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Opinion State board members are paid so why aren't charity organisation board members?

The current situation is not sustainable, writes Fiona Cormican.

ALL ACROSS THE country, charities such as credit unions, hospitals, sports clubs, community development organisations and animal and human welfare groups are managed by voluntary boards as is a requirement of the Charities Act 2009.

As a voluntary board member, a director or trustee has all the responsibility of a paid board member in a private or public company and are held wholly responsible in law for the governance of these organisations – yet they are prohibited from receiving a salary or any other benefits for this work.

When something goes wrong, it is very easy to point the finger and criticise and to suggest that that people’s behaviour is at fault.

However, the reality is that very often it is the system that is at fault as opposed to the individuals. Nevermore so has this been the case than in the voluntary housing sector or Approved Housing Body (AHB) sector.

The AHB sector is made up of organisations that are typically not-for-profit companies, limited by guarantee and are registered as charities, which means that they have no shareholders and if they do make a surplus from their activities, this money is reinvested.

There are 450 AHBs registered with the Approved Housing Body Regulatory Authority (AHBRA). The sector provides almost 55,000 social and cost rental homes for families across Ireland. The sector manages €7 billion worth of assets and carries approximately €6 billion debt on their balance sheets.

Six of the largest AHBs are responsible for the delivery and management of two thirds of this total. They do this mainly by borrowing long-terms loans from government which gives them seed capital to then borrow the balance from other funders. They take on massive debts and manage those debts for the good of the organisation and the current and future residents they provide homes for.

This is a significant level of risk to ask people to manage on a voluntary basis, given that the voluntary board members are usually highly experienced people with very busy day jobs not to mention personal lives.

If we look beyond the AHB sector, there are approximately 50,000 people sitting on boards of a wide range of voluntary organisations across the almost 10,000 registered charities in Ireland.

These people give their valuable time for free.

Neither do they get any perks or benefits of any kind. They often don’t even get a Christmas lunch for their efforts due to the concern that if they did take their voluntary board out somewhere nice for lunch and a glass of wine at Christmas, then it is almost guaranteed that it would be splashed all over social media and labelled a waste of money or a misappropriation of funds, instead of recognising it as necessary team building and an appreciation gesture.

These volunteers often have full-time jobs and families and yet they contribute between a minimum of 30 hours a year up to 100 hours a year of their time travelling to and attending board and committee meetings including reading the massive amount of board papers necessary for the management of these large organisations. This equates to between €14,000 to €48,000 per year for their time, if they were being paid at the level of a senior executive in a private company.

So why do they do it?

For most, it is a case of they “want to give back”. They appreciate that they have good jobs and good lives and probably their own home and they want to contribute to society in some way.

They believe they have skills and experience that could benefit the sector they are interested in, be it housing, social care, healthcare, Credit Unions etc. Many of these voluntary board members also sit on paid boards but, for others who aspire to sit on state or private boards, there is the added benefit of getting experience. 

However, it is getting more difficult to get people to sit on voluntary boards. A few well-publicised scandals over the years have seen board members pilloried for their involvement in the organisation and rarely has anyone been commended publicly for the voluntary work they did for the organisation.

At times, it appears that individual’s reputations and careers have been significantly damaged as a result of their efforts “to give back”.

The AHB sector is heavily regulated by the Companies Registration Office (CRO), the Charities Regulator and the Approved Housing Bodies Regulator. Compliance with the law and various codes of practice is extremely complex and it is critical that board members understand their legal and moral responsibilities, not just for the sake of the organisation but for themselves too.

Failure to comply with the laws and responsibilities that govern these organisations can carry significant penalties, including fines and imprisonment, as well as significant reputational damage.

Ignorance of the law is not considered a defence.

Corporate governance has become so complex that it is a discipline in its own right and there are several corporate governance qualifications available through a variety of institutions.

Board members of large charities usually come with significant experience and are highly qualified in their own fields but it is not currently a requirement for the board member of a voluntary organisation to have any corporate governance qualification. While this may be an acceptable for a small local group, it may not be a good risk management strategy for a large organisation that employs significant numbers of people and manages annual budgets in the hundreds of millions of euro.

If an organisation is serious about good governance, then would it not make sense to ensure that a significant number of your board members are qualified governance professionals, and is it not reasonable then to expect to pay for this expertise?

State board members are paid for their time so why not charity organisation board members?

There is a reasonable argument that paying board members in charity organisations dilutes the purpose of the organisation and takes away from the ethos. I agree that not all board members of voluntary organisations should be paid – holding onto that voluntary identity is very important. However, asking people to give their time on a voluntary basis to manage significant levels of debt and a complex governance regime without the back up of professional governance expertise on the board is not only unreasonable but unfair and disrespectful.

In order to ensure consistent and good corporate governance across the charity sector, large voluntary organisations should to be allowed to pay a certain number of qualified board members who can then take on the bulk of the governance work and support their voluntary counterparts.

The crossover between the Charities Regulator Office and Approved Housing Bodies Regulatory Authority is unclear when it comes to governance of the AHB organisations. As a charity, the requirement is for the board to be unpaid voluntary members, but the outgoing regulator has publicly stated that they would not have an objection to board members on AHBs being paid given the level of responsibility they hold.

Volunteering is a critical aspect of our society. Volunteers provide vital services to our communities, and it is widely recognised that people get a wellness benefit from volunteering. But placing such a heavy governance burden on voluntary board members, with little support available to them when things go wrong, is not only unfair but creates a risk of a lack of people with the necessary qualifications and experience stepping up to sit on the boards of our many voluntary organisations.

If we continue to disrespect the value of the voluntary board member and the huge contribution they make to society, then we run the risk of no one being willing to do this work – and for the vast majority of charities that would be a death knell to them and the value they provide to the state and the services they provide to their communities.

Fiona Cormican has worked in the social and affordable housing sector since 1998 when she founded a not-for-profit development and construction company to deliver affordable housing for co-operatives in Ballymun and Finglas. Fiona was Clúid Housing’s chief commercial officer for 16 years and took on the role of acting CEO in 2023. Fiona now works as a freelance business consultant with Fiona Cormican Consulting. 

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