Strong governance is the foundation of any successful charity/not-for-profit organisation. One of the most fundamental governance requirements is ensuring there is the number of trustees required by its governing document, articles of association.
But what happens if resignations, retirements, illness, or other circumstances mean your board drops below the minimum number of trustees required? Here Peter Neal, founder of the Experience Bank Group, outlines steps you should take.
“This situation is more common than many realise, particularly among smaller charities. The key is to act quickly, transparently, and in line with your governing document and the law.
“The first step is always to review your governing document carefully. Most specify the minimum and maximum number of trustees, as well as the process for appointing trustees. It may also specify who has the power to appoint them including the existing trustees, members of the organisation, or even an external appointing body.
“In many governing documents, if the number falls below the required minimum, the remaining trustees are restricted in actions they can take. Typically, authority is limited to:
Calling a meeting of the trustees or members; and/or
Appointing new trustees to restore the board to its minimum number.
“This principle exists to prevent a small number of individuals from making significant decisions without proper governance oversight.
“The priority should always be to recruit or appoint new trustees as soon as possible. This might involve co-opting trustees under powers in the governing document, holding an extraordinary meeting to elect trustees or requesting appointments from a nominating body.
“When recruiting, it’s important to fill the vacancy quickly and to consider the skills and experience your organisation needs. Guidance for charities recommends thinking about the knowledge and expertise required to govern the organisation effectively.
“Even if you are still above the minimum number of trustees required by your governing document, you must ensure that board meetings remain quorate. If the board cannot reach a quorum, decisions made at meetings may be invalid. This is why many charities recruit additional trustees before vacancies arise.
“Operating below the required number of trustees can expose a charity to several other risks, including:
Increased regulatory scrutiny
Difficulty maintaining oversight of finances and compliance
Reputational risk with stakeholders, donors, and regulators
“For these reasons, boards should treat trustee vacancies as a governance priority rather than an administrative task.
“Once the immediate issue has been resolved, it is wise to review the charity’s succession planning. Many organisations run into difficulty because several trustees retire at the same time or recruitment only begins once a vacancy appears.
“Good practice includes maintaining a pipeline of potential trustees, staggering trustee terms, regularly reviewing the board’s skills and diversity; and keeping recruitment processes ready to deploy quickly.
“Falling below the minimum number of trustees required by your articles is not uncommon. But if you follow the rules in your governing document, and restore the board to full strength as soon as possible all should be well. With clear processes and proactive recruitment, charities can turn a governance challenge into an opportunity, strengthening their board for the future.”
If this article has struck a nerve and you need to talk about it, get in touch on peter@theexperiencebank.co.uk