Making Decisions

Making strong, appropriate decisions as a board/management committee requires an informed and serious approach to governance. third sector organisations and particularly charities need to make good decisions because you hold a unique responsibility; being entrusted with resources, public reputational trust, and charitable purposes to create positive change. Making poor decisions can lead to inefficiencies, financial mismanagement, or reputational damage, which can ultimately harm the very people and causes you aim to support.

In order for your organisation to deliver on fulfulling its purpose and to operate lawfully, making good decisions is an essential element of being a trustee. Making good decisions in this context should be differetiated from good decision-making, which is the process for making decisions.

Why does making good decisions matter?

• Charities and many other third sector organisations exist to make a difference and deliver public benefit. Thoughtful choices ensure you use funds and resources effectively to maximise impact
• Donors and stakeholders need confidence that their contributions are being used wisely. Transparent and ethical decisions build long-term credibility and maintain public trust
• Legal and financial responsibility: Charity boards must comply with regulations and manage finances properly to avoid legal issues or financial instability
• Strategic decisions help organizations adapt, expand, and stay relevant in changing circumstances
• Working to ensure ethical and informed governance prevents internal disputes, fraud, conflicts of interests and other challenges that could undermine the charity’s purpose or reputation. This reduces risks and helps to avoid conflict

Key principles to follow for good decision-making

• Act within your powers: Ensure all decisions align with your charity’s governing document and legal framework.
• Act in good faith: Decisions should always prioritize the charity’s best interests, avoiding personal or external influences.
• Be sufficiently informed: Gather all relevant information before making a decision, including financial, legal, and operational considerations.
• Consider all relevant factors: Weigh different perspectives and implications to make well-rounded choices.
• Ignore irrelevant factors: Avoid distractions or biases that could cloud judgment.
• Manage conflicts of interest: Identify and address any potential conflicts to maintain integrity.
• Ensure decisions are reasonable: Choices should fall within the range of what a reasonable trustee body would decide.

Further resources and links

The seven principles above are further defined and a good explanatory narrative is available at the CCEW guidance page

OSCR has good resources about independent decision-making

The TSI learning portal includes an online course - Impactful committee behaviours

For further free, well-informed information, find your local Third Sector Interface (TSI) at the directory page here