Decision making for Charities in a challenging environment
Is your charity’s management information fit for purpose?
Post Kids Company and other high profile and front page stories about various charities, much has been written on the role of trustees. The Charity Commission has published various new guidance and updates of old guidance central to which is an increased emphasis on what the role of trustees is, including the importance of decision making.
Focus
Importance of the right management information
- Decisions are made by the board together with senior management to identify which strategic priorities to fund or which income generating activity to pursue.
Effective decision making
- To make informed effective decisions there must therefore be good information for decision-making at all levels. The pyramid below shows the three levels of decision making for any organisation.
Checklist for making better decisions
- Re-consider the charity’s mission: is it too narrowly defined given the current economic and political context. For example if you are climate change charity is it time to move from pure advocacy or research to working on the ground in communities impacted by climate change?
- Clearly define the charity’s core strategic priorities. Consider other realistic alternatives; this will help define the most appropriate priority.
- Correctly balance the short and the long term.
- Base decisions in reality. At the outset write down the impact you expect during each of the strategic years. Check-in at the end of each year to review actual against expectation and consider the why of any deviation.
- Align performance metrics to the charity’s strategic mission.
- Set the performance expectations – consider both the potential downsides and upsides.
- To make a decision requires the decision maker to make a choice and every choice will have some degree of risk associated with it. Understand the risks associated with the decision and consider the organisational risk appetite.
- Consider qualitative and quantitative measures, include benchmarking wherever possible and beneficial.
- Continuously review what the charity does against what it should be doing to serve its beneficiaries. Ask "if we weren’t already funding this activity would we fund it today?"
- Consensus is good but challenge to guard against "group think" and make good effective long last decisions which enable the charity to achieve its objectives.
