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The challenges of governing an international charity

Business lawyer and charity expert Richard Abbott explains how charities and NGOs can structure their organisations to overcome the legal and operational challenges presented by governance across international borders.

As international communication and travel become more accessible, charities and non-governmental organisations (NGOs) are increasingly taking the opportunity to set up bases in multiple countries. But how does a charity working in a number of jurisdictions govern itself?

This growing trend for operating across international boundaries makes the question more relevant than ever. For example, an international NGO may require donor information to be supplied to its headquarters in the US. However, branches of the NGO based in the EU would be unable to comply because it would breach European law on the export of personal data.

Even within the UK, England and Scotland have their own separate charity laws. For example, in Scotland the Office of the Scottish Charity Regulator is required, under Scottish law, to assess the activities of a charity to decide if it meets the public benefit test to a degree that is not applicable under English law.

Any charity that wishes to be registered in multiple locations must therefore ensure it complies with the laws of every country in which it operates.

NGOs will also need to ensure accountability and freedom of action for national entities, which will have the local expertise to understand and respond to a local issue in a way that the central organisation will not.

On the other hand, the central organisation will wish to exercise a degree of control over the local entity to ensure that it follows the vision and strategy of the NGO and does not take action which could damage its reputation or render it in breach of laws to which it is subject.

Different organisations have come up with different solutions to the challenge of working internationally. Some allow national entities a high degree of autonomy, whilst others opt for a more centralised approach.

Having looked at how different NGOs are governed, there is one structure in particular that allows for a good balance between local independence and central accountability. This model comprises an International Board, which acts as the overall governing body responsible for the vision and strategy of the NGO, with a subordinate Governance Board responsible for day-to-day operations.

The CEO sits on both boards and heads the Governance Board. Board members of some of the larger national entities will sit on the International Board.

A governance secretary, who is also a member of the Governance Board, is responsible for liaising with local entities. This appointment is crucial to ensuring good communication between the International Board and the national entities and for ensuring best practice across all parts of the organisation.

Local entities are incorporated in their respective countries in accordance with local law, reflecting the specific requirements of each country.

Agreements are then put between the International Board and each of the local entities. These will govern the relationship between the central and local organisations and help to ensure that local entities operate in accordance with the overall strategic vision of the International Board. However, local agreements will also reflect the differing local requirements, e.g. relating to fundraising and data protection.

Finally, communication is crucial. As well as putting in place appropriate agreements and boards, there needs to be a comprehensive training policy to ensure the vision of the organisation is represented in each local entity.

This structure also has distinct advantages from a legal perspective. The central organisation can keep a measure of control over national entities to ensure that they are acting within its objectives and complying with any regulations to which it may be subject.

For example, a charity registered in England and Wales would be obliged under English law to ensure all its branches and officials acting anywhere in the world comply with the Bribery Act 2010.

The devolved nature of this structure also reflects the fact that the NGO must comply with local law. Thus, to use the earlier example, a UK branch of a US based charity can ensure that British and EU law relating to data protection is complied with.