Who Actually Controls the Money in Your High-Performance System?

<h2>The Problem Nobody Introduces You To</h2>

<p>When a new board chair takes their seat, someone hands them the governance framework. They read the delegations, note who holds what authority, and see how decisions are supposed to flow.</p>

<p>What they are rarely handed is the second document.</p>

<p>That document is different depending on your organisation's funding model. For government-funded bodies, it is the funding agreement with a sport agency, lottery body, or government ministry. For athlete-funded organisations, it is the affiliation framework imposed by your International Federation. In both cases, it sits in a compliance file rather than a board pack. And in both cases, it constrains decisions that the governance framework describes as the board's to make.</p>

<p>Neither document is dishonest. Both describe something real. But they describe it from different angles, with different purposes, drafted by different parties. The governance framework answers: how should this organisation govern itself? The second document answers: under what conditions will we continue to permit or fund its operations?</p>

<p>Those are not the same question. The answers are not always compatible. And most boards have only read one of them carefully.</p>


<h2>Why Two Documents Exist</h2>

<p>The governance framework is internal. It reflects board deliberation, legal requirements, and institutional standards. It is yours.</p>

<p>The second document is external. It belongs to the relationship between your organisation and the party that either funds it or controls its competitive access. That party's priorities are built into the document's conditions. When your priorities and theirs align, the two documents are functionally compatible. When they do not, the second document tends to win — because it controls the resources or the access that your high-performance programme depends on.</p>

<p>This is the structural problem this article addresses. It operates across funding models. The mechanism differs. The consequence is similar.</p>


<h2>The Government-Funded Model: When the Funder Becomes a Third Principal</h2>

<p>Resource dependence theory holds that organisations adapt their behaviour to secure critical resources. When one resource source is critical enough, the organisation's decision-making begins to reflect the provider's priorities as much as its own.^[1] This is not a policy choice. It is an adaptation to structural dependency.</p>

<p>Most National Governing Bodies and International Federations operating in government-funded systems are in exactly this condition. The Future of Sport in Canada interim report documents significant financial dependency on government allocation among Canadian National Sport Organisations, though precise cross-country dependency ratios require jurisdiction-specific verification.^[2] The SPLISS comparative elite sport study examines funding as a structural variable across nine national systems and confirms that government allocation is a primary funding mechanism in most of the jurisdictions studied — including the UK and Australia — though it does not quantify dependency ratios directly.^[3]</p>

<p>In high-dependency conditions, the funding agreement is not a document that exists alongside your governance framework. It is a document that runs underneath it.</p>

<p>Funding agreements specify what the money is for: programme areas, participation targets, performance benchmarks, welfare standards, reporting obligations. When an organisation plans its annual priorities, it plans around those conditions because the conditions attach to the money. The funder's programme categories migrate into the organisation's strategic planning — not because anyone decided they should, but because compliance is required to maintain funding.</p>

<p>The standard framing of principal-agent theory in sport governance focuses on the board-CEO dyad: the board sets direction, the CEO executes, and governance is the mechanism that keeps them aligned.^[4] What this underweights is the funder's role as a third principal. The funder's requirements shape the environment in which both board and CEO operate. When those requirements and the board's preferences diverge, the CEO is navigating competing principals without a clear governance mechanism for resolving the tension. The board that believes it is setting strategy may, in practice, be ratifying a plan substantially shaped by what the funding agreement permits.</p>

<div class="pull-quote">
<p>The board that believes it is setting strategy may, in practice, be ratifying a plan substantially shaped by what the funding agreement permits.</p>
</div>

<p><strong>The earned autonomy condition.</strong> In UK sport policy, funding bodies have described arrangements where organisations demonstrating governance quality and performance delivery receive reduced oversight.^[5] This is framed as a reward. Structurally, it is conditional independence: independence that is earned can be revoked, and the conditions for revocation are set by the funder. Most boards operating inside this arrangement do not fully understand they are operating inside it. The governance document describes independence. The funding agreement describes the conditions on which it currently rests.</p>

<p>Whether analogous conditional frameworks operate in other jurisdictions is a live question. The structural logic — that funders hold leverage over organisations they fund and exercise it through conditions rather than directives — is not unique to the UK, but specific policy language should not be applied universally without jurisdictional evidence.^[6]</p>


<h2>The Athlete-Funded Model: A Different Document, the Same Problem</h2>

<p>Most governance writing about funding authority defaults to the Olympic model. That framing leaves out a large and structurally distinct category: organisations funded primarily through athlete membership fees, competition entry fees, licensing revenue, and event income.^[7]</p>

<p>This includes national and regional governing bodies across sports with high participation volumes and annual or biannual championship calendars: martial arts, gymnastics, swimming, cycling, triathlon, athletics. Organisations where the athlete is not simply the beneficiary of the system. The athlete is the revenue source.</p>

<p>For these organisations, the second document is not a government grant agreement. It is the affiliation framework imposed by their International Federation. And it carries its own structural authority that governance documents rarely acknowledge.</p>

<p>IF affiliation agreements are not administrative formalities. They determine whether your athletes can compete internationally. They set eligibility rules, competition formats, qualification pathways, anti-doping obligations, and technical standards. Boards of athlete-funded NGBs can pass whatever internal policies they like. If those policies conflict with IF requirements, athletes lose access to the competitions that justify the high-performance programme's existence.</p>

<p>The dependency here is as structural as government funding dependency, but it operates differently. A government funder threatens the organisation's operating budget. An IF threatens the athletes' competitive access. In a high-performance context, the latter may carry more immediate operational weight. Coaches and Performance Directors feel it directly. Boards may not be aware of the specific IF clauses constraining their programme design.</p>

<p>There is a further complication specific to athlete-funded models. When athletes and member clubs pay directly into the system, they are simultaneously the revenue source, the primary constituency, and in many governance structures, the membership base that elects the board. Research on nonprofit sport governance identifies this as a particularly difficult governance configuration: the people the board is accountable to are also the people the organisation depends on financially, and also the people most directly affected by programme decisions.^[8]</p>

<p>That creates a tension the formal documents rarely name. The board owes fiduciary duty to the organisation. It is accountable to members. It depends on member participation for revenue. When a programme decision is correct for high-performance outcomes but unpopular with the broader membership, the governance framework offers guidance on the first two relationships. It is largely silent on the third.</p>

<p>The IF compliance equivalent of earned autonomy operates without that label. IFs do not generally speak of conditional independence. They speak of eligibility and compliance. The effect is structurally similar: the NGB's operational discretion within its high-performance programme is bounded by IF standards, and deviation carries competitive consequences for athletes. The board's formal authority exists. Its practical reach is shorter than the governance document implies.</p>


<h2>Where the Gap Does Its Damage</h2>

<p>The misalignment between governance document and second document does not produce a crisis every day. Most of the time both point in the same direction, and the organisation operates without visible friction. The damage appears under pressure.</p>

<div class="scenario">
<div class="scenario-title">Scenario 1 — Strategic Planning Under Financial Uncertainty</div>
<p>For government-funded organisations, when a funding review is underway, the board is setting strategy without knowing its primary constraint. The rational response is to defer. Planning is hedged. The window for building structural capacity is spent waiting for funding clarity. Strategic capacity erodes across cycles.</p>
<p>For athlete-funded organisations, the equivalent moment is not a formal review. It is the membership renewal cycle. When clubs and athletes decide each year whether to re-affiliate, they are making a judgement about the value the organisation delivers. Attrition does not announce itself as a governance failure. It presents as a participation trend. By the time it registers as a financial concern, the revenue base funding the high-performance programme has already contracted.^[9]</p>
</div>

<div class="scenario">
<div class="scenario-title">Scenario 2 — Welfare and Accountability Decisions Under Performance Pressure</div>
<p>This is the most consequential scenario. When athlete welfare concerns arise in a high-performance environment, governance frameworks typically assign clear responsibility for escalation, investigation, and response.</p>
<p>What the documentation does not address is the operational reality that a welfare-driven programme suspension, or a disciplinary process against a high-performing coach, affects competitive results. In government-funded models, those results are linked to funding outcomes. In athlete-funded models, they affect IF standing and competitive access, which in turn affects programme viability and membership retention. The organisation is not being formally instructed to manage the welfare concern quietly. It is simply operating in a structure where the consequences of poor performance and the consequences of acting on welfare concerns flow through the same resource channel.^[10]</p>
<p>This is the most serious expression of the alignment gap, and it is the one most frequently described as a governance failure after the fact. It is more accurately described as a structural design failure.</p>
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<h2>The Rule</h2>

<div class="rule-block">
<div class="rule-label">Core rule</div>
<p>Every sport organisation is operating under two authority documents. Understanding which one holds more operational power over which category of decision is a governance competence — not an administrative detail.</p>
<p>Before your board believes it is exercising independent authority over a financial, strategic, or operational decision, someone in the room should be able to answer clearly whether that decision sits inside the constraints of the second document, or outside them.</p>
<p><strong>If nobody can answer that quickly, the gap is there. It is not dormant. It is accumulating.</strong></p>
</div>


<h2>What Boards and CEOs Can Do</h2>

<ol class="guidance-list">
<li>
<div>
<strong>For athlete-funded organisations: treat membership data as governance intelligence first.</strong>
<p>Attrition rates, re-affiliation patterns, and club participation trends are not only commercial indicators. They are signals about how the membership base — your revenue source and primary constituency simultaneously — is experiencing the organisation. An NGB without a formal mechanism for converting that signal into board-level intelligence is operating without its most direct instrument.</p>
</div>
</li>
<li>
<div>
<strong>Map the documents against each other.</strong>
<p>Take the second document — funding agreement or IF affiliation framework — alongside the governance framework, and identify specifically where they describe different authority for the same type of decision. The gaps will tell you where your governance is functioning as designed and where it is functioning as the external relationship requires.</p>
</div>
</li>
<li>
<div>
<strong>Name all principals explicitly.</strong>
<p>Most governance frameworks describe two authority relationships: board to CEO, and board to members. They do not formally describe the external party's role. For government-funded organisations, the funder is a genuine third principal. For athlete-funded organisations, the IF and the member base each exert structural authority the governance documents rarely name. Making these relationships explicit at board level is more honest and more operationally useful than leaving them invisible.^[8]</p>
</div>
</li>
<li>
<div>
<strong>Review the second document on a governance calendar trigger, not ad hoc.</strong>
<p>Funding agreements change. IF technical regulations are updated. A governance framework reviewed three years ago may not reflect the external conditions your organisation currently operates under.</p>
</div>
</li>
<li>
<div>
<strong>Identify the conditions of your independence.</strong>
<p>Whether your external party is a government funder operating a tiered autonomy model or an IF with compliance and eligibility thresholds, you should be able to answer precisely what triggers a reduction in your operational discretion. If you cannot, your independence is less stable than your governance documents suggest.</p>
</div>
</li>
</ol>


<h2>The Closing Position</h2>

<p>Governance documents describe the organisation you designed. The second document describes the conditions under which you are permitted to operate it.</p>

<p>The board that reads only its own governance framework is operating with an incomplete map. It may be making decisions in good faith, believing it is within its authority, without knowing that the second document has drawn the boundary somewhere different.</p>

<p>Know both documents. Audit the gap. Make decisions with accurate information about where your authority actually sits.</p>

<p>That is not advanced governance. It is the baseline.</p>

</article>

<section class="footnotes">
<div class="footnotes-header"><h2>References &amp; Validation Notes</h2></div>

<div class="footnote-item">
<div class="footnote-num">[1]</div>
<div class="footnote-body">
<p>Pfeffer, J., &amp; Salancik, G. R. (1978). <em>The External Control of Organisations.</em> Harper &amp; Row. Sport application: Ferkins, L., &amp; Shilbury, D. (2012). Good boards are strategic. <em>Journal of Sport Management.</em> See also: <a href="https://www.researchgate.net/publication/321355123" target="_blank">Governmental power in elite sport networks (ResearchGate)</a></p>
</div>
</div>

<div class="footnote-item">
<div class="footnote-num">[2]</div>
<div class="footnote-body">
<p>Sport Canada. (2022). <a href="https://www.canada.ca/en/canadian-heritage/campaigns/future-sport/participate/interim-report/chapter-7.html" target="_blank">Future of Sport in Canada Interim Report, Chapter 7.</a></p>

</div>
</div>

<div class="footnote-item">
<div class="footnote-num">[3]</div>
<div class="footnote-body">

<p>De Bosscher, V., et al. (2015). <a href="https://ussa-my.com/assets/SPLISS_report.pdf" target="_blank"><em>Comparative Elite Sport Development.</em> SPLISS Consortium.</a></p>

</div>
</div>

<div class="footnote-item">
<div class="footnote-num">[4]</div>
<div class="footnote-body">

<p>Young, D. (2011). Principal-agent theory and nonprofit accountability. In <a href="https://www.cambridge.org/core/books/abs/comparative-corporate-governance-of-nonprofit-organizations/principalagent-theory-and-nonprofit-accountability/7DF3788BBE65B7EAD4D20E7CB57EE7BA" target="_blank"><em>Comparative Corporate Governance of Nonprofit Organisations.</em> Cambridge University Press.</a> Also: Ferkins, L., Shilbury, D., &amp; McDonald, G. (2009). Board involvement in strategy. <em>Journal of Sport Management.</em></p>
</div>
</div>

<div class="footnote-item">
<div class="footnote-num">[5]</div>
<div class="footnote-body">

<p>Chartered Governance Institute UK &amp; Ireland. (2020). <a href="https://www.cgi.org.uk/knowledge/governance-and-compliance/analysis/reviewing-the-uks-approach-to-sporting-success" target="_blank">Reviewing the UK's approach to sporting success.</a> UK Sport funding and governance: <a href="https://uksportsinstitute.co.uk/who-we-are/funding/" target="_blank">UK Sports Institute — Funding.</a></p>
</div>
</div>

<div class="footnote-item">
<div class="footnote-num">[6]</div>
<div class="footnote-body">

<p>Australian Sport Commission: <a href="https://www.ausport.gov.au/clearinghouse//evidence/australian-sport-policy" target="_blank">Australian sport policy evidence.</a></p>

</div>
</div>

<div class="footnote-item">
<div class="footnote-num">[7]</div>
<div class="footnote-body">

<p>Wicker, P., &amp; Breuer, C. (2011). Scarcity of resources in German non-profit sport clubs. <em>Sport Management Review.</em></p>

</div>
</div>

<div class="footnote-item">
<div class="footnote-num">[8]</div>
<div class="footnote-body">

<p>Hoye, R., &amp; Cuskelly, G. (2007). <em>Sport Governance.</em> Elsevier. Shilbury, D., &amp; Ferkins, L. (2011). Professionalisation, sport governance and strategic capability. <em>Managing Leisure.</em> Also: <a href="https://www.tandfonline.com/doi/full/10.1080/14413523.2023.2259148" target="_blank">Shilbury, D., et al. (2023). Taylor &amp; Francis.</a></p>
</div>
</div>

<div class="footnote-item">
<div class="footnote-num">[9]</div>
<div class="footnote-body">

<p>Wicker, P., Feiler, S., &amp; Breuer, C. (2013). Governmental subsidies and coercive pressures: Evidence from sport clubs. <em>European Journal for Sport and Society.</em> <a href="https://www.researchgate.net/publication/307811245" target="_blank">ResearchGate.</a></p>

</div>
</div>

<div class="footnote-item">
<div class="footnote-num">[10]</div>
<div class="footnote-body">

<p>The Conversation. (2023). <a href="https://theconversation.com/when-medals-matter-most-high-performance-sport-funding-risks-a-return-to-the-win-at-all-costs-model-246319" target="_blank">When medals matter most: High-performance sport funding risks a return to the win-at-all-costs model.</a> Frontiers in Sports and Active Living. (2025). <a href="https://www.frontiersin.org/journals/sports-and-active-living/articles/10.3389/fspor.2025.1593673/full" target="_blank">Interorganisational relationships between funders and implementers in sport.</a></p>

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