Governing documents are key legal documents for any voluntary organisation or non-profit and depending on the legal structure of the organisation it will be called different things – a Constitution, Trust Deed, or Memorandum & Articles of Association (often known as M&A, or Mem & Arts for short). Formulated or adopted (if using a model template) at the very set up of the organisation, it establishes how the organisation will run, what it intends to do (purpose), who will be responsible for it, what it can legally do, and how to make decisions including any necessary closure.
Or as the Charity Commission puts it…
“A governing document is a foundational written text that establishes the rules, structure, and purpose of an organisation or entity. It acts as a legal rulebook, dictating how the entity operates, makes decisions, and manages its affairs… It details the organisation’s charitable purposes, who runs it, and how to close the charity.” (Gov.uk)
And yet, this hugely important document is often treated as something used to set up the organisation and then largely forgotten about (unless of course we need to check we are quorate for a Board meeting, we’ve all been there…). I’m often surprised by how many trustees I meet who have never read it and yet the legal responsibility for adhering to it, is theirs – and when I’m contacted by an organisation that needs support in times of challenge, change or crisis my first question is always “What does your Governing Document say about XXX? It will tell you what you can and can’t do and from there we can work out what support you need”.
As I write this, I am very conscious that we are operating in a world where recruiting trustees is extremely tough and the last thing I want to do is put future trustees off, so I need to be clear – while use of words like ‘legal responsibilities’ can be daunting, the point is that those responsibilities are made so much easier to adhere to through good governance and a commitment to the governing document. It tells you exactly what you can and can’t do, so if you stick to that, it can be simple. The issues arise when decisions are made ‘in the dark’, often well-meaning and in good faith, but not actually in accordance with the governance.
What does the document cover (in broad terms)?
- Charitable Purpose and Powers – what your organisation is set up to do and where, and what powers it has i.e. if it can employ staff, open bank accounts, borrow money etc
- Board/management committee – appointments/removals, size, structure, quoracy, how decisions are made, how meetings can be held etc
- Membership – if applicable, who can be a member, how, voting rights etc
- Financial and asset management rules including trustee reimbursement, what the organisation can or can’t own, investment rules, reporting requirements etc
- Whether an Annual General Meeting is needed and how to go about it
- Alterations and closure details – how to amend the document itself and how to close down if needed
So how do we ‘unseat’ the governing document from the shelf?
- Make sure it is part of trustee recruitment packs – it is a publicly visible document so provide a link and direct potential trustees to it
- Make it a meaningful part of new trustee inductions – go through it together as part of the induction process and ensure they understand it and their responsibilities (at this point I will also mention ongoing Trustee Training in the wider sense and how important it is…)
- Review it annually, at a minuted Board meeting – is it still fit for purpose, does anything need to change, are you complying with it?
- Ensure it is part of your Strategic Planning cycle – do your plans adhere to your Charitable Purposes? Is your mission drifting?
- And Executive/Management teams – when you are asking your Board to make a decision, as part of your Board paper/proposal, be clear on any points/instructions from the governing document that must be adhered to. For example buying or selling of assets or land, closure processes, onboarding new trustees etc.
It sounds a lot, but by putting these things in place, both the Board and Executive Management Team (or indeed, individual) can be reassured that they are practicing good governance and know how to deal with challenges should they arise. Imposter syndrome is fast becoming one of the biggest reasons (alongside time and other pressures) cited for not seeking or taking up a trustee role – but governing documents tell us what to do, giving peace of mind to both parties and helping to eliminate the uncertainty.
So find the shelf (physical or virtual), dust it off, and make it prominent!
This blog is the 1st in a 6-part weekly series on challenge and crisis – next time, we’ll focus on the importance of trustee boards/management committees so, watch this space and do get in touch if there are other topics you would like to see.
Hannah
