Governance: a beginner’s guide

Governance: a beginner’s guide
Arts Consultant Imelda Dervin outlines how voluntary and small organisations can keep their governance shipshape.

Across Ireland, there is a vast number of small groups and not-for-profit organisations responsible for driving and delivering a huge range of diverse music activities with communities and for people of all ages and at all stages of development. These groups and organisations, most often voluntary in nature, are a critical conduit through which much beneficial and value-adding music activity in a community can take place with outputs being delivered through local choirs, bands and ensembles engaging with music across the genre spectrum. In essence, they occupy a critically important position in the musical life of Irish communities as a driver of music development and a deliverer of musical activity relevant to the citizens of a locality.

Committees and governance

Many music entities (bands, ensembles etc.) start with small informal gatherings or groups which often form committees that come together as collectives of shared interests to discuss ideas and deliver activities. Successful small groups and organisations are reliant on the commitment and effective functioning of a number of individuals. These individuals work in committee or board formats to establish shared aims and objectives for the group and each individual adds value to the delivery of same. A committee or board is essentially the governing body of a group. It is responsible for the effective and transparent management, operation and outputs of the group according to best practice. In order to be effective, a group or organisation needs to identify aims, objectives and procedures and indeed, the decision to adopt a formal structure to deliver on objectives may be appropriate.

Appropriate governing structures

The effective functioning of any group or organisation relates directly to the effectivity of its governing body i.e. its management committee, steering committee or board. Small groups and organisations that deliver on an ongoing basis and whose work involves managing finances, applying for public funds and fundraising need to consider a formal arrangement in relation to the group’s purposes, aims and objectives, responsibilities and procedures in order to maintain transparency and accountability.

Many voluntary groups start up as an unincorporated organisation. An unincorporated group or association is governed by a steering committee, management committee or board. Though informal in nature, a constitution or written set of rules according to which the organisation adheres should be agreed in order to observe best practice and remain transparent and accountable.

Characteristics

  • Often adopted by voluntary not-for-profit groups that are not at a point where it is felt that a formal structure is needed
  • Very easily formed
  • Structure does not provide separate legal status or limited liability for members so legally, members are seen as collectively responsible and are liable for the group’s obligations e.g. if the group owes money, members can be liable for debts
  • It cannot engage in contracting, employ staff or own property
  • Even though many small community groups operate successfully according to this structure, disadvantages can arise when trading
  • Structure can be a disadvantage when endeavouring to apply for public funds
  • Is recognised by the Charities Regulator.

As voluntary groups and organisations grow and the level of activity increases, they often formalise their governance structure and incorporate as a company limited by guarantee. A CLG is governed by a board of directors (at least 2) and is bound by its constitution which includes the company’s Memorandum and Articles of Association.

Characteristics

  • Legal entity separate from the individuals who are its members
  • Has no shares or shareholders
  • Often adopted by voluntary not-for-profit groups and organisations at the point where income increases significantly
  • Allows the organisation to engage with contracting and employing staff
  • More credibility when applying for public funding and fundraising
  • Can borrow money
  • Members of the company agree to pay a nominal amount as a ‘guarantee’ (usually €5) should the company be wound up
  • Cannot distribute profits
  • Can own property
  • Can hold charitable status (most charities adopt this kind of company structure)
  • Holds legal responsibilities for board members.

Trusts are often created to manage assets or capital intended for a particular purpose. The assets are placed in the ownership of the Trustees (members of the Trust) in order to benefit others for a specific purpose. Their focus is not to run an organisation but rather, to administer assets or property according to the terms laid out in the Trust Deed which is the name for this type of organisation’s constitution or governing document. The Trust Deed sets out the parameters within which the Board of Trustees will operate and manage the Trust.

Characteristics

  • Can hold charitable status (and within the music sector very often does)
  • Manages assets for a specific purpose
  • Can be created to administer a donation (of funds, musical instruments or other assets)
  • Trust Deed sets out clear objectives of trust and how it is to be managed by a board of trustees.

Committees and boards

An initial step of any group or organisation involves a number of individuals who come together with shared motivations to form a committee. The purpose of the committee or board is to make plans, take decisions and deliver outputs according to shared aims and objectives.

When establishing a committee or board, the following should be considered:

  • What is the purpose of the group/organisation?
  • Why is there a need for it?
  • What is its relevance to the community?
  • What are the appropriate skill sets required by the committee in order to deliver on its purpose?
  • What size should the committee be?
  • How often will committee meetings take place?

The committee should comprise individuals who offer a variety of skill sets in order to facilitate the work of the committee and allow it to achieve its aims and objectives. Even though each member of a committee has an important contribution to make, there are some key roles and responsibilities that should be covered when it comes to best practice:

  • Chairperson, whose role it is to chair meetings and provide strong representation for the group or organisation
  • Treasurer, whose role it is to look after every aspect of the finances of the group or organisation including keeping accurate financial records
  • Secretary, whose role it is to convene meetings on a regular basis, record minutes and look after all committee administration (including legal obligations should the organisation grow into a CLG).

In addition to these key roles, a variety of skill sets can enhance the ability of a committee or board to deliver on aims and objectives e.g. when setting up a music ensemble, it is vital to have appropriate musical expertise sitting on the committee. In addition, other skill sets such as individuals with legal, financial, local government and marketing expertise are invaluable on a committee.

Writing a constitution or governing document

A key role of any voluntary committee or board, unincorporated or incorporated, is to agree a set of rules which clearly articulates its aims, how it will be run and how its members will work. This set of rules is recorded in a governing document which is called a constitution, trust deed or Memorandum and Articles of Association according to which governing structure has been adopted.

The importance of drawing up and adhering to a constitution for unincorporated groups and associations cannot be understated. Even when a group is just starting out, an agreed document stating aims and objectives in addition to indicating how the group will operate will not only keep the entity on track but will provide a sound and best practice basis for building into the future.

If or when a voluntary group or organisation gets to a stage where it needs to deal with finances, wants to raise funds including taking out loans, or wants to apply for charitable status, it needs to be able to present a written constitution in order to provide reassurance and to reflect clarity around its purpose and the framework according to which it operates.

The essential elements of a constitution comprise:

  • Name of the organisation
  • Aims and objectives of the organisation
  • Members of the organisation
  • Committee – how are committee members elected?; how long will members serve?
  • What does a committee do – manage the group/organisation, plan, make decisions etc.
  • Rules around meetings e.g. how often do meetings take place, how are committee members elected, AGM procedures etc.
  • Arrangements in relation to the management of finance including accounts
  • How the organisation can be dissolved.

It is advisable for small voluntary groups and organisations to draw up a set of policies to which it will adhere in the course of its business and which steer decision-making in relation to particular areas. Depending on the nature of the outputs of the group or organisation, the types of policy will vary and indeed some policies are a statutory or legal obligation. Here are some areas for which policies should be considered:

  • GDPR policy
  • Child safeguarding policy
  • Volunteer policy
  • Health and safety policy/statement
  • Event management plans

Good governance is critical to the running of any group or organisation, irrespective of scope or size. An approach that involves review and renewal on an ongoing basis will ensure that a constant check is being done on adherence to best practice and as a result, the group/organisation will build a solid foundation to operate effectively and with transparency.

Further information in relation to support for the setting up or the ongoing running of music-based groups/organisations in Ireland can be accessed on the following websites:

The Wheel
The Charities Regulator

The Governance Code
Voluntary Arts Ireland

Imelda Dervin has worked professionally in the arts and culture sector for over two decades and has experience in leading and working with a number of public cultural organisations, including the RTÉ National Symphony Orchestra, the Academy of St Martin in the Fields, the Arts Council/An Chomhairle Ealaíon, the National Chamber Choir (now Chamber Choir Ireland), the Irish Chamber Orchestra, Opera Theatre Company, RTÉ Concert Orchestra and Cork 2005: European Capital of Culture.