A new version of the Charity Governance Code has been published, which its co-authors describe as a "refresh" of its predecessor.
The Code sets out universal principles of good governance to guide charities in their work. Whilst compliance with the Code is not a regulatory requirement and it is not a substitute for Charity Commission requirements, it is nevertheless a practical tool for trustees to use to ensure that they are well governed.
The Code assumes that charities that adopt it are already meeting their legal and regulatory responsibilities. Working from that assumption, the Code is based on eight core principles, these being foundation, organisational purpose, leadership, ethics and culture, decision making, managing resources and risks, equity, diversity and inclusion, and board effectiveness.
Key recommendations of the Code are that:
- trustees take responsibility for, and invest the necessary time and care, in understanding the charity, their responsibilities and legal duties. The board must be clear about the charity's aims and how these benefit all or part of the public, ensuring that activity is targeted at achieving those aims both in the short and long term;
- the charity's work is directed by an effective board that provides strategic leadership in line with the charity's objects and values. The board must agree the standards and values which shape the charity's behaviours and culture, including being open about how the charity operates and responding thoughtfully to feedback;
- the board makes effective decisions that best serve the charity's purposes, with trustees taking personal responsibility for carefully considering each decision and working to reach agreement. The board takes responsibility for stewarding, developing and allocating resources, identifying risks to achieving the charity's aims and agreeing how to navigate them;
- the board has a clear, agreed and effective approach to supporting equity, diversity and inclusion throughout the organisation, including in its own practice. This represents a significant area of focus within the Code; and
- the board works well together, using an appropriate balance of skills, experience, backgrounds and knowledge, reviewing its performance on a regular cycle and taking steps to improve.
In terms of what's new in this update of the Code, perhaps unsurprisingly given the rapidly changing landscape, it's now suggested that charities have a policy for the use of technology and AI tools. Equity, diversity and inclusion has been elevated to a standalone principle of the Code, and boards should ensure that there are appropriate arrangements and resources in place to monitor and achieve the organisation's EDI plans and targets, including those relating to the board. It is recommended that large charities carry out a review of the board's approach to EDI in any external evaluation process every three years.
The Code maintains its practical approach, with each principle structured around behaviours, policies, processes and practice, alongside suggested indicators that governance processes are working well. Meeting the Code's principles and outcomes can provide strong assurance to external stakeholders and commissioners that a charity is well governed.
If you would like to talk to anyone about your charity's governance, contact Sharron Webster or Tom Wainwright.
