Insufficient monitoring, lack of oversight, inadequate governance standards – key issues identified by not-for-profit board members

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Insufficient monitoring, lack of oversight, inadequate governance standards – key issues identified by not-for-profit board members

IoD publishes findings of survey of board members in not-for-profit sector

An Institute of Directors’ research report released today, Governance in the Charity & Not-For-Profit Sector in Ireland, has found that an overwhelming majority (83%) of board members and chief executives involved in the sector believe that a mandatory code of governance for charity and not-for-profit organisations should be introduced and 4 in 5 (79%) want to see a more formal and transparent process of appointment to boards in the sector.

The research was carried out among members of the Institute of Directors in Ireland who are involved in the charity and not-for-profit sector in the wake of the controversies in the sector in recent weeks. Those surveyed include board members, chairpersons, chief executives and company secretaries of charities and not-for-profit organisations operating in Ireland, 54% of which are in receipt of State funding (see editors’ notes).

Action needed to improve governance in the not-for-profit sector

A staggering three-quarters (75%) of those surveyed rate governance levels in the sector generally as average or poor and a two-thirds (64%) believe that organisations in receipt of State funding are not adequately monitored or held to account for the appropriation of these funds.

These results firmly underline the need to improve governance levels in the not-for-profit sector and are all the more powerful given that it is the not-for-profit board members themselves who are calling for greater oversight and transparency in the sector,” said Maura Quinn, Chief Executive of the Institute of Directors in Ireland.

More than 1 in 2 (56%) believe that the establishment of the Charities Regulatory Authority and the appointment of a Charities Regulator, now expected in February 2014, will help to restore public confidence in charities and not-for-profit organisations and, when asked about what needs to be done to improve governance standards in the sector, those surveyed selected the following:

Establishment of Charities Regulatory Authority Public disclosure of accounts Board training Greater transparency in appointments
82% 74% 71%



More frequent rotation of board members Greater focus on ethics and integrity Publishing the salaries of CEOs
58% 57%



Executive remuneration

A key finding of this research is that a clear majority (80%) of board members surveyed believe that external benchmarking should be used to determine the appropriate salary levels for chief executives in the not-for-profit sector.

31% of organisations already claim to use external benchmarking to assist in setting their Chief Executive’s salary level, while 70% say that the Chief Executive’s remuneration is set by the board and / or by the remuneration committee and approved by the board.

Knowledge, commitment and compliance
On knowledge and training, the results are somewhat positive though there is room for improvement. A narrow majority (56%) say that their fellow board members have adequate knowledge and training to perform their duties effectively, though 1 in 3 (34%) disagree, which is cause for concern in the sector.

Half (53%) of those surveyed believe that board members give the same level of commitment and preparation to their role in the not-for-profit sector as in commercially driven organisations and, where it is applicable, three-quarters (75%) of board members surveyed say that their organisation complies with The Governance Code for Community and Voluntary Organisations in Ireland.

While 46% of those surveyed say that their organisation publishes its audited accounts as it is required to do so, it is encouraging to see that an additional 28% of board members surveyed say that their organisation voluntarily publishes its audited accounts.

Commenting on the findings, Maura Quinn, Chief Executive of the Institute of Directors in Ireland, said: “It is vital that swift action is taken to address the issues in the sector, such as appointing the Charities Regulator, to not only rebuild confidence but also to ensure that the countless organisations operating effectively and in-line with best practice are not unduly impacted by the governance failings that have beleaguered the sector in recent weeks.

“What has emerged from the recent controversies is a clear requirement for greater oversight and accountability for organisations in receipt of State funding and those in receipt of public donations. However, oversight is not a panacea and is only one part of the solution. The behaviour of board members is also a key factor.

“Ethics and integrity should be at the core of boardroom behaviour and decision-making and board members should not lose sight of the fact that their duty, first and foremost, is to serve the interests of the organisation.”

Article Published: 28/01/2014