Cross-border pitfalls for charities
Susan Murray and Shirley Otto highlight why it's important for UK charities to pay attention to their Scottish operation
Politically we are in very uncertain times. We know more powers are being devolved to Scotland and we know there will be lots of elections; this year for the Scottish Parliament and next year for local government, plus this June there will be a referendum on membership of the European Union. There is also much talk of another referendum on Scottish independence, although there are very differing opinions on the timescale for this.
All this has implications for charitable organisations, and in particular for the governance of UK charities with operations or branches, in Scotland
UK organisations often benefit from economies of scale by centralising core functions, however this can lead to a perception of remoteness from regions or nations far from the centre. This perception is a real risk for UK organisations.
If a UK organisation is remote and doesn’t engage actively in Scotland it could lose out on the opportunity to raise awareness of its work
The Scottish Government and Parliament prides itself on engaging many different stakeholders and actively travels to communities around Scotland for cabinet and committee meetings. The same goes for funders, who work together through the Scottish Funders Forum and the Scottish Grantmakers Trusts Group to share information and knowledge.
If a UK organisation is remote and doesn’t engage actively in Scotland it could lose out on the opportunity to raise awareness of its work. This is one of the reasons that many UK organisations have recently increased their presence in Scotland.
The impact of the shift in the political environment in Scotland can be compounded by a governance deficit in many of cross-border (England + Wales / Scotland) charities. UK Boards are often not sufficiently aware of the structure by which they govern across nations; for example is the operation in Scotland a subsidiary, is there a Scottish Committee or do representatives from the nations sit on the main voard and make decisions for the whole of the UK? Indeed there are a mix of structures none which, it could be argued, properly manage the political environment, the sense of identity, of affiliation, of the staff and volunteers of the Scottish operations.
It is timely for boards of UK charities to ask the question to what extent their engagement with the Scottish Government, local authorities and funders is affected by the changing political climate and whether their strategic plans might be better achieved by establishing an independent Scottish charity. If it seems the purposes of UK charity would be best delivered by re-structuring then the experience to date suggests the process for devolving governance needs very careful consideration.
What arrangement will most benefit the people or the cause? Is it a Partnership Agreement, Group Structure or a Memorandum of Understanding? The most important factors to consider are sustainable funding for the newly independent charity and maintaining the essential formal and informal relationships with the UK operation, and other key stakeholders. Achieving sustainable funding in a climate of austerity requires time and a robust fundraising strategy; changing relationships within the Scottish operation, and with the UK organisation, needs time and cordiality amongst those involved. This would mean staff of the Scottish operation working with colleagues in the other nations whilst the governance is being re-structured.
Timing is crucial to the change process but given the political situation it is also a matter of the right time to make decisions and act on them. Making governance changes and embedding them could take three to four years but the time to think about how you govern Scottish operations could be now.
Shirley Otto and Susan Murray are part of Scotland's Third Sector Governance Forum.