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Governance: does the size of your Board of Management matter?

Governance: does the size of your Board of Management matter?

April 17, 2018

The following article is republished from the Spring 2018 edition of Early Times Magazine.

In December 2017 the Charity Regulator indicated its intention to put a limit on the time a Trustee/Director can serve on a community or not-for-profit’s board of management. This formed part of a Governance Code for the sector. The decision was taken on foot of findings from public meetings and an online survey regarding governance of charities, through which concerns were raised about how long Trustees are sitting on boards. Feedback from the consultation suggested that a period of five to nine years was sufficiently long for a person to act as a Trustee.

An ECI review of the data held by Benefacts** last year shows us that while there are Trustees with many years of service, the majority of Trustees sitting on boards of community childcare services have a range of approximately two to eight years’ service. The average term served is five years. The good news is that this is very much in line with the thinking of the Charity Regulatory Authority.

Table 1: Terms of service

 

Lower

Average

Median

Higher

2 years

5 years

5 years

8 years

This measure may be considered a positive move for the Community and Voluntary Sector, and our sector is predominately abiding by these term limits. However, it may impact smaller boards of management, with only two or three board members. Under company law, these boards may be at risk of operating illegally if the number of board members falls below two directors and a replacement director is not immediately available (Companies Act 2014).

Our review of a sample size of 576 community childcare services indicates that board sizes range from two to fifteen members, but many services operate with only two or three directors (Benefacts 2017).

Table 2: Board Size

graphic depicting average size of boards of management in early years sector Ireland

For the early years sector, the implications of having a small board of management with only two or three members needs to be addressed as a matter of urgency. This is primarily due to the risk of operating illegally under the Companies Act 2014.

Community Services should ensure that their Constitution (formerly known as Memorandum and Articles of Association) clearly sets out the minimum and maximum number of directors, and allowable terms to be served. The Constitution may need amendment if the Charity Regulator imposes a term limit for Directors.

With a view to the possibility of impending restrictions, now might be the time to think about recruiting new members to your board. To enhance the recruiting of new board members, your recruitment process should include a job description that clearly sets out the strategic and/or operational aspects of the role and the time commitment required.

If you have any concerns about the size of your board or the term served by board members, please contact our Director of Membership & Operations, Susan Selfridge, on sselfridge@earlychildhoodireland.ie.

*The full newspaper article from the Charity Regulator can be viewed here.

 

**Benefacts is a social enterprise established with the purpose of creating a publicly accessible database of civil society organisations. It holds agreements with the Charities Regulatory Authority, the Companies Registration Office, and the charity section of the Revenue Commissioners to access and pull data into their own database.

 

Early Childhood Ireland is holding Governance Code information sessions in locations in Dublin, Cork, Wexford, and Galway over the coming weeks. For more information, please see here. For booking, please see here.

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