ACCOUNTABILITY

Posted 26/5/06

Ensuring its Trustees are Accountable to Monthly Meeting

By Stephen Petter.

The 27 March 2006 meeting of the Monthly Meeting Task Group on Charitable Registration, item 3 included: "We ask Stephen Petter to read through the model governing document produced by QSC (Quaker Stewardship Committee) to identify changes he feels should be made to ensure the accountability of trustees to the Monthly Meeting".

BACKGROUND

I will not repeat here the reasons why it is generally (though not universally, even in our Monthly Meeting (MM)) accepted that the society nationally, and each MM, has no realistic option other than to register with the Charity Commission if and when the law is amended, which is expected soon.

Nor will I do more than mention in passing that although it seems generally accepted that a small group of 5 to 15 members will be appointed by MM as its trustees, I remain convinced that MM itself could be the trustees. I have made a case for this in this link, but here I am accepting the ‘small group of trustees’ model.

QSC has issued a document, "Constitutional Issues - Supplement to documents in Advance 2006" which includes the proposed governing document for the national level Britain Yearly Meeting, to be submitted for approval by YM in May 2006. It also includes a model or template Governing Document for MMs. I have also seen earlier versions of both these documents.

MMs are free to establish their own structures but (we are told) any great deviation from the QSC template would pose difficulties and cost.

It seems clear to me that the national, Britain Yearly Meeting Governing Document (BYM GD) has received most of QSC’s attention. The Monthly Meeting version (MM GD) is more rudimentary.

In the context of this present document the interesting parts of the BYM GD are those which are intended to require BYM Trustees to implement the policies and long term plans of YM in session and of the main representative committee, currently named Meeting for Sufferings.

CONCERN

My concern is that if we register our MM as a structure that includes a small body of trustees, we do so with a governing document that ensures to the greatest extent possible that the trustees act in accordance with the concerns and aspirations of MM at all times.

PROBLEMS

The central problem is that trustees are by definition those who control a charitable trust. The Charity Commission will not accept a governing document unless it shows the trustees to have this authority. The current model makes this clear. But our traditional ‘gospel order’ has our policy decision making centred on meetings that all Friends are entitled to attend, such as YM and MM, or in the case of Meeting for Sufferings, one in which the fullest practicable extent of representative participation was essential. These bodies have commonly set up smaller committees to implement certain aspects of the Society’s work but it was always clear that final authority remained with the larger body (see footnote 1.) However, both the YM GD and the template MM GD establish trustees as the smaller body.

How can we prevent the cautious legal formal tail wagging the adventurous advisory informal dog?

Another fundamental problem is that the mindset of the charity commission and all documents and books about trusteeship is centred on the trustees’ responsibilities with respect to property and finance. There is scant guidance for trustees dealing with other aspects of the management of a complex organisation. Of all the corporate forms available, a Trust is not the best for a complex organisation. The model adopted by most charitable trusts is to incorporate themselves initially as Companies Limited by Guarantee, which defines essential structures and procedures to control all aspects of the organisation’s work, then register the Company as a charity. The Charity Commission (CC) requires the trustees to manage the organisation but is concerned with - has it seems only considered - property and finance. But here we are setting up the Trustees with power to manage all our affairs.

In the template MM GD it is clearly stated ab initio: "X Monthly Meeting … will be administered and managed in accordance with this governing document". It goes on to say "The object of X Monthly Meeting is the furtherance of the general religious and charitable purposes of [BYM] in [its geographic area]".

The template then quotes from Quaker Faith and Practice (QF&P Section14.02) a list of purposes to which MM’s money and property may be used. This section was not written as guidance to trustees but as a general statement about BYM policy.

A critical feature of a Governing Document is the statement of its powers. The template GD does not list any powers of the MM other than the powers of the Trustees.

In its Section 12 the template MM GD defines the trustee body - its number (5 to 15), its appointment (by MM) and their length of service (maximum 9 years). Section 13 describes how ‘a trustee’ (not ‘the trustees’) might be removed from office. It seems clear that if he or she did not wish to resign, dismissal would be quite difficult and rare.

In Section 14 the powers of Trustees are defined. Most of these are the normal financial powers that one would expect to see (including ‘to employ staff’). What troubles me is the final, catchall clause: "To do any other lawful thing that is necessary or desirable for the achievement of the objects of the monthly meeting". Note no mention of the wishes of MM in session nor of the general membership. In other words the trustees are given sole authority to decide what is ‘necessary or desirable’.

Thus we are invited to appoint a few trustees, selected on the basis of certain abilities, experience and attitudes, to manage the MM in order to further the objects of the MM as interpreted by themselves, with no requirement to liaise with MM in session (other than

a. to report annually and submit ‘for information’ the accounts to MM within 8 months of a year-end, and b. to ‘refer’ issues such as selling a meeting house to MM - thought the final decision rests with the Trustees. In this they will have the power and authority of the law, through the Charity Commission.

Moreover the essence of trusteeship is that each trustee is personally liable. (The extent and relevance of this liability is the subject of some debate, but a trustee’s personal liability is certainly greater than that of a director of a limited company.) The effect is to make trustees cautious and conservative.

The danger as I see it (and apparently as seen at national level) is that these few trustees could have an entirely different agenda from that of the general membership.

REDUCING THE DANGER

So, what are the features that may be changed or inserted into the MM GD template to reduce this danger?

Section 8 in the BYM GD are requirements about the relationship between MfS and the trustees which are absent from the MM GD. (These provisions are somewhat hidden by the section title which is not very apposite.) Following is my suggested wording for the MM GD, based on that in the BYM GD. [Section 9 in MM GD is the equivalent of Section 8 of BYM GD.]

9. Meetings for Church Affairs.

Add: The monthly meeting is the primary meeting for church affairs in Britain Yearly Meeting.

Its purposes are deliberation and discernment and oversight of our corporate religious life, and in particular with receiving interim reports for information from the body of trustees constituted in clause 12 of this governing document. (See QF&P 4.01) [End of addition]

(I question whether the phrase ‘for information’ is needed and recommend it be deleted. It is redundant except that it implies recipients of the interim reports have no right of comment.)

Leave in sub-items i, ii, and iii

14. Powers of Trustees.

Regarding the financial powers, it seems to me that, oddly, the MM GD gives MMs wider scope than BYM. I suggest we ask someone with better financial expertise than I have, to examine these clauses (14, i to xii) against BYM GD 15 a. to i.

As for the final catchall clause, I suggest, no I recommend most emphatically that we replace the wording in the MM GD with that in the BYM GD, i.e.

"To do all other such lawful things as are necessary for the efficient conduct of the charity’s [or ‘the monthly meeting’s] administration and the management of its property and affairs."

(Readers may remind themselves of the antecedents of this document, namely the RECAST proposals, one of which was that MMs should delegate most of their business to committees so that the meeting held monthly could be more inspirational and spiritual. Possibly due to lack of time QSC seems to have thoughtlessly bolted the trusteeship role onto what was to have been a MM executive or administrative committee, responsible to MM for most MM activities. The BYM wording implies a more restricted role, admin and finance and property, i.e. the role of our present (misleadingly named) General Committee.

Further accountability. The BYM GD concludes with a section "Aid to interpretation, not forming part of the Governing Document". (Note that in the BYM GD MfS is NOT the trustees.) It specifies that MfS is "entrusted with the general care of a matters affecting BYM… discerns major and long-term priorities and considers reports from the trustees…"

It goes on to say "The duty of Trustees is to ensure the priorities … set out by BYM and MfS … are being followed… and that the governance and management….

(Earlier drafts and RECAST were even more specific about the roles of MfS and Trustees, e.g. that only MfS and not Trustees sets the priorities and long term plan and only Trustees manage all the (centrally controlled) activities according to those plans, and how MfS was to monitor the trustees.)

I suggest we follow the BYM example by adding a similar "Aid to Interpretation". (Or, preferably we might add it into the GD in Section 9.)

Aid to Interpretation

The monthly meeting is the primary meeting for church affairs in Britain Yearly Meeting.

Its purposes are deliberation and discernment and oversight of our corporate religious life, and in particular with receiving interim reports [for information - is this needed? ] from the body of trustees constituted in clause 12 of this governing document. (See QF&P 4.01). MM discerns the priorities and issues statements on behalf of its members. The duty of MM Trustees is to ensure that the priorities for the work set out by MM from time to time are being followed as far as resources allow.

[If this suggestion is accepted the duplication of twice quoting QF&P 4.01 can be deleted.]

Section 18 Annual Reports and Accounts.

An annual report to the charity Commission is not only a financial report, but a general report.

The MM GD only requires the trustees to show their annual report to MM within 8 months of the financial year-end. I would hope we add a requirement for timelier and more frequent reporting.

In addition to what is currently proposed (though it seems to me it includes some needless repetition) we might ADD:

iv) Trustees shall forward the minutes of all each of their meetings within one month to the clerk of MM with advice as to which items if any should be regarded as confidential. The clerk to MM shall then make the minutes available to members as appropriate.

OTHER SUGGESTED AMENDMENTS

Where the BYM GD and the MM GD differ in a manner that seems trivial or pointless to me, I recommend adoption of the BYM wording simply because more attention has been paid to it by our national experts.

Section 1. ‘shall’ not ‘will’.

Section 6: ‘must’ not ‘shall’.

Section 9 heading. Replace "Meetings for Worship for Church Affairs" by "Meetings for Church Affairs" .

Section 12.iv. BYM GD has YM appointing the clerk to trustees. Amend this section to have MM appoint the clerk to MM trustees on nomination from MM Nominations Committee, not on nomination of the trustees.

Section 12. The BYM GD simply says BYM shall appoint trustees. I see no reason why the MM GD should be much more detailed and prescriptive. MM Nominations Committee should be free to use its judgement, perhaps with informal advice from QSC.