At dinner last night I was asked by a friend whether she should become the trustee of a charity. At the time I didn’t know that Sir Alan Parker, one of the most influential PR people in the UK, had resigned as chairman of Save the Children because of scandals engulfing the charity. It would only have reinforced my expressed view that you need to be very careful getting into situations you cannot control.
As people become successful in business, they become tempted to take on extra responsibilities where they can give other organisations the benefit of their experience, typically as a non-executive director of a company or trustee of a charity. They do this usually for very good reasons, but are often unaware of the reputational dangers that come from not having the control that you think you have over the organisation you are helping.
As a non-executive director the role is quite well defined and can be quite familiar to someone who has been an executive director of a company. But beware. A NED has the same responsibility in law, but less power and significantly less information. However good you are at ferreting out the facts, you rely on what the CEO and his or her henchpeople tell you. At WPP Group, Sir Martin Sorrell famously had his non-executive directors cowed, so that they allowed him to have a remuneration package that scandalised business and remain in charge well past his sell by date. Look at the mess the group is in now.
If you are a NED and you think that the business in nor being run well but the CEO disagrees, what can you do? Force him or her out? Unlikely unless you can convince a majority of other NEDs and/or shareholders. Resign? OK – but that’s a brief moment and you have lost any influence. Go to the press? Good luck with that!
At least businesses are businesses. Charities are usually founded to achieve laudable aims – though I would argue that the regulation of charities is so poor that some questionable organisations achieve charitable status. Their management structures, governance standards and financial controls are often vastly inferior to businesses. Good intentions do not always translate into good management. Trustees have limited time to delve into the workings of the charity, are often not remunerated and carry significant responsibility under law and in the court of public opinion.
If things go wrong, the finger is pointed at the trustees to ask why they didn’t do more. Look at how Sir Alan Yentob was criticised over Kid’s Company, and now Sir Alan Parker at Save the Children.
Don’t get me wrong – I think that being a NED and being a trustee of a charity is a great thing for people with the right experience and intentions to do. But go into it with your eyes wide open and get the best possible advice before, during and after.