Common Governance Mistakes in Early Years Charity Managed Settings
- Sally Gridley
- Mar 5
- 6 min read
A practical myth-buster for committee-managed early years and childcare providers
If you sit on the committee of a charity-run early years setting, you’re not “just helping out”. You are a charity trustee and that brings with it a legal responsibility.
Governance in early years charities can feel unnecessarily complex. Constitutions, AGMs, Ofsted, safeguarding oversight and financial controls, it’s a lot, especially when trustees are volunteers juggling work and family life.
But when governance slips, the consequences are real. The Charity Commission has highlighted poor financial management and unmanaged conflicts of interest as common failings across the charity sector. In early years settings, where we are responsible for children’s safety and public funds, those risks are amplified.
In this blog I’ll clear up some of the most common myths and mistakes.
Note – if you are using a version of the Pre-school Learning Alliance (now Early Years Alliance) model constitution this is an approved governing document and all enquiries relating to it and changes required should be made to them directly not the Charity Commission.
1. Treating the Constitution as a Formality
Every registered charity must operate in line with its governing document, usually called a constitution for unincorporated associations and CIO’s.
Yet one of the most common governance mistakes is:
Making decisions that fall outside the charity’s stated objects
Ignoring procedural rules around appointments or meetings
Failing to review whether the constitution still reflects how the setting operates
Your constitution is not a dusty administrative document. It is the rulebook. Read my blog ‘Understanding your Charity Constitution: A Beginner’s Guide’ for more information.
Under the Charities Act 2022 trustees must act in accordance with their governing document. Acting outside of it is mismanagement.
Practical tip: Schedule a formal review of your constitution every few years, particularly if your services, funding model or structure has evolved.
2. Believing Constitutions Can’t Be Changed
They can — but only properly.
Charities can amend their constitution where the governing document allows it, usually by agreement at a general meeting. Certain amendments such as changes to the charitable objects, the use of property on dissolution and private benefits for trustees or members, will require Charity Commission consent.
A common mistake is either:
Assuming change is impossible, or
Making informal changes without following due process
Both create risk.
If your governance arrangements no longer fit your setting for example, trustee numbers, officer roles, or term limits, address it lawfully rather than working around it.
3. Not Understanding That Committee Members Are Trustees
There is no legal distinction between a committee member and a trustee in a registered charity.
If you are on the management committee, you are a charity trustee.
That means you must:
Act in the charity’s best interests
Manage resources responsibly
Avoid conflicts of interest
Ensure compliance with charity law
Safeguard the charity’s assets
The Charity Commission’s guidance is clear: lack of awareness is not a defence.
One of the biggest governance mistakes in committee-run settings is trustees not realising the seriousness of their role.
Support is available to help you with your role and responsibilities as a trustee, with my Trustee Roles and Responsibilities Workshops.
4. Weak Financial Oversight
Financial governance is one of the most common areas of regulatory concern.
Typical issues include:
Poor segregation of duties
Trustees not reviewing management accounts
Inadequate reserves planning
Failure to track restricted funds properly
Over-reliance on one individual (often the treasurer or manager)
Trustees are collectively responsible for the charity’s finances even if one person “looks after the books”.
Good governance looks like:
Regular financial reporting at every meeting
Clear delegated authority levels
Dual signatories where required
Transparent budgeting and reserves policy
Financial oversight is not optional it is a legal duty.
Read my blog ‘Business Planning – An Essential Tool for Early Years Settings’ for more information on managing the charity finances.
5. Getting Trustee Numbers Wrong
Some committees assume:
They must have five or more trustees
They cannot operate if officer roles are temporarily vacant
The reality depends on your constitution.
Many charities can lawfully operate with three trustees, provided quorum requirements are met and while officer roles (chair, treasurer, secretary) should be filled, a short-term vacancy does not automatically require closure.
The real risk is prolonged governance instability not short transitional gaps.
6. Misunderstanding Parent Representation Requirements
It is common for early years charities to require a percentage of trustees to be parents of attending children.
However, this is rarely 100%. In fact if you are using a PLA constitution it’s 60%.
Many constitutions allow a proportion of trustees to be individuals with relevant skills or community interest, even if they are not current parents.
However, having a committee solely of parent trustees can create:
High turnover
Loss of continuity
Skills gaps
Strong governance benefits from a balance of lived experience and professional expertise.
That’s why when I’m supporting charity managed settings to convert to CIO I use the Foundation model constitution as it removes the requirement for a percentage of parent representation and gives scope for a board with greater experiences and continuity.
7. Poor Conflict of Interest Management
This is a recurring issue in Charity Commission inquiries.
Conflicts are not inherently wrong but poorly managed ones are.
Examples in early years settings include:
Trustees related to staff
Trustees supplying services
Trustees involved in disciplinary or grievance decisions affecting relatives
Good practice requires:
A conflict of interest policy
Declarations recorded at every meeting
Withdrawal from decision-making where appropriate
Clear documentation in minutes
Transparency protects both individuals and the charity. Get a copy of my Conflicts of Interest Toolkit in the library.
8. Blurring Governance and Management
In committee run settings, boundaries can easily become blurred.
Trustees govern. Managers and staff manage.
Common governance mistakes include:
Trustees becoming operationally involved in day-to-day issues
Managers making strategic decisions without trustee oversight
Staff attending all committee meetings without defined purpose
It is entirely appropriate to invite staff to contribute to specific agenda items particularly safeguarding, finance or operational updates, but governance meetings are trustee decision-making forums.
Clear boundaries reduce tension and strengthen accountability.
9. Treating Safeguarding as an Operational Issue Only
In early years charities, safeguarding oversight sits firmly with trustees as well as managers.
The Charity Commission expects trustees to:
Ensure safeguarding policies are in place and reviewed
Understand reporting procedures
Act promptly on serious incidents
Notify the Commission where required
A common governance mistake is assuming safeguarding is “the manager’s responsibility”.
It is a shared duty and trustees must be able to evidence oversight. Useful blog ‘Safeguarding Responsibilities for Charity Trustees in Early Years Settings’
10. Confusion Around Ofsted and Legal Structure
Another area of misunderstanding concerns registration requirements.
Changing your constitution does not usually require re-registration with Ofsted.
However, changing your legal structure for example, moving from an unincorporated association to a Charitable Incorporated Organisation (CIO) does.
If your nominated person is a manager, Ofsted requires that they are also part of the governing body where appropriate and permitted by the constitution.
Structural decisions must always be considered from both charity law and Ofsted regulatory perspectives.
11. Misunderstanding What Happens on Closure
When a charity closes, its remaining assets must be transferred to another charity with similar aims.
They cannot be distributed to members.
They cannot be transferred to a non-charitable structure such as a Community Interest Company (CIC).
Charitable assets must remain within the charitable sector. Check the dissolution clause of your constitution for information on how to transfer your assets.
Failure to manage dissolution correctly can result in regulatory action.
12. Poor Minute-Taking and Record Keeping
If governance is ever scrutinised, your minutes are your evidence.
Weak minutes often:
Fail to record conflicts
Do not document rationale for decisions
Lack clarity about actions agreed
Provide no audit trail
Minutes do not need to be lengthy but they must show that trustees considered risks, complied with their constitution and acted in the charity’s best interests. They should also include actions, the person responsible and a date for completion and be distributed in a timely manner after each meeting.
The Common Thread
Across all of these issues, the pattern is consistent. Governance problems in early years charities rarely arise from bad intentions.
They arise from:
Unclear understanding of legal duties
Informal working practices
High trustee turnover
Lack of structured induction and training
The Charity Commission’s guidance is clear: trustees must take reasonable steps to understand their role and govern effectively.
In a sector responsible for young children, public trust matters enormously.
Strong governance is not about red tape. It is about:
Protecting children
Protecting charitable assets
Protecting volunteers
Protecting the future of the setting
Final Thoughts
When trustees understand their constitution, manage finances robustly, declare conflicts openly and maintain clear boundaries with management, governance becomes far less intimidating — and far more effective.
If you are unsure about any aspect of governance in your setting, the most important step is not to ignore it.
If you have questions about your own governance and need advice you can book a Virtual 1:1 Session with me for guidance.
Clarity now prevents crisis later.
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