The success of an NGO depends on a board with the expertise Chartered Accountants already possess, says Michael Wickham Moriarty.

Non-profit organisations play a major role in Irish society. They generate more than €10.9 billion in turnover annually, 8% of current exchequer funding is channelled through non-profits and organisations described as Section 38 and Section 39 bodies under the 2014 Health Act deliver much of Ireland’s health and social services. Almost a quarter of Ireland’s official overseas development aid is delivered through NGOs. Non-profits are at the forefront of responding to Ireland’s current housing crisis.

Chartered Accountants have a lot to offer Ireland’s 19,505 registered non-profit organisations. Non-profits require volunteers to give their time and expertise to act as directors. The non-profit sector has been subjected to both increased regulation and increased public scrutiny in recent years and there is a need for engaged, educated and diligent directors for non-profit organisations of all sizes.

Chartered Accountants are trained as experts in financial management and financial reporting, but what they have to offer non-profits goes much further than this. They are trained in company law and are bound by a code of ethics and professional standards. Many Chartered Accountants have developed expertise in areas such as risk management, strategic planning, governance and investment management, all essential for boards of non-profits.

Finding the job

There are a number of routes for Chartered Accountants who wish to become directors of non-profit organisations. People do get invited to join non-profit boards by peers or through existing relationships with organisations they support, and many non-profit organisations elect their directors from a broad membership base, which members of the public can join. 

There are a few ways someone interested can find out about board vacancies. Some organisations openly advertise when there is an opening on their board. Vacancies can occasionally be found on the careers pages of the Chartered Accountants Ireland website, and the Institute of Directors in Ireland also assists non-profits to recruit new board directors. Recruitment services in the charity sector such as Activelink.ie and Charity Careers Ireland advertise board positions (as well as paid, professional roles), and Boardmatch Ireland is a charity which matches professionals to non-profit boards.

One effective route for accountants is to first join a board subcommittee as an external expert. Finance and audit committees may recruit volunteer accountants to work alongside board members. This is a good way to learn about the inner-workings of a non-profit without suddenly taking on  the full, legal responsibilities of a company director.

Tools and supports 

 There are a range of tools and supports available for directors of non-profits. The Charities Regulator has recently published a range of guidance documents, such as Guidance for Charity Trustees, Internal Financial Controls Guidelines for Charities and Guidelines for Charitable Organisations on Fundraising from the Public, which can be found on its website. The Institute of Directors in Ireland has also published guidance for directors of non-profits.

The Institute offers many CPD courses that can assist directors of non-profits and has a Charity & Non-for-Profit Group for members active in the sector. Non-profit umbrella bodies such as The Wheel and Charities Institute Ireland run events and training relevant to board directors. 

For non-profits that have a cross-border structure or are based in Northern Ireland, there is guidance available from the Charity Commissioner for Northern Ireland. The Charity Commission for England and Wales has extensive resources available online, many of which are relevant for directors of non-profit organisations in Ireland.

Common pitfalls 

There are a number of challenges that frequently arise for directors of non-profit organisations.

Many small non-profit organisations may not have the resources to employ full-time accountants or management staff with a comprehensive range of skills at executive level. In such circumstances, it can be tempting for highly-skilled directors to step in and carry out work that should be the function of executive management. It is important to clearly define and document the separate roles and responsibilities of management, and those of the board of directors. Directors should remember the old adage that they should put their noses in, but keep their fingers out.

Sometimes board members can over-rely on these finance experts. Boards may appoint treasurers from among their members and they may establish subcommittees such as finance and audit committees to focus on specific areas. However, such structures can never delegate away the responsibility of the board of directors for the sound financial management of the non-profit. 

It is vital that all directors understand the financial affairs of the organisation and that they contribute to key financial decisions. Chartered Accountants on boards can assist by ensuring financial reports to the board, such as management accounts are presented in a way accessible to non-financial experts. 

The most serious governance failures often occur where one individual or a tight knit group control the organisation over an extended period of time. The board of directors as a collective body should exercise ultimate control over the non-profit instead of a CEO or founder. As unpaid voluntary directors, a non-profit board is heavily reliant on executive management to inform them about the organisation and to implement their decisions. The relationship between the Chair of the board of directors and the CEO is crucial to maintaining appropriate control and delegation. In a well-governed non-profit, this relationship should have some healthy tension.

Reporting for non-profits

The Charities Statement of Recommended Practice Financial Reporting Standard 102 (Charities SORP FRS 102) is mandatory for UK charities and is considered best practice for charities in Ireland. The Charities Regulator has signalled his preference for this to become compulsory in Ireland in the near future. Since not all non-profits are regulated charities, this accounting standard is not appropriate or applicable to some non-profit organisations. Where it is applicable, directors of non-profits should ensure that the Charities SORP FRS 102 fully is implemented in their financial reporting. In cases of charities where it is not in place, directors should seek a road map for its adoption.

Directors should seek that non-profits have a clear objective manner of measuring their success against their aims and objectives and that these should be communicated to stakeholders.

There are a range of voluntary and mandatory codes of compliance applicable to sub-sets within the non-profit sector. For example, the Code of Practice for the Governance of State Bodies from the Department of Public Expenditure and Reform applies to many non-profits funded by the Irish state. The Department of Public Expenditure and Reform Circular 13/2014 sets out some of the responsibilities of non-profits in receipt of state grants. Dóchas – the umbrella bodies for overseas aid NGOs – has a Code of Corporate Governance for Irish Development NGOs. In addition, there is a more widely relevant Code of Practice for Good Governance of Community, Voluntary and Charitable Organisations. Directors should understand which codes are most suited to their organisation. They should understand whether these are voluntary or mandatory and they should understand how their organisation measures up against these standards.   

For non-profits seeking to benchmark themselves against the highest standards of the sector, there are some annual awards to consider. The Leinster Society for Chartered Accountants runs the Published Accounts Awards and includes categories for non-profits. Separately, the Good Governance Awards is an initiative that recognises and encourages adherence to good governance practice by community, voluntary and charitable organisations in Ireland. Charity umbrella bodies such as The Wheel and Dóchas run awards that recognise the impact of non-profit organisations. Boards should take a look at the calibre of the reporting the winners have displayed and aim to emulate that standard.

Conclusion

There are many opportunities for Chartered Accountants to volunteer as directors of non-profit organisations and they have so much to offer. These roles come with challenges and the duties are not to be taken lightly.

While serving as a non-profit director is unpaid, it can be a personally very rewarding experience. 

Michael Wickham Moriarty is the Head of Finance of the Central Remedial Clinic and he is a Governor of the Rotunda Hospital.