Charities running public services – what’s new?

Schools becoming academies – an issue that is not going to go away in the foreseeable future. There is equal support and opposition on ideological grounds; cause for concern on practical issues (summarised well by Jonathan Simmons) and a whole lot of unanswered questions on matters finance and legal.

Wherever one sits on the topic one of the outcomes of academisation is that more schools have moved into being managed by charities – albeit mostly with exempt charity status.

Much of the opposition to academies – ideological and practical – stems from concerns over transparency and effectiveness of Multi Academy Trust (MAT) boards and the notion of private benefit. Certainly cases such as Perry Beeches  suggest that culturally, legally and in terms of financial management there are some significant challenges with oversight.

But handing over state resources to the charity sector is not new and those wanting to understand the potential risks and benefits could do worse than explore examples such as Canal and River Trust (taking on over half a billion pounds of public assets to manage England’s waterways) and the distribution of the multi-billion DFID aid budget through development charities. Arts Council will be spending £1 billion government funding over next 3 years on cultural and arts and within health large swathes of health service contracts at national and local level have gone to third sector bodies.

Some of the concerns will be very familiar – the siphoning off of money to private companies, for example, and worries that public funding does not benefit the poorest .But the development of structures that put users at the core of governance presents some interesting models for schools - as do the charities’ impact reports that detail spend and outcomes in a manner more transparent than most MATs.

Accepting that charities do not always get it right, there are some practical lessons to be learnt from charities that both directly address some of the concerns raised around the academy agenda and show some of the issues of creating a few thousand new charities in a charity system that is already struggling with regulation.

Our top 5 lessons to learn below, but more will follow in blogs over the weeks ahead as we look further at the role of charity and education collaboration and shared interests.

1.    Language matters

Many MATs have appropriated the language and culture of ‘business’ – multi academy trusts are run by Boards of Directors; we talk about income generation and efficiency and outcomes are reduced to the transactional and financial.

Making a shift to the language of charity may help change the dynamic. MATs are run by trustees – holding the asset in trust for ‘public benefit’, one of the core principles and purposes of charities. Using the narrative of charities outcomes become rounder, talk becomes more about beneficiaries and users and it is much harder to create a culture – deliberately, or as we suspect more often through inexperience, – that accepts that large payments of public monies to individuals or their companies without challenge is the norm.

2.    Users are not an add on in governance – they are at its core.

Across the country experienced charity CEOs and trustees rolled their eyes as the Secretary of State for Education made the case of removing parents from MAT governance structures. The debate on whether users need ‘special skills’ to be part of a trustee board was over years ago in the charity sector. Most mature charities recognise that being a user is – in itself – a special skill and the Cabinet Office and Charity Commission both make user engagement – real, powerful user engagement, a core requirement of an effective and well run charity.  The Government’s own guidance on trustee recruitment for example states “as well as skills, consider if your trustees’ background and experiences can help:

  • ring different points of view to a discussion
  • give insight into your beneficiaries' needs and experience"

It is beholdant on the charity to ensure that trustee training and the structure of meetings allows the involvement of users and beneficiaries in meaningful ways and – for schools like many other organisations serving young people – considering where children and young people sit in the governance structure is as important as where parents sit.

3.    Understanding the rules doesn’t happen by accident

Ideally MATs should recruit trustees with charity expertise – people who have experience of being a trustee in other contexts or in the running of charities. Much is made of the need for business expertise on Boards but – as we have made the case before – experienced charity trustees and senior managers often have all the skills of colleagues from corporate sector but with the added advantage of how to balance ‘business skills’ with a bottom line that is public benefit rather than profit. This however is one of the key challenges of an expanding voluntary sector – recruiting trustees and staff with the right skill set is an increasing challenge for charities. Free good practice guides from organisations such as KnowHowNonProfit are a useful starting points and making the most of trustee recruitment sites can help increase reach.

But even with this expertise investment in Trustees is essential. Auditing against Charity Commission’s Hallmarks of a Successful Charity provides a useful insight into a Charity’s well-being and reviewing the Hallmarks can help trustees understand what ‘good’ looks like.  Board skills audits and trustee training is essential and organisations like NCVO and Small Charities Coalition provide some helpful guidance on training.

If the Department for Education remains the principle regulator for MATs as exempt charities then it is not unreasonable to demand that they show how they will ensure MAT trustee boards are fit for purpose from a governance perspective and how this ties to the government’s wider charity agenda of charity regulation, user engagement and good trustee skills.

4.    Challenge is important

A core role of the Trustee Board is to hold the CEO and executive to account – the CEO in nearly every charity in the UK does not sit as part of their charity’s trustee board. This is not about a lack of trust – as has been suggested by some Headteachers who currently sit as part of their MAT trustees in the same way that they would have sat on their Governors Boards. But rather because good people sometimes make bad decisions; sometimes mistakes happen; always checks and balances with public and charity funding make for better decisions for users.

Being a charity CEO is scary. The challenge of independent trustees also becomes the best protection against carrying sole responsibility for outcomes, finance and impact. Good CEOs welcome strong trustee boards. Building in challenge and clear lines of accountability are essential – the rise of MATs with groups of trustees who share business interests with each other and with staff may be in the letter of the law (just) but certainly is not in the spirt of charity practice.

In most non-exempt charities trustees cannot benefit from the Charities that they are entrusted with without formal checks with Charity Commission. Making this clear to trustees and CEOs matters – many working in education don’t understand the rules of business, charity or governance and it is easy for practice to creep towards personal benefit over public for even well-meaning individuals when this is prevailing culture.

5      If you have to revert to the law it’s too late

There have been many sensible calls for the laws to be tightened around Academy governance. And these should be considered.

However, if you get to the point where laws have been broken and sanctions taken it is too late – public trust is lost, resources are wasted, impact is reduced. Good training, positive culture and the ability to raise concerns proactively are key routes to ensuring good practice. Are charities perfect at this? No – look at Kids Company and some of the other disasters in charity governance. But creating a culture of public benefit; skilling trustees and staff in their roles and allowing challenge and demanding transparency are battles that the charity sector have fought and won as a community and MATs could do a lot worse than to adopt charity culture.

There are of course other lessons for MATs to learn from charity sector. Fundraising has to date been the preserve of private schools (who are of course charities) and non-maintained special schools. Increasingly though MATs are moving to fundraising practice and will need to be mindful of the changes in fundraising regulation about to sweep through the voluntary sector. Similarly the constraints on lobbying and advocacy that charities in receipt of public funding now have to be mindful of will also apply to MATs and further exploration of the potential impact of this will be something we will return to in months ahead.

Lastly of course it is not all one way. Charities can learn a lot from schools and MATs on effective governance and, working with LLS, ACEVO and others, we will be looking at practical opportunities for charity and education leaders to better work together to improve outcomes for children and young people. Because – in the end – that is the public benefit that most of us want to see.