Managing difficult times

James Gare, Principal, writes for Trustee Home's blog on managing difficult times:

"I have been involved with the not for profit sector for well over 15 years.  As well as being a charity Trustee in my spare time, my day job as a Chartered Accountant specialising in the sector has given me an interesting insight into good governance. I have seen the sector weather several economic downturns. However I can’t help but feel that we are looking at the most significant shake up for the last 20 years. Not only are we in the midst of an international economic crisis but the change of government has brought about a new direction for the sector. David Cameron’s drive for a “Big Society”  is requiring Trustees of some charities to re-examine their strategic direction if they are to survive the changing funding environment  – with a greater emphasis on service delivery and a cut back of unrestricted grants.

A good example of this has been the reforms in health and social care. Headway North London, the Charity I am a Trustee of, can no longer expect grants from the local NHS trust, but will instead need to apply for funding for its members on a case by case basis.  In some ways, this is an encouraging move which matches income generation more closely to service delivery. While it would seem this environment would favour the small voluntary organisation, the charity’s internal systems needed to manage this kind of funding structure need to be radically different. This illustrates quite well how change brings opportunities as well as threats, but more than ever organisations need to be strategic and dynamic if they are to seize the opportunities and protect themselves from the threats. In my view this dynamism should come from the top and Trustees need to look inwards to see whether they are fit for purpose. 

Firstly, the Board needs to understand what skills it has available then match them against current and future requirements. Very often time is wasted recruiting for skills that may already exist within the Board. Remember that Trustees may have skill sets broader than those they were initially recruited for!  Rapid periods of change require very specific skill sets.  In my experience sudden financial fluctuations can quickly expose lack of experience within a Board. If a Treasurer needs additional support through a process of change, this needs to be identified and provided. Support from an auditor often works well as they should have a fairly good understanding of the business, but similarly it may be helpful to have additional HR advice or to call in a professional fundraiser.

I sympathise with how difficult it can be to remove a Trustee who is emotionally attached to the organisation but is no longer adding value. However in order to make quick and appropriate decisions, Boards need to approach Trustee recruitment (and redundancy) in the same way they would approach staff changes.

Lastly I would suggest that Trustees need to be outward and future facing – anticipating changes to the sector and forecasting financial performance, sometimes under a number of scenarios. 

I see an enormous enthusiasm in the sector and if the right skills are identified and utilised appropriately, there are opportunities out there.  However I would urge Boards to look at themselves critically if they are going to weather the changes ahead.