Charity boards in recovery

About this research

To support charities through this time of high-stakes decision-making, NPC partnered with decision-making consultancy Leapwise. Leapwise works with senior leaders to support strategic decision-making and build more effective governance and decision-making approaches across organisations. They wanted to support this work on a pro bono basis to support their social impact. NPC wanted to bring different perspectives and expertise to support the sector.

The Leapwise team interviewed board development experts, chairs and chief executives of medium and large charities in Britain about their approach to decision-making. The team also surveyed 34 executive and non-executive charity Board members on the challenges faced by charity Boards and the effect of the Covid-19 pandemic on charity governance. And they drew on their previous research and experiences around board and senior leadership decision-making. NPC provided detailed input based on their own research and experience, alongside editorial oversight and publication support.

For more on the Leapwise authors of this paper, head to https://leapwiseadvisory.com/team/.

Decision-making has changed during Covid in four domains

Good decision-making and governance have always been vital, especially in a crisis. Research in 2016 on charities in financial trouble suggests many seek help too late. Those charities who survived did so, in part, because their boards practiced good governance. They planned ahead, they engaged more, and they sought professional advice.

The unpredictability of Covid makes effective decision-making harder than ever. Boards face existential decisions that they must make quickly amidst a cloud of uncertainty. To prevent a cash-flow crisis, financial decisions are being treated as more pressing. Our research also found some charities are trialling new services faster than they would have done. In this climate of uncertainty and change, some executive teams and boards are actively reforming their decision-making processes, drafting more precise proposals and assessing them with more careful deliberation than before.

This research identified four main domains where boards were making critical decisions in a crisis:

1. Leadership
2. Organisational performance
3. Operating models
4. Decision-making infrastructure

1. Leadership

The Covid-19 pandemic is catalysing changes in charities’ leadership.

• Being a chief executive is stressful at the best of times, and many are now expressing fears of burn-out. While reluctant to leave their organisations in a time of uncertainty, this could accelerate people’s decisions to make career changes.
• Some introspective chief executives have come to realise that someone with a different skill set is needed to lead the organisation through its next chapter.
• For many trustees, charity governance is part of a portfolio career. In the current economic climate, some are no longer able to volunteer their time and energy as consistently as before, despite their expertise being most needed. Others are getting more involved in charity work than ever before.

Major changes in charity leadership can make succession planning and recruitment harder. Some boards have halted recruitment altogether. Meanwhile, others are finding that Covid-19 restrictions are contributing to less satisfying onboarding processes, for example, because trustees are unable to join frontline staff to see the charity in action.

2. Organisational performance

Charities have had to pivot fast to deliver their mission through a pandemic.

• As charities move from immediate reaction to a ‘re-set’ stage, boards will be stewarding conversations about what changes should be kept and what needs to be done differently.
• A core responsibility will be to address underperformance, relating to both people and systems, which were previously tolerated while pursuing other goals, but which are now critical.

3. Organisational operating model

The Covid-19 pandemic is challenging charities to re-think their operating model to better achieve their mission and serve communities and service users.

• CAF reported in April that 23% of charities were refocusing their activities. Such changes may become permanent.
• To continue achieving their mission in a new social and economic environment, some charities will create new services while eliminating others. Some may decide to make online delivery permanent after delivering services virtually during lockdown.
• More fundamental restructuring processes are also on the horizon. During lockdown, 18% of charities surveyed by CAF said they were now collaborating with other organisations. Going forward, charities may be making major decisions on merging and will need more information to do so strategically. NPC’s publication Let’s talk mission and merger argues that mergers are an extension of collective action, and therefore a means of achieving great impact.

4. Decision-making infrastructure

In many charities, coronavirus has revealed weaknesses that have impeded decision-making for a long time but were never critical enough to be a priority. For example, problems around:

• Professional relationships – Including relationships between the board and the executive team; between the chair and the chief executive; and between the chair and other trustees, all of which have a significant bearing on decision-making.
• Information management – Including what information is needed to reach high quality decisions; records of the decisions that have been reached; and progress on implementation.
• Strategic operations – Including an understanding of medium- and long-term strategic objectives; management of reserves and investments; and appetite for risk within the board and the executive.

Coronavirus is a game-changing moment generating ripe opportunities for chairs and chief executives to think about how decision-making can be improved. Nevertheless, some board development experts interviewed for this research worry that, as the crisis progresses and trustees feel they have created some stability for their organisation, some will begin to disengage from proactive governance again.

This would be a missed opportunity. The decisions that will shape the British charity landscape for decades to come are only now appearing on the horizon.

So how should trustees respond?

Governance and decision-making systems are undoubtedly feeling the pressure, but this isn’t always translating into changes in approach. Capacity is limited, risk-appetite is down, and many boards are already overwhelmed with unfamiliar ways of working.

We therefore focus our advice on small and easy-to-try ‘experiments’ that have potential to improve the effectiveness of board meetings and decision-making.

We encourage chairs to try some of these tools and to adopt a validated learning approach to test what works for their board. Some of the techniques we suggest are provided by the experts and leaders we spoke to. Others are drawn from decision science and the experience of Leapwise, the decision science consultancy, and from NPC’s work with boards and leadership teams across the social sector.

How to…