Bear with me for a moment but, if we are to talk about the value of good governance, it would be sensible to put some numbers on it to see what sort of a difference this can make. An area that is easily quantifiable and where the effects of poor governance can be seen clearly is in the world of investment management. So, with a little forbearance, I will begin this article by demonstrating just how valuable governance is in terms of pounds, shillings and pence before setting out some of the characteristics that make a real difference when a trustee board makes long-term plans, whether about investments, fundraising, finance or pretty much anything.

Here comes the sum: consider an investment fund worth £100m. It can earn about £8m a year when invested in a long-term portfolio, but the ride will be bumpy and the governance will need to be resilient and steadfast to cope with these ups and downs. Now consider a much more cautious body of trustees who are uncomfortable with these ups and downs. These trustees would only invest in a much more stable portfolio which would only return (say) £4m a year, or half as much. Now assume that there are only four trustees. If we compare what the steadfast trustees will earn every year (£8m) with how much the cautious group earns (£4m), we can see that the latter group will cost their charity £4m every year, or approximately £1m each. And, after several years, the cautious group’s charity would slowly be able to afford less and less because its purchasing power would be eroded by inflation until it was a shadow of its former self. In less than 20 years, the cautious charity would only spend half what it spends today. On the other hand, the spending of the steadfast trustees would remain relatively unaffected over time. In that case, the cost of caution is even higher than £1m a year.