> ## Content Index > Fetch the complete content index at: https://www.nedness.com/llms.txt > Use this file to discover other available public pages before exploring further. # The Other Boardroom: part 3 - URL: https://www.nedness.com/articles/the-other-boardroom-part-3/ - Published: 2026-11-01T10:13:17.000Z - Updated: 2026-11-01T10:31:37.000Z - Description: The extra responsibility that comes with spending public donations and why having experience within both the paid and voluntary non-executive director (NED) world provides the most complete education a director can have. - Author: Tom Noel - Tags: #article, Board careers, Aspiring, #aspiring, Capability, #not-for-profit, Not for profit ## Part 3: Spending public donations In the first two articles from The Other Boardroom ([part 1](https://www.nedness.com/articles/the-other-boardroom/) and [part 2](https://www.nedness.com/articles/the-other-boardroom-series-2/)), I argued that charity roles are not a training pitch for corporate paid roles, and that charity governance is a distinct discipline which provides unique learnings that make you a more complete NED. I also discussed the challenges of being asked to step over the line from a NED role into an executive and how you find your way back after the secondment is complete. In this final article I want to talk about the money, and the extra responsibilities that exist when you are spending funds created through donations. Finally, I will aim to bring the three articles together and make the case for a NED career that runs across both boardrooms and the benefits that come from the rounded nature of the experiences that you gain. As before, I write this article based on my own experiences on boards in the UK and Jersey. Where I refer to a regulator it is the Charity Commission for England and Wales and whilst the principles travel, the detail on reserves, restricted funds and trustee liability varies between countries. Please do check the rules that apply where your charity is registered. ## The responsibilities of spending donated money On a company board, the income generated comes from its commercial endeavours. The business builds the product, sets the prices and if customers choose to buy it, money arrives. In a charity, by contrast, income is predominantly the product of trust. Funds come from individuals, year on year, with the expectation that the money is spent prudently on activities that further the charity’s mission. This dynamic changes the conversation around the board table in a way that’s hard to appreciate until you have sat through it. The Charity Commission’s 2026 research on public trust puts it starkly. The research shows that the single most important driver of trust in a charity (cited by 55 per cent of the public) is whether most of the money raised is spent directly on the cause. That ranks ahead of whether the charity makes a real difference at all (cited by 51 per cent), and well ahead of being able to see how the money was raised and spent (at 40 per cent), and the charity holding high ethical standards (at 29 per cent). In the Commission’s own words, “money reaching the end cause remains the most important driver of trust.”[1](#fn-1) In other words, the public is watching the money first and the mission second. In my experience, most charity boards spend most of their time worrying about where next year’s funding is coming from. The balance, that is worth noting however, is that the director must also worry about how the money is being spent and the impact of the spend in delivering the charity’s mission. A board that is permanently in fundraising mode runs the risk of being a board that loses focus on whether the money it is raising is doing any good. ## Restricted funds and the strings attached I initially introduced the concept of restricted funds in the first of my articles. From my perspective it was the concept that took me the most amount of time to get my head around when I first took on a charity NED role and so I wanted to delve a little deeper here. A restricted fund is money given to a charity for a specific purpose. Importantly the funds can only be used for that purpose, no matter how good the business case might be for something else. A grant provided to purchase a new minibus cannot be used to pay for an electricity bill regardless of how tight the financials might be. Charities that are audited will be asked to show how they ring-fence these funds and spending money on items that are not permitted can have very serious consequences for your auditors’ opinion. The strings are held by the donor, and not by the board, and the board cannot untie them without going back to the donor, and in some cases the regulator. What this means in practice is that it’s entirely possible for a charity to be both very well-funded and insolvent. I have seen balance sheets that on the face of it look comfortable until you separate out the restricted funds from the unrestricted. The first question I would ask any treasurer, is the balance sheet split between restricted funds and unrestricted funds and the governance that surrounds ensuring the split is sacrosanct. Commercial boards have no direct equivalent, but there are close cousins: customer money held on trust, deferred revenue and customer deposits. All three sit in the bank looking like the company’s cash, when the reality is that they are not. A director who has learned to read a charity balance sheet with the restricted funds stripped out will spot that distinction quickly, and will be quicker to ask whether the business is trading on money that is not yet its own. ## Reserves, the question every board argues about In England and Wales, every charity must have a reserves policy and explain within the annual report what the policy is and how much runway it holds.[2](#fn-2) Importantly there are no hard and fast rules about what the reserves should be, only that they are made up of unrestricted funds, that are freely available, and that they exclude restricted monies, the building you operate out of and anything else already committed to. The argument I have seen run in every charity board I have sat on goes a little like this: the auditors and the finance committee want six months of operating costs in the bank. The chief executive and the fundraisers want to spend it, because every pound sitting in reserves is a pound not delivering against mission. Donors do not give money so that the charity can sit on it and a large reserves balance can even be counter-productive especially when the charity may be receiving partial funding from a government grant. Ultimately this is a matter of balance and also a matter for the board to consider very carefully. It’s worth referring back to the lesson from Kids Company, which I covered in my first article, where the charity had an income of £23 million and reserves of around £400,000 but could not survive a single bad month.[3](#fn-3) A reserves policy should be written down and reviewed every year and should be a standing agenda item at a board meeting at least once a year. The private sector does this more instinctively through scenario planning, a well-established risk management regime, and covenant headroom. Charity boards, in my experience, often only do it when the auditors ask. ## Collective responsibility: every trustee owns every decision One of the first things you notice as a trustee is that responsibility is collective. There is no such thing as a trustee who only does the fundraising, or who only looks after finance. The Charity Commission’s core guidance is clear that trustees act together and are jointly responsible for the decisions the board makes.[4](#fn-4) If the charity spends restricted funds on the wrong thing, every trustee owns it, including the one who was not at the meeting and the one who said nothing. The Kids Company trustees learned this the hard way. The disqualification proceedings brought against them were not directed at the chair or the finance lead alone but at the board as a whole, and depending on the charity’s legal form, the exposure can be personal rather than limited.[5](#fn-5) This is not only a legal point. The money a charity board spends was given by someone. In my experience, that someone is often a pensioner with a standing order, a parent running a half marathon for a cause that touched their family, or a local business making a donation it could have spent on itself. None of them sit at the board table, and none of them will see the minutes. In the corporate world, I have never heard a director describe a budget line as a betrayal of the people who provided the money. In the charity world, I have heard it more than once. ## Operating in public A charity operates in a community that is watching, with a regulator whose primary interest is in public trust rather than a return on capital. A company that has a bad financial quarter may lose share price, a charity that has a bad headline can lose a year of income and can ultimately fail. The Presidents Club is the example I find most sobering. For over thirty years the Presidents Club Charitable Trust ran a men-only fundraising dinner in London, attended by senior figures from business, politics and finance. In January 2018 the Financial Times sent undercover reporters to the event at the Dorchester hotel. They reported that the 130 hostesses hired for the evening had been told to wear black underwear and matching short dresses, and that several guests had groped and sexually harassed them during the night.[6](#fn-6) The money raised on the night, through ticket sales, pledges and an auction of prizes, was then distributed by the trust as grants. In 2016 alone it made 49 grants totalling over £1 million, the largest being £280,000 to Great Ormond Street Hospital, with the rest going to other children’s hospitals and charities.[7](#fn-7) Within 24 hours of the report, the trustees announced that the charity would close, and several of those hospitals and children’s charities said that they would return the money they had received rather than be associated with the way it had been raised. The grants were real and the causes were good. None of that mattered once the method of raising the money became the story. For a trustee, the lesson is that how the money arrives is a governance question, not just a fundraising one. Every charity should have a clear donor acceptance policy and this should be reviewed regularly and be monitored. ## What each sector can learn As with my previous articles, the lessons from the boardroom can flow both ways. Charity boards can take from the private sector a level of financial literacy around the board table which is not always there. The discipline of scenario planning and a reserves policy that is stress tested and used rather than gathering dust in a drawer. Private sector boards can take back the habit of asking what the money is for in a moral sense rather than purely a fiduciary one, the practice of reading a balance sheet for the constraints hidden within it, and the experience of operating in public, where trust is the biggest asset you own. Someone once told me that integrity is doing the right thing when no one is watching, and it is a principle I try to live by in whatever boardroom I join. In practice it means reading the papers properly before the meeting, asking the question that is obviously awkward rather than letting it pass, declaring an interest before anyone has to ask, and treating a budget line the same way whether it is a donor’s standing order or a shareholder’s capital. Nobody outside the room sees any of that, which is exactly the point. ## Turning it into a board career My aim in writing these articles was to set out my strong belief that a charity boardroom should not be used as a stepping stone into the corporate and is instead, a separate discipline which provides huge learnings to any director. If you are interested in exploring a NED portfolio career, my advice is simple, choose the charity roles deliberately. A personal link to the cause is always helpful, because it will sustain you on the Tuesday evenings when the agenda is long and the biscuits have run out. Go for a role where you will be stretched and may be outside of the comfort zone of your executive career. Be clear also on what you will have to unlearn. The company board will expect you to let the executive run the business, to resist the urge to roll your sleeves up, and remember your primary role of challenge and ensuring the company is well run. The informality that some charity boards tolerate will not be tolerated on a company board, and the formality a company board takes for granted will need to be learned quickly. And finally, hold one seat of each at the same time if you possibly can. I think this is the most complete education available to any director. The charity seat keeps you honest about mission, stakeholders and the moral weight of money. The company seat keeps you sharp on financial rigour, delegated authority and the separation of governance from management. A director who can carry the lessons between the two, is a stronger contributor in both, and that is the whole argument of this series. --- ## Use of AI statement This article was written by Tom Noel, its human author. AI was used to research background sources, to check quotations and figures against the original documents, and to compile the footnotes. It did not write the argument, the interpretation or any of the original editorial. The article was reviewed and edited by Peggy Curley, Chief Communications Officer, and approved for publication under the NEDness Editorial Policy. --- ## Notes 1 Charity Commission for England and Wales, Public trust in charities 2026, 8 July 2026, section on drivers of trust. Overall trust 6.5 out of 10, unchanged since 2024; 55 per cent cite most of the money raised being spent directly on the cause as important to trust, 51 per cent the charity making a real difference, 40 per cent transparency over money raised and spent, 29 per cent high ethical standards. [↩](#fnref-1) 2 Charity Commission for England and Wales, Charity reserves: building resilience (CC19), updated 16 September 2026, sections on what counts as reserves and on explaining the reserves policy in the trustees’ annual report. [↩](#fnref-2) 3 Charity Commission for England and Wales, Charity Inquiry: Keeping Kids Company, published 10 February 2022, amended 21 May 2025\. [↩](#fnref-3) 4 Charity Commission for England and Wales, The essential trustee: what you need to know, what you need to do (CC3), sections 6.3 and 9.3 (trustees act collectively and remain collectively responsible for all decisions) and sections 10.2 and 11.1 (personal liability and legal structure). [↩](#fnref-4) 5 Charity Commission for England and Wales, Official report criticises former trustees of Kids Company, GOV.UK, 10 February 2022, updated 21 May 2025\. The Official Receiver sought to disqualify the charity’s trustees and chief executive as company directors; the High Court found in their favour in February 2021\. [↩](#fnref-5) 6 Madison Marriage, “Men-only Presidents Club charity dinner”, Financial Times, 23 January 2018\. [↩](#fnref-6) 7 Civil Society News, “Scandal-hit Presidents Club to close as charities hand back donations”, 25 January 2018\. [↩](#fnref-7)