Why does governance matter?
Effective governance has the power to positively transform New Zealand organisations, communities, and the country itself. Charitable trusts are out in the community doing important work to uplift others, and so, if they are well-governed, they will achieve even more. So effective governance can enable a better future for all of us. Boards are the guardians of the entities they serve, and their role is to make choices and decisions that create a strong, fair, and sustainable future for the charitable trust.
Today, more than ever New Zealand needs effective and knowledgeable charitable trust board members who go beyond compliance and aspire to meet the highest standards. The role of governance is increasingly visible and important in a complex and fast-moving environment. This is especially the case in the context of challenges, where traditional funding streams may be drying up – how will the board adapt and learn to thrive while looking for new opportunities? There has never been a more challenging or rewarding time to be involved in the governance of charitable trusts.
Responsible and effective governance increases the likelihood that the charity will not only survive but also adapt when needed, and fulfil its fundamental mission: to advance the charitable purposes for which it was set up. It makes good sense because it builds and sustains stakeholder confidence, improves operational performance, and reduces risks. The board, as a key agent of effective governance, adds value when its actions help to achieve the entity’s purpose.
Research has proven that the benefits of governance include:
- providing leadership
- supporting senior management to keep focused
- providing advice and mentorship to management
- a more purposeful strategic direction
- furthering achievements and likelihood of entity survival
- providing credibility, transparency, and accountability
- increasing confidence of those donating funds
- ensuring stakeholder interests and relationships are managed
- achieving better risk management.
From a stakeholder perspective – whether those donating funds, using the services, or volunteering to support the charity - the knowledge that skilled and trusted individuals have close oversight of the entity can reassure them and encourage them to continue to support the organisation.
The importance of effective governance for charitable trusts
As a charitable trust is accountable for funding it receives from the public, there is a need for responsible governance and reporting on the impact the charitable trust is making. Without effective governance, it is likely that a charitable trust will fall short because often those on a charitable trust board are volunteers. Upskilling them in effective governance will help them to ensure that the entity is achieving the purpose that the charity was set up for.
In addition, we live in a fluid and fast-changing world, which has caused all of us to question our previous assumptions. For many charitable trusts this has included an impact on funding streams that may no longer be there. This is a dynamic time of change and the best leaders of charitable trusts will be those who take their governance skills to the table to discuss and map out where the opportunities might be for their organisation.
That is why this topic of effective governance is so essential for charitable trusts right now.