Changes to automatic disqualification from running charities miss the point

From 1 August there will be two changes to the rules about automatic disqualification from being a charity trustee.

The first is a fairly straightforward – the number of reasons why someone can’t be a trustee are increasing.

In addition to being bankrupt or having unspent convictions relating to dishonesty or deception, you will also be automatically disqualified for having unspent convictions for terrorism or money laundering, for disobeying a Charity Commission order, or for being on the sex offenders register.

The reason for the changes are fairly unspecific, but they are not in response to anything recent: the initial consultation on the subject took place in 2013. Whilst some object to using the sex offenders register for this purpose (as you can be put on the register without being convicted of anything and kept on it for several years after any offence is ‘spent’), individuals have the right to apply for waiver, when allowing this will be ‘in the best interests of a charity’ – and presuming potential trustees want to tell everyone about their past, on the off-chance their offence is waived.

The second change is more significant – for the first time, the criteria used to disqualify people from being trustees will also be used to disqualify people from holding senior positions in charities, specifically as chief executive or in a senior finance role.

Whatever the wrong and rights of this – and social justice charities are well-versed in the wrongs of restricting employment to ex-offenders – one effect is to further confuse the role and relationships of staff and trustees.

It seems entirely reasonable that all those accountable for the running of a charity should be held to similar standards. The problem, however, is that senior staff are not accountable. The Charity Commission makes clear that trustees and not paid staff have ‘independent control over, and legal responsibility for, a charity’s management and administration’. The best run charities have sensible relationships between chair and chief executive which allow grown-up decisions to be made. However, when disagreement arises, whilst the chair has the casting vote on a board of trustees, the chief executive doesn’t even have a vote.

Those behind the new rule presumably believe it will improve the way charities are run. In practice the change highlights the major weakness in the current model of governance for large charities, which won’t go away until senior staff are equally accountable to trustees for what happens in their charity.

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The changes have an important practical implication for all 168,000 charities in England and Wales. By 1 August 2018 you should:

  1. Check which, if any, staff posts qualify as senior manager positions, and ask identified senior managers whether they are affected by any of the automatic disqualification reasons, old and new
  2. Ask all trustees whether they are affected by the changes to the disqualification reasons
  3. Get senior staff and trustees to confirm in writing that they are still eligible to be a trustee, or will apply for a waiver before 1 August 2018 (using these or similar declarations for trustees [download] or staff [download]).

After that you need to ensure that systems for appointing trustees or senior staff are updated in advance of making any new appointments.

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If you think you would like some help updating your trustee and senior manager declarations, think again – it’s a quick job so we suggest you just get on with it. If, however, you would like some help strengthening your governance, we may be able to help, so please contact us.