, Kate Sayer from auditors, Sayer Vincent, urges funders and trustees to question the reliability of a charity’s income and the flexibility of its cost base. She also emphasises the importance of being prepared to change and make difficult decisions, such as closing services.

The report concludes: “As charities feel the squeeze, it will be more important than ever that trustees are there to lead and support them.Trustees need to help charities plan ahead and respond to the changing environment.But they also need to maintain a strong focus on their charity’s mission and review how they can provide the best possible support to beneficiaries.”

The report is free to download from the NPC website.