New structure for the ECF

Debate directly related to English Chess Federation matters.
Paul Cooksey

New structure for the ECF

Post by Paul Cooksey » Wed Oct 05, 2011 11:54 pm

I'd like to split this from the funding debate.
Adam Raoof wrote:What future structure for the ECF are readers of this Forum actually proposing when they refer to OMOV (one man one vote)?
Simon Spivak wrote:I'd rather not further expand on my answer at this juncture for two reasons. The first is that it would take me a long time to flesh out something coherent and properly researched, even though I have read about this subject, when there is no indication that any of it will be taken seriously. The second is that David Robertson is obviously so much better qualified that I am for this task, that he would likely come up with a superior solution in less time than I would. We want the least bad outcome, not a clash of wills and egos.
Wise words. But I'm not sure we can expect David to do all the work for us, although I hope he will chip in. As an independent forum, I think we have the privilege of being able to debate options without restriction, which may or may not be of use if reform is instigated.

I would like OMOV to mean direct election of Directors, probably by web based voting. But not referendums on particular issues, unless the board decided to hold one. I would prefer a much smaller body than the existing council to improve efficiency, and would elect 5 of the 15 directors every year. Three year terms seem long enough to empower directors and improve accountability.

The posts I would elect are:
THE PRESIDENT
THE CHIEF EXECUTIVE
NON-EXECUTIVE CHAIRMAN
FINANCE DIRECTOR
DIRECTOR OF HOME CHESS
INTERNATIONAL DIRECTOR
DIRECTOR OF JUNIOR CHESS & EDUCATION
MARKETING DIRECTOR
NON-EXECUTIVE DIRECTOR: EAST ANGLIAN CHESS UNION
NON-EXECUTIVE DIRECTOR: LONDON CHESS LEAGUE
NON-EXECUTIVE DIRECTOR: MANCHESTER CHESS FEDERATION
NON-EXECUTIVE DIRECTOR: MIDLAND COUNTIES CHESS UNION
NON-EXECUTIVE DIRECTOR: NORTHERN COUNTIES CHESS UNION
NON-EXECUTIVE DIRECTOR: SOUTHERN COUNTIES CHESS UNION
NON-EXECUTIVE DIRECTOR: WEST OF ENGLAND CHESS UNION

(I haven't forgotten the FIDE Delegate, I think he should report to the international director. Various other managers too as now, all reporting to a board member)

All members would be entitled to vote for executive positions and chair, but would be tied to a geographic area when voting for non-executive directors. I think a large number of non executives is useful for the integrity of the system. Also it means someone represents every member directly. I would not weight the votes of the non-executives, since the bigger unions have more influence over the election of the executives.

I am hoping to provoke constructive green housing. But feel free to tell me why I am wrong as bluntly as you like if you would prefer! :)

Roger de Coverly
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Re: New structure for the ECF

Post by Roger de Coverly » Thu Oct 06, 2011 12:30 am

Paul Cooksey wrote: I am hoping to provoke constructive green housing. But feel free to tell me why I am wrong as bluntly as you like if you would prefer! :)

At the time the CLG was set up in 2005, the advice was that you could only have a limited number of non-exec directors, two at the time, now extended to three to include the non-exec chairman. Given that at the same time, the membership was also told that it was necessary for every individual person as a member to become a guarantor (signing the white form) , which we now learn is not the case (to be precise requires a small change in wording), there has to be doubt on the reliability of the original legal advice on this issue.

A Google search came up with this
http://www.companieshouse.gov.uk/about/ ... rantee.doc
which doesn't have any reference to restrictions on the count of directors, that I was able to find.

I may have seen commentary that charities have restrictions on their directors. Given the major restructuring that charitable status appears likely to involve, restricting directors is one of the smaller problems.

David Robertson

Re: New structure for the ECF

Post by David Robertson » Thu Oct 06, 2011 12:46 am

I'm more than happy to chip in, as Paul puts it; and I'm flattered by Simon's confidence. Not much to be said at this late hour; more tomorrow, if inspiration seizes me. My biggest problem though is summoning the energy to engage in a protracted, and likely oft-interrupted, wander up a garden path. If there's is no serious prospect of achieving structural reform - and existing structures lend no confidence to that prospect - then we waste our time. Rather as we have, and continue to do, with funding reform. The two processes cannot be separated of course. Anyhow, zzzzz...for now

Sean Hewitt

Re: New structure for the ECF

Post by Sean Hewitt » Thu Oct 06, 2011 8:11 am

Roger de Coverly wrote:At the time the CLG was set up in 2005, the advice was that you could only have a limited number of non-exec directors, two at the time, now extended to three to include the non-exec chairman. Given that at the same time, the membership was also told that it was necessary for every individual person as a member to become a guarantor (signing the white form) , which we now learn is not the case (to be precise requires a small change in wording), there has to be doubt on the reliability of the original legal advice on this issue.
If such legal advice was given, then whomever gave that legal advice wants shooting. It's complete rubbish as there are no such legal restrictions.

I think Paul's structural idea has merit. I was thinking of a similar board size to what we have now, elected along the lines Paul suggests, with council delegates replaced by a smaller directly elected council with similar powers as now. Debatable how many of those there should be, and who they should represent.

One thought though - why should London League and Manchester Federation have their own non-exec directors (or council member) in such a structure? I know they are constituent units but you would have no truck with such if designing a new structure. Of course, London (in particular) and Manchester may be of sufficient size to get their own delegate in a new world in any case but it should be on merit.

Brian Valentine
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Re: New structure for the ECF

Post by Brian Valentine » Thu Oct 06, 2011 8:58 am

My understanding/experience of Boards is that Non Executive Directors is to keep an eye on the Executive. To also represent their regions means the accepted responsibilies of the Non Execs would be compromised. I can understand reasons why regional representation improves the situation (link with past, national communication etc) but what are their intended responsibilities (/job spec)?

Mick Norris
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Re: New structure for the ECF

Post by Mick Norris » Thu Oct 06, 2011 9:37 am

Paul

An interesting nod to the constituent units (and to answer Sean, why would the Unions be any more suitable than the MCF or London League?)

Practical - will anyone from Manchester want to attend meetings in London or, even worse, Hastings, on a regular basis? If the ECF had a base that made more sense (no further south than Milton Keynes) than maybe it would be seen as better representing players in the North rather than the south

Fundamental - no, non-execs should not be "representing" any (pressure) group, they should be independent and if the best 7 happened to all come from, say, Sunderland, why have only 1 of them and 6 inferior ones?

Good idea to elect the Directors, you might follow the model of Football Trusts and elect half the board every 2 years, but allow the board to fill vacancies and co-opt members in the meantime i.e. set a minimum and maximum size - and you might want a smaller Executive Board of half a dozen to get on and run things
Any postings on here represent my personal views

Paul Sanders
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Re: New structure for the ECF

Post by Paul Sanders » Thu Oct 06, 2011 9:58 am

A company with the ECF's turnover would never survive with 15 directors. It needs a very non-executive Chairman whose job is to butter up rich and important people, a Chief Executive to deliver what little it can afford from its resources, and a Financial Director to keep all the money side open and above board. And that's it.

If it can credibly increase its revenue, for instance by offering a self-sustaining junior programme, or national tournaments, then there is an argument to be made for appointing separate paid heads of self-reliant divisions if they are inside the organisation, or liaison staff to coordinate with outside organisations where strictly necessary - signing FIDE entry forms and exchanging data internationally spring to mind.

That's my tuppence worth, as a net contributor to the ECF's balance of payments.

Alex Holowczak
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Re: New structure for the ECF

Post by Alex Holowczak » Thu Oct 06, 2011 10:07 am

Mick Norris wrote:Practical - will anyone from Manchester want to attend meetings in London or, even worse, Hastings, on a regular basis? If the ECF had a base that made more sense (no further south than Milton Keynes) than maybe it would be seen as better representing players in the North rather than the south
The only Board Meetings that are face-to-face now have been within a stone's throw of London Euston, a stone's throw of Birmingham New Street, or alongside the British Championship or a 4NCL weekend.

I believe the plan is for fewer face-to-face meetings, fewer telephone meetings, and more Skype meetings.

John Philpott

Re: New structure for the ECF

Post by John Philpott » Fri Oct 07, 2011 6:36 pm

I have only just spotted this thread.

Paul Cooksey wrote:
The posts I would elect are.....
I note that your list does away with the elected Chairman of the Governance Committee. :D

Roger de Coverly wrote:
At the time the CLG was set up in 2005, the advice was that you could only have a limited number of non-exec directors, two at the time, now extended to three to include the non-exec chairman.
This is not my recollection, although reference to the papers at the time which I doubtless still have at home would prove the matter one way or the other. My understanding is that the driver for the smaller ECF Board compared with the old BCF Management Board was the perception that if charitable status were to be achieved, the Charity Commissioners would be looking for a Board of no more than 9 or 10 directors. The inclusion of just 2 NEDs was therefore a means to an end (as was the disappearance of previous Executive Directorships such as Congress Chess and Game Fee & Grading) rather than something that was seen as legally necessary. In any event, the ECF Articles do not specify two NEDs: they require at least two NEDs, and it just so happens that at each subsequent AGM the Board happens to have proposed the election of exactly two.

Sean Hewitt wrote:
It's complete rubbish as there are no such legal restrictions.
Precisely. I am currently working on the FSA authorisation application for a new insurance company where there will be a majority of NEDs on the board, and this seems far from uncommon.

Roger de Coverly
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Re: New structure for the ECF

Post by Roger de Coverly » Sat Oct 08, 2011 12:30 am

John Philpott wrote:My understanding is that the driver for the smaller ECF Board compared with the old BCF Management Board was the perception that if charitable status were to be achieved, the Charity Commissioners would be looking for a Board of no more than 9 or 10 directors.
Given that we are probably still as far away from ECF charitable status as we were in 2005, the number of directors should be considered on its direct merits. If we are looking back at 2005, why was it decided that every individual had to sign up as a guarantor member?

Sean Hewitt

Re: New structure for the ECF

Post by Sean Hewitt » Wed Oct 12, 2011 10:13 am

Roger de Coverly wrote:If we are looking back at 2005, why was it decided that every individual had to sign up as a guarantor member?
Incorrect legal advice I believe. I did inform at the time that the FA had a similar legal structure but had only required council members to sign up as guarantor and that the ECF could do the same.

Paul Cooksey

Re: New structure for the ECF

Post by Paul Cooksey » Tue Oct 18, 2011 8:09 pm

David Robertson wrote:All this 'Director', 'Manager' business is pure nonsense. People are playing at being a 'Board' just as ECF is posturing as a 'Company'. Cut through the b/s, and ECF is a piddling outfit, let's be honest. Its annual budget is small change in a real company. Put it like this: 500 players or so will spend roughly twice ECF's annual budget over the course of the 4NCL weekends this year. Yet the ECF has erected one enormous confection of guff to oversee and direct a mere £160k. A Council of c.240 delegates? A Board of 10+? Managers of this and that. But no one with a discretionary penny to spend.

Either we become a membership organisation willing to vote the finances fit for a decent oufit, designed to meet a specification we have collectively, by proper process, defined. Or the ECF drifts aimlessly, unreformed, into oblivion.

Where to start? Council as currently constituted must abolish itself; or be abolished by some means. And the ECF must be legally reconstituted as a voluntary association of individually subscribing members, thereby dissolving Company, Board and the rest of that tiresome clutter.
I think there are some interesting posts, lost in the AGM threads. I'll fish this one out first.

I agree with David that the ECF structure is bloated. I'm trying to get down to 15. I'm calling it a board, but committee, council, whatever. The name unimportant to me. Still a lot for a company of this size, but the ECF is mostly part time volunteers, which makes a difference

The only reason I can see for mimicking a company, is it allows the ECF to easily borrow governance structures with which people are familiar. But that seems a double edged sword at best. For example, I find it hard to believe the ECF got definitive advice on the number of non-executive Directors. A professional advisor has never given me a straight answer. Ever. "Two is normal for a company of this type and unlikley to require further work to justify, although we ought to do a through review at enormous expense to be sure" is the sort of answer you usually get, but it can lose its qualifiers.

(Actually, they'll probably be evasive about the enormous expense. But as the former CEO of Olympus will tell you, that is invariably the case :) )

Matt Harrison
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Re: New structure for the ECF

Post by Matt Harrison » Wed Oct 19, 2011 9:00 am

Speaking as a charitable company secretary and finance director for the last 15 years, the move to charity status seems moderately irrelevant to me. It's not clear to me that the financial benefits outweight the costs and resultant increase in regulatory responsibilities. Charities are certainly not exempt from VAT for example. There are some areas where income can be exempted from VAT, but having non-business income can actually make the situation worse - irrecoverable VAT is one of the biggest bugbears of charity finance. The net benefit from charity status is thus less than the potential reduction in VAT paid on income as a smaller proportion of input VAT can be recovered. So the cost-benefit assessment would depend upon the VAT profile of the organisation.

I don't see that there is a clear benefit from charitable registration. The additional complexity of a group structure with a commercial trading company to handle the non-charitable elements seem to me to potentially outweigh the benefits. And given the cost (in volunteer time - the ECFs most valuable asset) of the current debates about membership, is it wise to invest what is clearly a scarce resource in such issues?

And charity registration doesn't remove the need for company governance. Most registered charities are also companies listed by guarantee. The alternative would be an unincorporated charitable trust. This would be very inappropriate for an organisation of this size as directors could be personally liable for debts. So the company structure for the ECF (whether non-charitable or charitable) is essential.

Charity Commission do advise on smaller boards, but 15 would be acceptable - my charity has 10 for example but with the powers to vary between 5 and 15.

Roger de Coverly
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Re: New structure for the ECF

Post by Roger de Coverly » Wed Oct 19, 2011 9:21 am

Matt Harrison wrote: I don't see that there is a clear benefit from charitable registration.
The hope seems to be that you can somehow convert a membership charge into a payment subject to Gift Aid, thereby attracting tax relief on membership costs. Whilst obvious enough that a gift to a chess charity can attract tax relief, it's not so obvious that a payment for a licence to play chess is in any form a gift. Can you help us on this one?

The suggested structure is two parallel bodies, with the existing ECF handling international issues and the British Championships, with the domestic body handling the rest. If the two bodies had different governance, it's quite possible they would be at each others throats in no time.

Matt Harrison
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Re: New structure for the ECF

Post by Matt Harrison » Wed Oct 19, 2011 9:39 am

Gift Aid is a potentially viable route. London Zoo certainly use this on their admission fees. The question on eligibility of membership fees is whether use of the ECF grading scheme counts as personal use of the charities facilities.

There is also a potential VAT benefit of charitable registration in the VAT treatment of membership fees.

Doing a rough CBA would be questioning whether the potential returns on Gift Aid of that proportion of membership income deemed to be a donation to the organisation plus some VAT benefits would outweigh costs. In monetary terms the benefit is likely to maximise at about £40,000 - assuming 10,000 members. This could make it worthwhile. Admin costs would increase (Gift Aid is notoriously onerous in admin), but probably by less than £10,000. The main cost would be on volunteer time in setting everything up and managing the new setup.

Parallel bodies looks horrendous in governance terms, plus there would be VAT issues on services provided by one body to the other. I am aware of an organisation in my field that split into two organisations, one charitable and one semi-commercial. At that time they shared a chief executive. The semi-commercial organisation grew and they then decided to hire their own chief executive. They then split (amicably) into two almost completely separate organisations. However it causes massive confusion as in one geographical area there are two organisations with almost exactly the same name, operating in the same field - and with some contracting overlaps.

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