People become charity trustees because they believe in something and want to make a difference. They don’t want to waste their time on bureaucracy. But nor do they want their efforts wasted by ineffectiveness or undermined by the behaviour or actions of others.
Governance might sound dull or technical, but it’s a simple idea. It’s about making sure that your charity is well-governed. It’s about ensuring the charity has the policies, systems and procedures that it needs, and that these are followed. It’s also about encouraging the right attitudes, behaviour, relationships and values.
So governance isn’t an end in itself; it’s about delivering the charity’s purpose as effectively as possible, and understanding the need the charity is meeting. It’s about demonstrating leadership, integrity, accountability and sound judgement.
The charity sector has had its own code of governance since 2005. It was updated in 2010. The Code Steering Group (ACEVO, the Association of Chairs, Small Charities Coalition, ICSA: The Governance Institute, NCVO and WCVA) is now consulting on a new version.
The Commission has responded to the Code consultation. We support the more rigorous approach in the new draft – a more demanding Code reflecting changing public expectations of charities, trustees and senior managers. There are stronger recommendations on board diversity, tenure of board appointments and transparency around conflicts of interest.
We welcome the new Foundation Principle, setting a shared expectation that as a starting point all trustees understand their roles and legal responsibilities, with particular reference to The Essential Trustee (CC3) and the charity’s governing document. This should be a reasonable assumption; it’s one we’re testing in research that we hope to publish this spring.
We feel that the greater emphasis on values and behaviours is timely. Our research shows that these are key drivers of trust in charities. Charities need to set standards of what is acceptable, and the consequences of unacceptable behaviour. The Code can play a key role in this.
But the Code must remain relevant to charities of all sizes. The Code Group must achieve the right balance of rigour, challenge, flexibility and proportionality. The new draft makes some steps towards this by identifying recommended practices that only apply to charities with staff, for example.
The Code is important. It’s the sector’s own statement of what good looks like. Charities that use the Code, stand by the fact that they do so and are willing to be held to account against its principles. This should engender trust and confidence.
Whilst the regulator can enforce legal compliance, and encourage the adoption of good practice, it is really for the sector to define what good practice should be, and set expectations of adherence to it. And its adoption ultimately depends on attitudes and behaviours in individual charities. For these reasons we propose to withdraw our publication The Hallmarks of an Effective Charity and instead refer charities to the sector’s Code as setting out relevant standards of good practice.
We strongly encourage you to have a look for yourself and send in your own comments before the deadline on 3 February. But more importantly to adopt and follow the Code in your own charity.