The new Charity Governance Code (the Code) was published in July 2017. It has been drafted in response to recent high profile charity fundraising scandals and the loss of public confidence in larger charities.

The purpose of the Code is to encourage charities to comply with higher standards of practice. It is based on the trustees’ basic legal and regulatory responsibilities. The seven principles in the Code build on the assumption charities are already meeting their basic obligations. Trustees are expected to regularly discuss and consider the principles by applying the recommended practice, explaining what they have done or clarifying why they have not applied it.

Two versions of the Code have been published, one for larger charities (whose annual income is in excess of £1 million and have externally audited accounts) and the other for smaller charities. Each one is tailored to address governance issues relevant to the size of the charity.

The Code’s 7 principles and examples of how these may be applied are set out below:

  1. Leadership: Every charity is led by a board that provides strategic guidance in line with the charity’s ethos and objectives. E.g. the board could continuously evaluate the vision of the charity and review and update the roles and duties of the trustees.
  2. Organisational purpose: The board is clear about the charity’s objectives and ensures these are being delivered efficiently and effectively. E.g. the board could organise site visits for trustees so they can see the impact of the charity’s work at a grass root level.
  3. Integrity: The board acts with integrity and adopts values and fosters a culture which is conducive to achieving its objectives. E.g. the board could improve its understanding of conflicts of interests, create or update the conflicts of interests’ policy and register of interests and gifts. Similar amendments should be made to the Employee Handbook.
  4. Decision-making, risk and control: The board ensures it makes informed decisions swiftly, matters are delegated where required and risk management systems are established and reviewed regularly. E.g. the board could have regular discussions on the level of risk it would like to take and evaluate this risk on a regular basis.
  5. Board effectiveness: The trustees have a range of expertise and knowledge to make decisions. E.g. the board could undertake reviews of the trustees and governing documents to ensure they match the needs of the trust.
  6. Diversity: The board’s approach to diversity supports its effectiveness, leadership and decision-making. E.g. the board could introduce workshops on diversity issues and assess the diversity of staff and trustees to understand the obstacles they encounter and how they can be overcome.
  7. Openness and accountability: The board must be transparent and accountable for its actions. Charities are expected to “apply or explain”. E.g. The board could implement a disclosure policy which sets out a list of documents which clarifies which documents a charity will release or keep confidential.

Please consider how the Code applies to your charity. If you would like to discuss key governance issues please contact [email protected]