55% of charities fail to assess board financial competence

A survey of 200 charities suggests that the governance competency of charities continues to be deficient in financial matters and are failing to take advantage of available guidance and training

57% of respondents said that they understood strategic financial governance matters well or very well, but 87% of respondents said that their charity would benefit from ’having a better understanding of strategic financial governance matters’. Nearly two-thirds (65%) do not formally assess board competency in matters of finance, and over half (55%) of charities fail to formally assess the effectiveness of financial governance. This last figure has increased by 9% from 2017 and indicates that many charities are failing to recognise the necessary improvements that can be made to become high-performing.

99% of charities consider it important to have more than one trustee involved in their charities finances but only 56% make training and development on handling finances available for trustees. In 2017, 81% of charities did so.

The survey was conducted by MHA MacIntyre Hudson and the Charity Finance Group. Commenting on the findings of this report, Sudhir Singh, partner and head of not for profit at MHA MacIntyre Hudson, said: ‘I am in no doubt that trustees overwhelmingly are motivated by good intentions. Clearly trustees should do their best when serving their charities, and most seek to do so. 

‘But our survey results are consistent with last year in identifying mediocre standards in financial governance and a lack of real commitment to trustee competency and diversity. The inconsistencies in charities’ responses certainly points to a widespread lack of self-awareness, and probably unacceptable complacency.‘

‘Trustees need a reality check on their own performance, and increasing numbers are undertaking formal assessments.  Most would be truly shocked if they understood this is holding back their charities’ impact on beneficiaries. I would encourage all to take advantage of the widely available guidance and training that is available through CFG, other sector groups and professional advisers - it would be remiss of them not to do so.’

Caron Bradshaw, CEO of the Charity Finance Group said: ‘While the survey indicates that there have been some notable improvements in financial governance amongst trustees, there is still a lot more to do to ensure all trustees are engaged in the finances of their charity. Help is available, but charities need to commit to using it to unlock the finance skills of their trustees.

‘We encourage trustees not to be complacent over the lack of diversity in the boardroom. It needs to be prioritised to ensure people from diverse backgrounds join our boards - better decision making depends on that diversity of thought and voice.’

Report by James Bunney

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