Governance and Accountability: an exploration of Chairs-CEOs Relationships in Large Scottish Charities

Abstract

Charities have been growing in numbers and visibility in many parts of the world over the past two decades. There has been a dramatic increase in the number of charities in the United Kingdom since the 1980s. Government withdrawal from direct involvement in certain service delivery programmes saw charities filling the void. The importance of charities can be reflected in the expenditures which are classified as ‘culture, sports and recreation’, ‘education, training and research’, ‘health and medical’, ‘social services and relief’ and ‘conservation and protection’. Others include ‘housing and community affairs’, ‘civil rights, law and order’, ‘philanthropic intermediation’, ‘international activities’, ‘business and professional’ and ‘religion’ (CaritasData, 2009). Despite their economic importance, limited academic research and professional development have been directed to charities. Laws and regulations for charities have been in place for decades, with Scotland enacting the Charities and Trustee Investment (Scotland) Act 2005 to regulate all charities operating in Scotland. This research focuses on governance and accountability in ‘large’ charities registered in Scotland. The research looks into the working relationships between Chairs and CEOs of charities following the 2008 economic recession. The main sources of data are questionnaires as well as annual reports and accounts. A combination of theories has been used from previous research on both for-profits and non-profits organisations to explain internal governance of charities. The research uses these theories to explain responses from both Chairs and CEOs on charity issues and how they also relate to the financial vulnerability status of a charity. Major findings of this research include the existence of very few differences in responses between Chairs and CEOs when it comes to general issues regarding governance and accountability in charities. Charities focus on having members with specialist expertise on their Boards. There is evidence that charities are engaging in signalling behaviour due to information asymmetry in charities and that the existing economic downturn has increased pressure on charitable operations. The research also found that the financial vulnerability status of a charity has limited or no effect on the responses from Chairs and CEOs; however, the research found significant differences in responses on the importance of legacies and public funding between charities that are financially vulnerable and those that are not.