Over the past ten years, the charity sector in the UK has undergone massive changes. Alongside their executive teams, the roles of Chairs, Trustees and Non-Executive Directors have evolved in line with regulatory changes, financial and social pressures and a global pandemic.
As the leader of the board, the Chair often has to navigate complex governance, manage stakeholder expectations, and drive strategic initiatives that ensure impactful and sustainable outcomes. All this while championing the organisation’s cause with internal and external networks.
In 2022, as the world was recovering from the COVID-19 pandemic, we began to ask, “Has the chair role become too onerous?”.
Since then, we’ve been supporting our clients in exploring the idea of Co-Chairing. Over the next few months, we’ll delve further into the topic before hosting an online event: “Co-Chairing: Ensuring Two Heads are Better than One.”
In this article, we revisit some of the changes the charity sector has undergone in the past ten years and the impact this has had on good governance. In our next article, we’ll discuss the evolution of the Chair role and then finish this series with an overview of co-chairing, along with the benefits and challenges.
Increased accountability.
In the mid-2010s, public trust in charities was at an all-time low. New legislation was introduced to create higher standards of governance that would combat accountability issues. The Charities (Protection and Social Investment) Act 2016 strengthened governance structures, including the ability to review trustee appointments, and brought in more transparent and ethical fundraising practices.
Many charities now adhere to the Code of Fundraising Practice, which outlines the ethical management of fundraising campaigns and donor data. The Financial Regulator is reviewing and updating the code from 2022 to 2025, leading to more changes that Chairs must keep on top of.
The Code of Fundraising Practice often works alongside the Charity Governance Code, which recommends best practices in areas such as leadership, integrity, decision-making and risk, board effectiveness, and accountability. Compliance with the Charity Governance Code requires regular self-assessment, trustee training, and enhanced stakeholder transparency.
The introduction of GDPR laws in 2018 required significant investment as data management and protection practices were overhauled. Non-compliance resulted in huge fines, with the ICO issuing around £42m in fines in the UK in the 2020-2021 financial year. Alongside financial damage, GDPR breaches inflict lasting reputational damage.
The media has played a key part in spotlighting compliance successes and failures to the public, making it even more important for charities to demonstrate integrity and effectiveness.
Social and environmental focus.
Along with accountability, the public now expects transparent social and environmental reporting that shows organisations are addressing climate change, supporting equitable practices, and championing social issues.
Many are now using the United Nations Sustainable Development Goals to set strategic goals that address corporate social responsibility concerns.
With concerns over greenwashing, rainbow-washing and token representation, it’s up to the Chair to ensure these elements remain at the core of the organisation’s strategy, rather than be an afterthought on optics. There needs to be a depth of engagement with sustainability and inclusive diversity that ensures they are linked to the organisational purpose and that they have the policy and practice guides in place to ensure such they are embedded.
COVID-19.
The COVID-19 pandemic increased demand for services across the charity landscape in an environment of heightened health risks and economic hardship.
The world moved online, with charities leveraging digital platforms for fundraising and service delivery, highlighting inequalities and sparking innovative approaches to community support. Remote work became prevalent, affecting volunteerism and operational strategies.
Organisations that couldn’t keep up with financial pressures closed or merged. The Government pledged £750 million for voluntary, community and social enterprises, and some philanthropists could increase their giving with emergency funding, but financial sustainability remains a high priority for many charities.
On the positive side, we saw increased collaboration across sectors and a public recognition of charities’ essential role in crisis response and resilience.
Financial Pressures.
COVID-19, high inflation, rising energy prices, and supply chain disruptions have led to a cost-of-living crisis, increasing charities’ operating costs and causing a downturn in donations.
Charities need sustainable financial models and diverse income streams to overcome financial challenges. When facing economic uncertainties, boards must focus more on financial resilience, strict budgeting, financial monitoring, and risk management practices.
There has been a marked increase in charities that require trustees with financial acumen to guide the charity through these economic challenges while maintaining service delivery and operational stability.
Technology.
Technology has reshaped governance by streamlining operations, enhancing donor engagement, and optimising fundraising efforts. Online platforms and social media have expanded their reach, allowing better communication with supporters and beneficiaries.
Data is used more intelligently to guide strategic decision-making about measuring impact and improving service delivery. It’s now expected that a board should have a digital/IT expert who can oversee digital strategies and guide the board on ethics, as well as robust data governance frameworks that ensure accuracy, privacy, and ethical use.
Protecting sensitive donor and beneficiary information is paramount, and charities must adhere to strict cybersecurity measures. Boards must stay current on cybersecurity risks and mitigation strategies and invest in training to ensure staff and board members are confident in using new technologies.
Demographic shifts.
Changing demographics have led to adopting inclusive, flexible and forward-thinking governance practices.
Fundraising strategies must be flexible to suit generational preferences, with different causes often prioritised by different generations.
Boards must be diverse and inclusive across gender, age, ethnicity, and socio-economic backgrounds to reflect the communities they serve. While leadership and sector experience stay important for the board, younger trustees can bring expertise in different skills, fresh ideas and passion for your cause.
Increased ethical accountability, shifting demographics and technology, and financial pressures have fundamentally changed governance within the charity sector. Introducing a Co-Chairing structure allows charities to reap the benefit of having a diversity of leadership in the form of two people with multiple skills, knowledge and backgrounds. As this blog has outlined, the timing could not be better for this because of the multiplicity of demands on charity boards as they attempt to maintain and sustain good governance in an ever-shifting landscape.
Charity governance structures must be well-defined but flexible to respond to these challenges. In the next edition of this series on Co-Chairing, we discuss the skills that incoming Chairs need to be successful, and why co-chairing might be the answer to these challenges.
Marie McQuade has a long history of working with charities to create impact. Since 2023, she has been recruiting board members for charities nationwide. You can reach Marie via her LinkedIn profile or email.
