An opportunity for change Exploring the trust option for museum

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<ul><li><p>An opportunity for change</p><p>Exploring the trust option formuseum services </p><p>A practical guide to the feasibility stage</p></li><li><p>BUnlimited is a consultancy service driven bya desire to release potential. We look at howto take the constraints off organisations andthe people in them, so that they can buildand flex their creative muscle and move fromgood to great. This may be about process andorganisational configurations but more often itis about culture and confidence. BUnlimited isabout helping clients to meet their potential. </p><p>Lawrence Graham LLP</p><p>Were business lawyers, advising clientsaround the world. Our base is in London but,like our clients, our reach is global.</p><p>Were not just commercially-minded, wereentrepreneurial and results-minded. Ourapproach is to get deep inside our clientsbusinesses and the industries in which theywork. Its this depth that gives us an extraedge in tailoring the most effective legal andcommercial solutions.</p><p>Were lawyers. Just different.</p></li><li><p>Foreword</p><p>The constant challenge for local authorities is tocontinuously improve public services with limitedresources. With conflicting priorities and demandsfor local authorities, cultural services do notnecessarily get all the attention, commitmentand drive that they need. </p><p>In 2001, the City of York Council asked meto chair an Initiation Group to investigate theoption of establishing a new charitable trustto take over the Councils key museum andarts facilities: the Yorkshire Museums andGardens, the York Art Gallery and the YorkCastle Museum, which was ultimately agreed.</p><p>These facilities remain in Council ownershipbut the Trust has total responsibility for theirmanagement and development. </p><p>Some elected members at the time objectedto what they perceived to be the privatisationof the services. However, a charity is not aprivate body: it is publicly accountable andlegally answerable.</p><p>Indeed the new charitable trust, YorkMuseums Trust, has gone from strength tostrength in its now six years of operation.Relations with the Council, at both officerand councillor levels, are good. There arefresh staff, fresh energy, fresh funds fromexternal sources, and new and imaginativeprogrammes. Each side has kept to theiroriginal commitments. </p><p>Joanna Bussell and Sandra Bicknell havenow produced this excellent report, whichsets out clearly and fully how such transferscan be set up, monitored and be successful.Their personal experience in York, I like tothink, has contributed to their thinking andwhat they have written here. I warmlyrecommend this report to any group orlocal authority who might be thinking ofsuch a change, and indeed to those ofus who have already embarked on thetransformation. We all have much to learn.</p><p>Robin GuthrieChairYork Museum Trust</p><p>i</p></li><li><p>Contact details</p><p>Joanna BussellPartner (Local Government and Public Authorities)Lawrence Graham LLP4 More London RiversideLondon SE1 2AU</p><p>T/ +44 20 7759 6664DX/ 1332076 London Bridge 4E/ joanna.bussell@lg-legal.com www.lg-legal.com</p><p>Sandra Bicknell DirectorBUnlimitedT/ +44 1226 767179E/ sandrabicknell@mac.com</p><p>Janet ThompsonHub ManagerRenaissance Yorkshire Museums SheffieldLeader HouseSurrey StreetSheffield S1 2LH</p><p>T/ +44 114 278 2672E/ janet.thompson@museums-sheffield.org.ukwww.yorkshirehub.org.uk</p></li><li><p>Contents</p><p>Page</p><p>Foreword i</p><p>1. Introduction 1</p><p>2. Your present position and aspirations 7</p><p>3. What are your options? 12</p><p>4. Options assessment is a trust the right option? 19</p><p>5. Next stages 25</p><p>6. Communicating possible change 27</p><p>7. Reflections from existing trusts 30</p><p>8. Concluding remarks 32</p><p>Appendices</p><p>A The NPDO options 33</p><p>B Comparison between alternative NPDO options 38</p><p>C Risk matrix 40</p><p>D Key legal tasks for a museum transfer 42</p><p>E Schedule of legal documents 44</p><p>F Trustee recruitment 45</p><p>G Person specification for trustees 46</p><p>H Draft advert for prospective trustees 47</p><p>I Model object clause 48</p><p>J Local authority powers 49</p><p>K Background to VAT position of NPDO 51</p><p>L NNDR briefing 54</p><p>M Staffing issues 56</p><p>N Definitions 57</p></li><li><p>1</p><p>1. Introduction</p><p>A practical guide</p><p>This is a practical guide targeted at localauthority officers who have responsibilityfor, or who are involved in, a local authoritymuseum service and who are consideringthe transfer of services from the localauthority to a Trust.</p><p>It is intended to be a practical documentto help you to think about what might beinvolved in transferring a local authoritymuseum service to a Trust. The criticalfocus of this guide is the first stage of thetransfer process the feasibility stage.</p><p>The transfer of services to a Trust is a majororganisational change. It is imperative,therefore, to the success of an initiative ofthis nature, that you undertake a thorough,objective and professional approach to thefeasibility stage of the transfer process.</p><p>The aim of this guide therefore, is to highlightthe key issues you need to consider whenexploring the Trust option. We have not givenyou all the answers, as your answers will bespecific to you and they will depend uponyour own circumstances. We have focusedinstead on the issues and the processinvolved. The contents of this guide does notnecessarily offer you a blueprint but shouldoffer enough detail, with examples, to helpyou with your own planning.</p><p>You will see that throughout this guide westress the importance of communication.This is because of the very simple fact thathow you communicate possible changes willmake or break the possibility of initiatingthose changes.</p><p>The experience offered within this documentcomes from two main sources: legal teamswho have extensive experience of transferringlocal authority services to Trusts and peoplewho have headed local authority museumservices both pre- and post-transfer.</p><p>Other sources of information</p><p>This practical guide to the feasibility stage ofa transfer of museum services to a Trust isintended to compliment other sources ofinformation published in recent years lookingat the advantages and disadvantages of theTrust Option for museum services and thekey legal, financial and operational issuesinvolved. Most significantly key sources ofbackground information on the Trust Optionfor museum services includes the MLAspublication Moving to Museum Trusts:Learning From Experience (2006) in(the MLAs Report) and the 7th Edition ofLawrence Graham LLPs publication Culturein Trust (2007).</p><p>This guide focuses in particular on thefeasibility stage of the transfer process, thatis determining whether the Trust Option is theright option for your museum service and thecritical issues to be addressed during theimplementation stage to ensure the transferis a long term success for all parties involved.</p><p>Transferring a service to a Trust will not initself transform the service. It is essential,therefore, that the feasibility stage identifiesthe critical success factors and mostimportantly resources are put in place todeliver the required change programme.</p><p>Quick wins are important. However, the realmeasure of success must be sustainabilityand continuous service improvements.</p><p>This practical guide will help all thoseinvolved in the change programme toidentify and put in place the platform fora successful transfer of museum services.</p><p>The Trust Option</p><p>The Trust Option referred to in this guide isa generic term for arranging for the deliveryof the services by a non profit distributingorganisation (NPDO).</p></li><li><p>2</p><p>The Trust Option would involve therefore:</p><p>n establishing a new NPDO (or identifying asuitable existing NPDO);</p><p>n transferring the existing services includingstaff to the NPDO; and</p><p>n entering into new partnership arrangementswith the NPDO for the delivery of museumservices.</p><p>NPDOs take a number of different legalforms including a:</p><p>n unincorporated charitable Trust;</p><p>n company limited by guarantee (charitableor non-charitable);</p><p>n industrial and provident society (charitableor non-charitable);</p><p>n charitable incorporated organisation; and</p><p>n community interest company.</p><p>Whatever its legal form the key distinguishingfeatures of an NPDO is that its profits cannotbe distributed (eg to shareholders) but mustbe reinvested back into the organisation tofurther its objectives.</p><p>This is the fundamental difference between aprivate sector share company and an NPDO.It means that all of the profits generated bythe organisation are continually reinvested toimprove the services provided.</p><p>We set out the advantages of the Trustoption in Appendix A of this guide. However,it must be emphasised that these potentialadvantages do not arise automatically fromthe legal status or the structure of theorganisation alone.</p><p>Success will depend on the leadership,commitment and culture of the neworganisation and importantly in this context,the willingness of the staff involved toembrace the organisational change andopportunities the NPDO presents.</p><p>An overall process model</p><p>We recommend a four stage process. Thisis summarised as the flow chart overleaf(Table 1).</p><p>The chart is intended to model the overallprocess of transferring a local authoritymuseum service to a Trust. This is followedby short descriptions of each stage. Asstated above, the main narrative of this guideconcentrates on the first stage of this overallprocess: the feasibility stage.</p><p>We have focused primarily on the feasibilitystage of the process because carefulconsideration of issues during this stage isessential to establishing a sound basis forany further development of a Trust option.</p></li><li><p>3</p><p>Table 1</p><p>Key stages for a transfer of museum services to a trust</p><p>Issues to be addressed</p><p>Stage</p><p>1 Feasibility(Sections 2-4)</p><p>2 Detailed planning (Section 5)</p><p>3 Transfer(Section 5)</p><p>4 Post-transfer</p><p>Legal</p><p>Assess existingarrangements</p><p>Prepare necessarydocumentation</p><p>Establish shadow boardwith chair-designate</p><p>Establish full Trustee Board</p><p>Initial training of Board</p><p>Finalise suite of documents</p><p>Establish legal entities</p><p>Ongoing Trustee training</p><p>Business</p><p>Define aim/intention(Section 2.2)</p><p>Assess present position (Section 2.3)</p><p>Identify options(Section 3)</p><p>Assess options(Section 4)</p><p>Develop recommendationfor future governance(Section 4)</p><p>IN PRINCIPLE DECISION</p><p>Develop detailed businessplan with 5-7 year horizon</p><p>APPROVAL</p><p>Deliver any pre-transferorganisational changes</p><p>TRANSFER DATE ANDPARTY</p><p>Implement business plan</p><p>Communications/relationships (Section 6)</p><p>Identifying stakeholdersand their concerns</p><p>Inform stakeholders of keystages</p><p>Keep stakeholdersinformed in an appropriatemanner</p><p>Discuss findings withstakeholders</p><p>Involve stakeholders in thedevelopment of the detail</p><p>Maintain and buildrelationships</p><p>Maintain and buildrelationships</p></li><li><p>4</p><p>Stage 1: Feasibility</p><p>This stage is about exploring what mightconstitute the best governance option forsecuring an effective museum service. Itneeds an assessment of the existing legalstatus of the service, its collections and itsproperties, and needs a broad look at theorganisational and business implications.Key questions for this first stage of theprocess include the following:</p><p>n Does the principle of establishing a Trustfor the museum service make sense?</p><p>n Is it viable?</p><p>n Whats the best overall portfolio fortransfer?</p><p>n Are there any insurmountable legal,financial or operational obstacles?</p><p>As inferred by the last question, this stageshould also explore what might make atransfer impossible at the present time. Thiscould be a legal issue, a political one, atiming one, a capacity one, or it could bethat disentangling from the local authorityscentral services is perceived to be toodifficult.</p><p>Stage 2: Detailed planning</p><p>If an in-principle decision to look further at aTrust option has been given then a far moredetailed set of work will be needed. From theorganisational and business planning sidethis means developing a full business planfor the Trust with 510 year financialprojections. The aim being to ensure financialsurety: you know what the new organisationwill cost to run, you have taken into accountyour aspirations for service delivery,addressed any issues of capital need(dilapidation, and/or match funding for amajor grant application, and/or means ofdealing with cash flow projections),developed robust income projections and youknow what the transfer costs will be.</p><p>Stage 3: Transfer</p><p>The transfer itself comes with costs and needscareful planning. Like all change management,if it is not planned well, and communicatedeffectively, then it can easily flounder and fail.The level of legal work required to secure atransfer is significant (see Appendix E for aguide list of the documentation required). Froman organisational and business point-of-viewthis is about ensuring as smooth a transitionas possible. This includes a mutually beneficialoutcomes-based partnership agreementbetween the Trust and the local authority.</p><p>Stage 4: Post-transfer</p><p>The organisational changes of moving to a Trustcan be challenging and need ongoing supportand review. These changes can be supportedby the ongoing training of staff and Trustees.</p><p>Some key principles</p><p>Although, generally, we are convinced of themerits of the Trust Option, we do not assumethat this is the right option in all circumstances.It is imperative therefore to undertake anobjective analysis of the advantages anddisadvantages of the Trust Option as appliedto each local authoritys particular circumstances.</p><p>The MLA Report highlighted some of the keyadvantages of Trust status for museums.These included:</p><p>n greater financial stability and sustainability;</p><p>n greater sense of direction and ability tofocus on core business;</p><p>n access to additional resources from ratesavings and reallocation of central servicecosts and greater attractiveness of a standalone body to potential donors and funders(and lenders);</p><p>n greater flexibility and freedom to developaccording to audience needs;</p><p>n management structures that allow fortimely decisions;</p><p>n opportunity for organisational culture change;and</p><p>n develop new connections and partnerships.</p><p>In addition, a survey of existing Trustsconducted by Lawrence Graham LLP (Culturein Trust 7th Edition September 2007)highlighted a number of other advantagesof Trust status including:</p><p>n the speed of decision-making when freed fromlocal authority bureaucracy fleet-of-foot;</p><p>n being a single-focused body;</p><p>n a customer-first improved quality of service;</p><p>n the opportunity for improved investment byrecycling surpluses and NNDR savings;</p><p>n a more focused and business-likemanagement team; and</p><p>n more able to control own destiny.</p></li><li><p>5</p><p>As noted in the MLA Report on Trusts, whilstthere can be a number of reasons for trans-ferring a museum service to a Trust, oftenthe key driver is a financial one savings tothe local authority, or a means of stabilisingcosts, or a means of securing alternative(previously inaccessible) sources of funding.</p><p>It is not unreasonable to assume that anymuseum service that continues to be deliveredthrough the organisational mechanism of alocal authority will continue to be challengedto offer efficiency savings and cut costs tosupport the overall imperative to reduceexpenditure particularly in areas that arenon-statutory. The pressure and expectationto do more for less is inescapable with thedanger that...</p></li></ul>

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