UK: Warning Flags

Last Updated: 20 April 2017
Article by Louise Thomson

There are characteristics and behaviours that can indicate problems with a charity's culture

Whichever way you look at it, the charity sector has not had a good time of it in the media in recent years. Whether it is executive pay, fundraising practices, administration costs, or the 'incompetence' of trustees, there is a perception that the public's affection for the sector is being strained. However, despite a few high-profile cases attracting poor publicity, there are many other charities quietly and solidly delivering real change for their beneficiaries.

Furthermore, the environment in which charities now operate can also be challenging. Austerity, a shift in funding from grants to contracts, multiple demands on the time of prospective and serving trustees and volunteers, and increased regulatory requirements and oversight, combined with overwhelming demand and diminishing resources have all taken a toll on the sector. Some have managed to cut their cloth accordingly, others struggle to meet evident needs by using dwindling reserves. It certainly has been, and continues to be, tough for the sector.

"A rules-based approach can only influence the behaviour of some within the sector and it cannot eradicate poor culture and practices completely"

In hard times, boards can inadvertently get absorbed by the figures, to the detriment of equally fundamental matters such as quality of service provision, the delivery of public benefit, and the way in which the charity operates. In short, a microclimate exists where hard decisions are taken to ensure the ongoing sustainability of a charity, while neglecting the things that really matter at the front line: ethics, respect, integrity, openness and trust or, sometimes, vice versa. In short, the culture of certain charities, and by association the whole sector, has gone awry.

Trust under threat

The high-profile mismatch between words and deeds appears far harsher in the glare of media reporting. If words and actions are not aligned, there is a danger that declining public trust, support and confidence will erode the potential positive impact of the sector on wider society. That is why culture is important.

Initial reactions to this disconnect included a sector-led review of fundraising practices, with the introduction of a new regulator and, by accident or design, new powers for the Charity Commission. However, as other sectors have learned, a rules-based approach can only influence the behaviour of some within the sector and it cannot eradicate poor culture and practices completely. This is because behaviour is determined not only by rules but by the culture of the entity concerned – and in the worst cases, of course, the culture can be one of wilfully ignoring and seeking to bypass rules.

Having a strong positive culture protects people and teams from making bad choices when the going gets tough. Culture is therefore a core task for boards, not just a public relations add-on. Boards need to understand and shape the forces that drive the behaviour of people throughout their charities.

This cannot be done in isolation and, where senior managers are in place, there needs to be a strong understanding and respect for the roles of each one in ensuring an appropriate culture is evident and supported by corresponding values and ethics throughout the charity's operations.

A flawed culture may develop incrementally, over a sustained period. As the Public Administration and Constitutional Affairs Committee reports detailed, the warning signs about Kids Company were evident long before its final, sad demise. The answer to such scandals – and the loss of trust in charity they engender – is not necessarily to add more regulation. Rather it should be to identify weaknesses in the sector's and individual charities' culture, and seek to address them before disaster strikes. The important questions are: why these scandals happened and how do we prevent them from recurring?

Red flags

A round table discussion on these issues took place at ICSA last November, well attended by trustees, senior leaders, regulators and governance experts. Participants identified several characteristics and behaviours that could be viewed as 'red flags' for a charity's culture.

Existential stress

This is where a charity is unable to develop and/or deliver a sustainable plan for its continuing viability, an aspect of poor governance that could lead to a weak organisational culture. For instance, a charity that lurches from one crisis to another, with little or no time for reflection, may communicate mixed messages as one emergency overtakes another, with different responses required in order to resolve the matter straight away. A lack of consistency and a 'sticking plaster' approach does not foster a positive culture that contributes to the survival of the organisation, or the quality of the services offered.

Remuneration practices

When determining pay levels for senior and front-line staff or contractors, a range of factors come into play. Getting remuneration levels right can contribute to a happy, productive and stable workforce. Making the wrong decisions can lead to inappropriate behaviours that are rewarded simply because the full impact of agreed targets have not been thought-through. Furthermore, where pay appears to be out of step with that of the average worker – who may well be a committed donor – this can lead to some thinking the priorities of the charity have gone askew and adversely affect public support.

"A strong personality may unduly influence and overpower the better instincts of those around them"

The power of personality

Charismatic leaders, at board and senior manager level, can be a mixed blessing. A visionary with warmth and charm may well be able to inspire funders, staff, influencers and volunteers to support the charity in its aims. Similarly, a strong personality may unduly influence and overpower the better instincts of those around them. This has been a major focus of governance codes for many years.


Where charities have departments that delineate priority between front line and support functions, different cultures can emerge that challenge the one agreed by the board. For example, fundraising teams may be focused on meeting challenging income targets, which will be used for the charity's beneficiaries, but which encourage behaviour that undermines the work of supporter care teams and could consequently drive supporters away.

Pressure to increase funds to support the cause

Those involved in the work of a charity will usually believe the cause is a valid one. As such there may be an overarching desire to generate as much income as possible to help achieve the charity's purposes. This can lead to a mentality that the end-result justifies the means, as the charity is there to 'do good'. Others may see such behaviour as unduly neglectful of the wider ethos of the charity and the sector, and may view its activities as harmful to others trying to make a positive impact on society.

Green flags

In addition there are some 'green flags' that indicate a positive culture within a charity. These include:

Considered and reflective board discussions about culture, values and ethics

A board and senior management team that reviews and reflects on their organisational culture is likely to be more attuned to any deviation from agreed standards. Furthermore, a leadership team that embodies and displays the agreed culture, values and behaviours of the organisation is more likely to lead staff that adopt the same mindset. Leading by example can therefore have a profound impact on the culture of the charity.

Ensuring that doing things right leads to doing the right things

For some in the sector, there can be such an inherent belief that they are 'doing good', that they forget to weigh up decisions in the round. Focusing on what's legal and ethical is likely to lead to a greater organisational appreciation of the wider impact of their work, culture and how they operate.

A strong commitment to good governance

A charity that adopts proportionate and effective governance arrangements is better positioned to spot behaviours and activities that undermine the culture of the charity and may affect public confidence.

The value of delivering public benefit

History is littered with examples of good intentions not always leading to good outcomes. However, the central importance of delivering public benefit predisposes the sector to be more able to articulate and evidence the positive impact it delivers. A charity that can tell that story and provide evidence to support it will be aware of the dangers of hubris, and not only take its ethics, values and behaviours seriously but also protect them.

"Leading by example can therefore have a profound impact on the culture of the charity"

Strong, ethical and considered leadership

Strong, considered and ethical leadership can, and should, come from every level of the charity and in any situation. A charity that empowers all staff and volunteers to be ethical leaders is better able to demonstrate and live the values it espouses and deliver the culture it desires.

Seeds of origin

A charity that has evolved from a particular philosophical or religious perspective may be more likely to carry the seed of original intention with greater fervour than some other types of organisation. Any evolutionary changes that continue to reflect those founding principles are likely to reinforce a culture that is appropriate to the charity and the people around it.

Membership charities

A charity with an active and engaged membership may demonstrate a stronger culture that listens to and values their opinions. This requires a trustee board that understands its legal powers and duties and appreciates and respects the powers of the membership. A charity that has an effective and continuing dialogue with its members may be better able to cultivate and nourish a healthy culture, especially where accountability is clear, proportionate and meaningful.

Role of funders

A funder's explicit commitment to funding charities with good governance can have a positive effect. Linking funding to sound governance is one way that positive behaviours and thoughtful decision-making can be promoted throughout an organisation, especially where impact is also measured.

Isolated examples

Like the corporate sector, the charity world has been blighted by a number of governance stories that do not show the sector in the best light. Public trust in the way organisations are run and governed has been challenged and cynicism is gaining ground.

A small number of charities may have exhibited a belief that the end justifies the means and these isolated examples have wreaked havoc on the sector's reputation and ability to make the positive impact it so desperately wants to make. It is also why a considered, planned and positive culture is so important to charities.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.