A very short blog here. As if using the infinite improbability drive from the Hitchhiker’s Guide to the Galaxy, 5000-1 uber-rank outsiders Leicester City managed to win the English Premier League. Are there law and governance lessons for charities from this outstanding (and more importantly unlikely) achievement? Yes.
Leicester City’s triumph shows that unlikely things do happen. They are unlikely and improbable, but anything has a probability- it is just that some events are less probable than others. Some, as we can from the Hitchhiker’s Guide to the Galaxy, are infinitesimally probable. Indeed, Leicester, like the infinite improbability drive, perhaps utilised a low probability to make the improbable probable!
Examples of the “unlikely” that affect a charity, its constitution and governance include:-
- Liability can lurk and hit a charity after years of no issues whatsoever. A real personal issue for those involved with the charity if it is an unincorporated association. It can also cause serious issues for any charity that has does not have the right policies and procedures in place to have addressed the issue be it financial, injury or health and safety, regulatory, employment or property related.
- No-one might notice for many years that the charity’s purposes are outmoded or are divergent from the charity’s activities… and then it matters to a third party or regulator.
- After years of uncontroversial decisions, a “hot” topic brings the decision-making processes of the charity into the focus… and they are found to be blurred.
- A benign or hidden force awakens and flexes muscles: the role of members (and some third parties) and their power over the trustees and the strategic direction of the charity. The relationship between or among key parties in the charity’s structure should be clear and understood from the outset rather than only really appreciated when relations are perhaps more strained.
- An otherwise well run charity does not follow the “quirks” of the law governing its constitution which later cause time-consuming or decision-making paralysing problems (such as apparently “straightforward” steps as changing trustees) as well as the potential for financial loss. This tends to be most likely (probable!) with charities that are set up as trusts.
With many situations that seem unlikely or unexpected, something could have be done to avoid or mitigate the effect. In many cases, the seeds are sown at the very outset of the charity’s life in the design of its legal form, constitution and governance arrangements. Other issues may of course evolve over time.