Governing your organisation

Contents

Run meetings

Meeting size

• You can hold trustee or members’ meetings of any size in person. If meeting in person, you can refer to guidance on living safely with respiratory infections including covid-19 on GOV.UK.
• Whether you are meeting in person or virtually, you need to ensure that your meeting is quorum. Quorum is the number of people required to attend a meeting in order for decisions to be made. The quorum number should be stated in your governing document. For more information, read the Charity Commission’s guidance on charities and meetings.

Hosting virtual or hybrid meetings

• The Charity Commission understands that covid-19 continues to have an impact on trustees deciding if and how they can hold meetings.
• When considering hosting a meeting on a remote or hybrid basis, you should check whether your organisation’s governing document allows you to do so.
• If there's no clause in the governing document allowing you to do so, one option is to see if the trustees can amend the governing document to facilitate changes to how and when meetings are held. Read the guidance on how to make changes to your charity’s governing document on GOV.UK.
• Generally, if there’s no such clause in the governing document, you couldn’t reasonably make prior changes to the government document and you have considered other relevant factors such as alternative options, the Charity Commission will understand the need to hold a remote or hybrid meeting and take a proportionate approach. This decision must be in the charity’s best interest. You should record the decision and the reason for it to demonstrate good governance. Read the Charity Commission’s guidance on holding meetings on GOV.UK.
• On 21 April 2022, the Charity Commission’s more flexible approach to holding meetings outside of the terms of their governing document came to an end.
• The Chartered Governance Institute has developed practical guidance for charities on how to approach your first virtual or hybrid AGM.

Postpone, adjourn or cancel meetings

• If you need to postpone, adjourn or cancel your organisation’s AGM or other meetings as a result of covid-19, you need to make sure that you follow any rules in your organisation’s governing document that allow for postponement, adjournment or cancellation.
• If there are no rules in your governing document, but you decide that this is still the best course of action for your organisation, you should use any power (usually in your governing document) to amend the rules to ensure you can hold meetings in a valid format. For further information read the Charity Commission's guidance on postponing or cancelling meetings on GOV.UK.

Making good decisions

• Organisations are having to make different types of decisions. McKinsey’s 7S model can help you think about the types of decisions you may be having to make.
• Under times of stress, science suggests that our decision-making capability is reduced.
• It can be helpful to break down the decision making process. Some key questions to consider include:
• What decisions do you need to take? Be clear about the exact decisions you need to make.
• What is the time-frame? How urgent is the decision? This will help you prioritise your decision-making.
• What information and data is required to make the decision? This might be for example financial and or evaluation data.
• Can you collect this in a meaningful and appropriate way? If not, you may have to make decisions based on imperfect information and data.
• Who needs to be involved and how will it be communicated? Make sure that the right people are involved in making the decision. Decisions will need to be communicated to staff and or volunteers. Think about how you are going to do this.
• Tools to help you make better decisions include:
• our scenario planning guidance will help you assess uncertainties in your external environment and plan how you are going to respond
• Tools for Tomorrow (PDF), a practical guide to strategic planning for voluntary organisations.

Report a serious incident

• The Charity Commission requires charities to report serious incidents.
• If a serious incident happens in your charity, you need to make sure there is a prompt, full and frank disclosure to the Commission.
• To find out what is a serious incident and whether or not you should report it, read the Commission's guidance on how to report a serious incident in your charity.
• The Commission has recognised that the pandemic has resulted in some unprecedented challenges and scenarios that were not envisaged.
• To help you decide if you need to report an incident that is relevant to the pandemic, the Commission has produced a supplementary examples table (PDF).
• You should still exercise judgement in deciding whether an incident is significant in the context of your charity. In making this decision, you should take account of your staff, operations, finances and reputation. For more detailed information, read the Commission’s guidance on reporting serious incidents during the coronavirus pandemic.

Manage board dynamics

• The behaviour, culture and overall performance of your board is critical to your charity’s success. This is clearly outlined in the principle of board effectiveness in the Charity Governance Code.
• During times of uncertainty and increased anxiety, board dynamics may become more difficult to manage and relationships between individual trustees may deteriorate.
• To help manage this, below are some good practice suggestions around building good board relationships.
• Make sure that all trustees are clear about what is expected of them by law and in practice. During times of crises, expectations may change. Be clear about these.
• Ensure that a culture of mutual respect and trust is encouraged. This can be supported by re-visiting or developing a board code of conduct.
• Continue to make time for team building activities, both formally and informally. For example, board away days can be a great opportunity for trustees to get to know each other better and can support the board to work well together as a team. The Association of Chairs have some tips on how to run a great virtual away day.
• Provide individual trustees with opportunities to review how they feel about their role and their relationship with other trustees. This provides an opportunity for issues to be addressed early. You can do this with individual trustee performance reviews.
• Being aware of the amount of support versus the amount of challenge you offer each other and your executive (paid or unpaid). You want to aim for a supportive environment where individuals feel comfortable to challenge each other in a constructive way. This will allow for scrutiny of decision making.
• If you are finding it difficult to resolve disputes amongst your trustees:
• Watch our webinar on Building good trustee relationships, what to do when things go wrong (broadcast 28 October, 2020)
• Read our guidance about managing trustee disputes
• Read The Association of Chairs' guidance on working through difficult board relationships.

Facing financial difficulty

Consider merger or collaboration

• If your charity is or might be facing financial difficulty, a merger or some form of collaboration could be an option.
• A merger is where two or more organisations formally come together.
• There are different forms of collaboration such as an informal alliance, a collaboration agreement or setting up a joint venture.
• The main consideration for these should be whether this will improve outcomes for beneficiaries by helping an organisation better achieve its aims.
• Find more information about mergers on our guidance pages. Find more information about collaboration on our guidance pages. 
• The Charity Commission has guidance and a checklist on mergers and collaborative working.
• Charities in search of partners for collaboration or merger can use the Commission’s register of charities to find potential partners.
• Bates Wells, the charity and non-profit specialist legal firm, has launched its new decision tool for voluntary organisations facing financial difficulty, and who are unsure of the next steps to take. You can also look at Bates Wells’ brief guide to collaborative working.

Check for and manage potential insolvency

• There's no statutory definition of insolvent.
• In practice there are two separate tests for insolvency. Failure of either might be an indication of insolvency:
• The charity cannot pay its debts as they fall due for payment
• The value of its liabilities exceeds the value of its assets.
• To find out more about these tests and signs of potential insolvency read our guidance on financial difficulty and insolvency.
• Read the Charity Commission’s guidance on what is insolvency.
• If you're dealing with potential insolvency, you should seek professional advice at an early stage in order to rectify your position. When obtaining professional advice, you should:
• meet more frequently with your board
• keep a record of key decisions and why they were made
• keep a record of any other arrangements.
• The Commission’s guidance outlines what steps you might consider taking if insolvency is a possibility.

Manage insolvency and potential closure

• If you think your charity is facing insolvency, you should: 
• contact your charity’s auditor or professional accountant in the first instance. Your charity’s auditor or professional accountant may be able to recommend an insolvency practitioner. If not, you can approach an independent insolvency practitioner. The Insolvency Service website includes a database of insolvency practitioners.
• be clear about whether or not your charity can continue to operate. This will depend on your charity’s precise circumstances. Section 4.3 of the Commission’s guidance explains in what circumstances a charity can continue to operate when apparently insolvent.
• A new statutory instrument means that the Pension Protection Fund, a statutory public body, will be allowed to represent trustees of charitable incorporated organisations and community businesses in insolvency discussions to help secure their pension schemes.
• If there's no alternative but to close your charity, read our guidance on closing your charity or voluntary organisation which outlines the key steps you need to take and the processes you need to be aware of to close your organisation.