With an uncertain year ahead, and a continuing cost of living crisis, this financial year for charities and non profits will be even more impactful. Understanding burgeoning governance issues in the sector is one way charities can prepare themselves for the year ahead.
It is important that even in unstable times, organisations are striving to achieve good governance. Before we look at the upcoming challenges facing the sector in governance, we first have to define what governance is.
What is Governance, and what are Governance Issues?
Governance comprises all aspects of leadership and decision-making. It is the structures an organisation puts in place concerning rules, controls and policies that define a standard of behaviour.
Governance issues are therefore anything that could impact an organisation's ability to achieve good and effective governance, as well as the aspects of governance that charities and their leadership teams need to be on top of this coming year.
Good governance is essential for charities to succeed in promoting their mission and making the world a better place. It supports their compliance with regulation and ensures that the organisation’s resources are well-used.
Here are five governance issues charities should be aware of when entering the financial year 2025.
1. Compliance
Maintaining legal compliance is a crucial factor for charities, and this financial year more than ever it is important for the sector to be focused on compliance.
Firstly, and perhaps most importantly, it is the law for certain Not-For-Profits to have an adequate level of security. According to the GDPR, organisations must ensure they process data with integrity and confidentiality. This is particularly important for organisations that handle special category data, as many charities do.
The highest level of encryption is AES 256-bit standard so you should look out for this when using any software. Also check for validation such as ISO 27001 for the software and CMMI-level 5 accreditation for the company.
Compliance has always been significant for governance, so it is something that charities need to remain on top of for the coming financial year.
2. Cybersecurity
Following from maintaining compliance, ensuring effective cybersecurity will not only help this but also is a critical thing for charities to consider in this coming financial year.
Digital solutions are more secure than paper documents, which can be picked up and read by anyone. Unfortunately, as technology evolves, threats to cybersecurity are becoming more advanced.
Charities are responsible for handling important data, so it is understandable they would want to implement an appropriate level of security. Having the best possible security to protect sensitive information is also essential for good governance.
Software with permission settings and access controls, as well as secure document sharing, is an important part of improving cybersecurity. While running a charity is a collaborative effort, not everyone can have the same level of clearance.
Board management software, like Convene, can assign roles to limit who can view, download, forward, export and print specific meeting agenda items or documents. With these granular access controls, charities are able to feel confident that their documents are protected.
As more of the nonprofit world turns to and remains online, organisations need to be on top of their cybersecurity in order to achieve good governance.
3. Accountability and Transparency
Ensuring that your organisation is consistently transparent in its practices, and held accountable to its action, will be another significant aspect of governance for the financial year 2025.
Openness and accountability means the governing body is responsible for their own actions and decisions. They must be transparent and deal openly with any consequences of their activities.
Auditing, and creating a secure audit trail, is one way to demonstrate your transparency and enhance accountability. Tracking the actions of users, particularly concerning sensitive information, means data cannot be misused.
This means charities can prevent threats, before they have even materialised, and eliminate human error. Conducting audits is good for ensuring compliance, so organisations can tackle multiple governance issues at once.
Board must act with integrity. Trustees should work to establish a culture that promotes consistent values and trustworthy processes.
Maintaining public trust is crucial to running a charity and the Board should be aware of this. They need to promote the organisation’s charitable purpose and act according to their values, in order to ensure good governance.
4. ESG
ESG has been growing in importance in recent years, so it is no surprise that it is something organisations need to be aware of and working on over this financial year.
Charities should take measures to encourage diversity and inclusion, as part of the ‘S’ in ESG. This doesn’t just mean meeting targets, but ensuring the team has a diverse range of views and perspectives.
They should be also focusing on their own environmental impact, and evaluating their practices to improve on their sustainability, looking into environmental factors like waste and resource management.
This growing focus on ESG means that it's important to feel prepared for what this changing landscape can bring in the future. While ESG reporting is not currently mandatory, organisations should be aware of the regulatory environment for the sector.
A charity’s approach to ESG will reinforce their effectiveness, leadership and decision-making, all crucial aspects of governance.
5. Risk Management and Resilience
For any organisation, effective risk management is a good way to ensure successful governance.
All staff members should take responsibility when it comes to risk management, from volunteers to the executive team. Most operations in a nonprofit are fiduciary duties of Board members. Mitigating risks is one proactive task that all Board members should be actively engaged with.
Setting up risk management policies is another effective way to minimise organisational threats. Nonprofits might find it challenging to manage risks because of the lack of resources, trust among employees and volunteers, and awareness. But effective risk management is critical not only for governance but also for organisational resilience.
Now more than ever, charities need to be thinking in both the short and long-term. Building resilience and ensuring that charities can maintain their impact long-term, will be increasingly necessary in the coming financial year.
Risk management, and ensuring an organisation’s resilience will be an important challenge to governance in the financial year 2025, and charities should remember to dedicate focus to the future, as well as the ‘now’.
How Convene Can Help Charities With Governance
When addressing governance issues in your organisation and ensuring you achieve good governance, having the right software is paramount.
Convene is an award-winning Board Portal designed to digitise and streamline your meeting processes from start-to-finish, helping your charity to maintain good governance.
Our comprehensive features include:
- A Document Library with role-based access to ensure your sensitive documents are protected.
- A built-in Audit Trail, so you can be sure you are compliant with all regulations.
- Integrated Video Conferencing, so you can make the switch from remote to hybrid working seamlessly, whilst still viewing your Board Pack all on one screen.
- Surveys, with the option for anonymity, so you can be sure you are aware of your employees' opinions.
- Accessibility Features, including text-to-voice, which makes us the leading accessible Board Portal.
The software now also comes as an integration with Microsoft Teams, which provides the benefits of both Teams and a Board Portal.
If you’d like to learn more about how Convene can help your organisation achieve better governance, please don’t hesitate to book a free demo today!
