How our currrent board systems keep the arts in check

Although public appointments in the arts have attracted attention of late, its worth remembering that the great majority of cultural governance in the UK is of a different order. Just about all arts organisations – theatres, arts centres, orchestras, festivals and so on, are charities, or limited companies with charitable status.  They are voluntary organisations and require to be governed by charity trustees and to comply with regulations, OSCR in Scotland. But the regime for serving as a charitable arts trustee is much less clear cut than serving as a Public Appointee, where the Seven Principles of Public Life apply, along with Registers of Interest and the like.

Charities are much more of a mixed bag.  Each organisation, required to comply with the law, will have its own constitution, memorandum and articles of association and/or other legal frameworks. Most arts organisations were established as charities in the days before social enterprise companies and Community Interest Companies existed, as the only type of organisation which would allow them to receive grants and avoid corporation tax.  Most of them are still charities because they can get rate relief on their premises.

There are some 23280 charities in Scotland of which 598 have the arts as one of their objects. These arts charities are encouraged to operate according to guidance provided by arts councils and their agencies.

Care Diligence and Skill, a handbook for arts boards in Scotland describes in detail the system, the requirements, the expectations and gives direct advice to arts board members assuming a low level of experience and understanding.  Versioned by previous SAC directors, the handbook is a useful bible particularly for new arts boards and trustees.  The book lays out the idiosyncracies and differences between arts boards and businesses, and arts boards and other charities.  It gives advice on a range of issues including recruitment, running board meetings, selecting members, legal and fiscal responsibilities, role and remit of the board etc.  There are are also several training courses to encourage adoption of this system, run  by other intermediaries such as Arts and Business.

But none of this advice is compulsory and its up to each board to behave and operate as it sees fit, and in accordance with its own constitution.  Take, for example, the agreed good practice around length of service.  Public appointments are offered at a maximum of two terms of four years.  In Care Diligence and Skill, a total length of service of six years is proposed.  But there are quite a few boards where the Chair and some board members have served for a longer period than that.

So is it worth the effort and resources of creating and disseminating bespoke advice and training, when there is free advice and affordable generic training available, for example on SCVO website?

That depends on how important it is to maintain the current regime and the style and behaviours of arts boards.  Because the arrangements for arts boards differ from others.

Where most arts boards differ from other charities, as well as businesses, is in their lack of accountability to members or shareholders.  In most arts organisations, the directors of the company are congruent with the members, and so the directors are only accountable to themselves, and of course, the funders who are significant stakeholders. Those arts boards who are elected by, and accountable to, a membership, are in the minority.

This contrasts with, for example, a health charity, where the members pay their subscriptions and vote for the trustees.  It also contrasts with private companies, where there are shareholders.

The danger of this is that some arts boards view themselves as primarily part of the (arts council) system as opposed to responsible to their community for the arts activity or facilities.

The most effective arts boards I know nowadays have three characteristics:

1. they have a board which is skilled and expert, particularly with a strong and experienced chair

2. the boards include representatives of the communities which the arts organisation serves; this could be local politicians, artists, education partners etc.  The inclusion of community and partners goes against custom and practice of recent years which has tended to narrow down the constituencies on boards, to make them easier to manage

3. they have clear and contemporary terms of reference which set out the roles and responsibilities of the board and enshrines its commitment to refreshment and renewal of skills – with a maximum term of office

The question is, is the current system, which keeps the arts in check and retains the status quo, what we need for the 21st century?  We seem to have created a coterie of bespoke limited companies with charitable status, populated by some talented and hardworking board members.

But in a fast changing world, with less and less public sector resources, we need our arts boards to be proactive, looking ahead and innovating.  We need them to take responsibility for the long term success of their facility or activity, to maximise their embedding into their community and to be  involved in as much partnerships and entrepreneurial activity as is appropriate. Perhaps even remodelling and merging.

Part of that look ahead for individual boards should include a fundamental review of the corporate structures and governance arrangements.

Maybe a Community Interest Company (CIC) or another type of Social Enterprise Company would better than a charity.  These vehicles are more suited to wider community ownership and to income generation.

But its horses for courses.  In some cases  maybe its even best to retain the status quo and for people to stay in their seats.

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