London, 19 January 2021 – ICSA: The Chartered Governance Institute has today released a statement outlining its views about the situation of having chief executives, and other staff, as trustees of charitable companies such as academy trusts. The Institute believes that the situation is nuanced and a default of only one option will not always represent good governance practice.
Louise Thomson, Head of Policy (Not for Profit) at the Institute says:
“While charity trusteeship is generally voluntary and, in accordance with charity law, no trustee should benefit from their position, there is an option for a charity to apply to the Charity Commission for England and Wales to appoint executive trustees where there is a sound business case. For commercial companies, the unitary board – made up of both executive and non-executive directors – is a common governance model and problems can arise where someone who is not a director is seen to unduly influence the board and therefore may be acting as a ‘shadow’ or ‘de facto’ director.
“Both the voluntary and unitary approach can present governance challenges. Within the charity board it may be felt that the CEO does not have ‘skin in the game’ if not a board member or may be seen to have too much influence without the responsibilities and liabilities associated with trusteeship. The role of a governance professional is to explain the pros and cons of each model and present workable arrangements to ensure that the organisation adopts the approach which is best suited to achieving its objects – whether commercial or charitable.
“The current situation regarding the options available to academy trusts is not perfect but does offer choice and, as with many aspects of good governance, the challenge is to adopt practices which work for an organisation at a given time. When a particular option no longer offers the best way to fulfil charitable objects, the situation should change. Governance evolves and its practices should not be set in stone either.
“It is a board’s duty to ensure the governance arrangements in place are fit for purpose and effective. A failure to regularly review an organisation’s governing document, including the articles of association, is not conducive to good governance practice. As a matter of urgency, the Institute encourages all academy trusts to review their governing documents to ensure they reflect current good practice for the benefit of delivering their charitable purposes (the provision of education) to their pupils, communities and wider society.”
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Notes to Editors: