https://charitycommission.blog.gov.uk/2017/07/13/the-new-charity-governance-code-essential-reading-for-all-trustees/

The new Charity Governance Code – Essential reading for all trustees

I am delighted that the charity sector’s governance code is now in its 12th year and its 3rd edition. The Commission has supported and endorsed the code since its inception. The latest edition has raised the bar in response to the challenges that the sector has faced over the last two years. And awareness of the code is also growing. It’s good news that the consultation on the updated code received over 200 responses including from key players in the sector.

It’s vital that charities get their heads around governance. Following good governance practices, not just paying lip service but really understanding and applying them, could have averted many of the bad headlines of the last two years. It’s more than ticking the boxes. It’s about attitudes and culture, whether a charity puts its values into practice. It’s about how trustees make decisions and how well they understand what’s going on. We have seen the consequences of failing to do that.

But more than avoiding bad, it’s about realising potential, understanding and maximising the difference you make. Everything in good governance should point to your mission and your strategy for achieving it.
In other sectors – the corporate sector, housing, sport, there are potential financial consequences for not complying with the relevant governance code. The Charity Governance Code doesn’t work like that. It’s not enforced by the regulator. The rule is not ‘comply or explain’ but ‘apply or explain’, recognising the diversity of the sector. The same core principles apply to all charities, but they apply in different ways in terms of tailored good practice.

The code starts with a ‘foundation principle’; it should be a ‘given’ that all trustees understand their legal duties (as explained in The Essential Trustee) and are committed to their cause and good governance. We don’t take trustees’ commitment for granted, but it should be reasonable to expect commitment to translate into finding out about their responsibilities. In practice this is not always the case, and it’s an area where we continue to focus our efforts.

The code then develops seven principles – leadership; integrity; decision making, risk and control; board effectiveness; diversity; openness and accountability; all underpinning organisational purpose. Why these qualities matter should be self-evident. Many of them are also key drivers of trust and confidence, and can help to demonstrate to beneficiaries, funders and donors that a charity is trust-worthy.

It might look like a lot of detail, but start with the principles – what they are; the rationale – why they matter; and the key outcomes – what difference they should make. How they play out in terms of applying recommended practice will depend on the size and shape of your charity.

The bottom line is, good governance is no longer an optional extra. It’s essential to charities’ effectiveness and probably their survival too. Charities need to be able to demonstrate that they take it seriously, allowing it to change the way they operate.

The Charity Governance Code represents a standard of good governance practice to which all charities should aspire. We encourage all charities to read, follow and apply it proportionately to their circumstances. And if you sign up to the code, go public about it on your website or your annual report. Be prepared to stand up and be counted, and see the difference that makes.

36 comments

  1. Comment by Mr Harry Lote posted on

    Can same family name be trustees and receive a salary

    Reply
    • Replies to Mr Harry Lote>

      Comment by Neal Green posted on

      It depends on the exact circumstances. But charities need permission for arrangements that benefit trustees or their close family. Trustees must also deal with any conflict of interest. Here is what the Commission's guidance says:
      https://www.gov.uk/guidance/manage-a-conflict-of-interest-in-your-charity
      And here is what the Charity Governance Code says: https://www.charitygovernancecode.org/en/3-integrity

      Reply
    • Replies to Mr Harry Lote>

      Comment by John McKellar posted on

      Dear Harry,
      I'm just a trustee of a small charity - but here's my answer:
      When we met a similar issue, our understanding was "Yes, but be very clear about it". In the end, we made a definite split (a trustee stood down).
      However, I know of instances where trustees (or their businesses) are paid - for this you need to demonstrate that it was the best value for money for the charity. Get a few quotes and document the decision in formal minutes.

      Reply
  2. Comment by Karen posted on

    The good governance code link in the first paragraph links to an insecure page - is it possible to get the code in pdf so as not to have to go to an insecure page?

    Reply
    • Replies to Karen>

      Comment by Jon Benjamin posted on

      That has been the case for some time, since publication. It's frankly remarkable that a code about good governance can only be accessed by taking a risk with one's computer!

      Reply
  3. Comment by Ken posted on

    can a charity keep awarding contracts to the same company for building works even if there charges are astronomical is this legal do they not have to get seperate quotes for the work to be done

    Reply
    • Replies to Ken>

      Comment by Ann Abernethie, Trustee since 1996! posted on

      Good governance and Best Practice means that for expenditure in excess of an amount agreed by your Trustees, e.g. £5,000, should always go out to more than one supplier, in order to ensure that the Trustees are accountable to their beneficiaries as well as to the Commission. But, be sure that a) all the Trustees are agreed as to exactly what is required, b) a clear Minute of that decision is made in the written records, c) the specification,requirements for the work to be done is spelt out very clearly and unequivacally and d) those bidding for the business have a clear understanding of everything that is required BEFORE the work is begun. Be sure to be clear on costings, timing as well as specifics as to what is to be done/provided. If the Trustees do NOT follow this course of action, the person raising this concern should report the Trustees to the Commission, without hesitation! There is just no excuse! if the Trustees do not not how to implement Best Practice and Good Governance, then they should seek outside advice from other charities or their local C. V. O. In Dorset, we have Dorset Community Action, in Hampshire, we have Community Action, Hampshire both of whom could be contacted even if your charity is not in this area of the country.

      Reply
  4. Comment by Marilyn Hadley posted on

    Is anyone able to tell me if an individual can raise thousands of pounds, when they are not a charity, or a Ltd Company who advertise as a non registered not for profit.
    This is an individual who has been raising money over a 17 year period for animals, where the money is being used personally & not for the purpose it was intended.
    If they are not a charity, they are not answerable to the Charities
    Commission, so who are they answerable to?
    If they are advertising as a not for profit, do they have to be registered?
    At what amount reached are they forced to register their charitable funds?
    I look forward to your response by email. Thank you.

    Reply
  5. Comment by Marilyn Hadley posted on

    Please reply to Hadley-m@sky.com
    Thank you

    Reply
  6. Comment by Jeremy Simmonds posted on

    Any ideas as to how I can get a copy without the security system on my computer screaming dire warnings about the website?

    Reply
  7. Comment by Paul Griffiths posted on

    Has a parallel Governance Code Self Assessment template been produced - or is it planned to produce one - as existed with the previous edition of the Code of Governance?

    Thank you

    Reply
  8. Comment by Darren Gosling posted on

    My company's Governance is so poor I believe our charity partnership (Charity No: 326568) needs thoroughly investigating by an independent third party - whether that be the Charities Commission or Ernst & Young the company's external auditors.
    I raised the matter internally using SAFECALL but the matter was buried.
    I contacted whistleblowing@charitycommission.gsi.gov.uk on 11th May 2017 but no-one has come back to me.
    I would appreciate it if someone could please give me the correct point of contact at the Charities Commission as the misuse of public raised funds by the company should not be allowed to continue.

    Reply
  9. Comment by Mr.R. Chilvers posted on

    I take for granted charity trustees act within the Equality Act 2010. Is this so

    Reply
  10. Comment by Jenny Simnett posted on

    Can anyone highlight the differences/amendments in this 3rd edition of the Code?

    Reply
  11. Comment by Katy posted on

    Simple question.
    Can the same person who is the Financial Director and Company Secretary also be a Trustee? Isn't this a conflict of interest!

    Reply
  12. Comment by Katy posted on

    Also, could you be kind enough to reply to Jenny Simnet's question dated 16th October 2017.
    It is not acceptable, nor professional, that questions asked on your site are ignored. They should be acknowledged at the very least.
    Your reply is very much appreciated.

    Reply
  13. Comment by S Khan posted on

    When is Code for 2018 coming ?

    Reply
  14. Comment by Mrs Dianna Moss posted on

    Hi, if I am in the wrong place for my question I apologise.
    Our village trustees hold a committee meeting once a month in the village hall. The villagers have always been allowed to sit in on these meetings, just to listen but not take part. This is the only way we have of knowing what is happening as the minutes are never published.
    The committee have now decided that the villagers can no longer attend and the meetings will be closed.
    Surely we have a right to know what is being said as what is happening at the village hall is for the villagers.

    Reply
  15. Comment by Gemma posted on

    Hello, we are a small registered charity with a project that will cost in excess of £5,000. However each individual aspect will be less than £1,000 from different suppliers. Do we have to get three quotes for each element as the whole project is over £5,000?
    Thank you

    Reply
  16. Comment by Charityuk posted on

    your article Awesome Thanks for this information, very informative as well as Modern.

    Reply
  17. Comment by Zuky posted on

    Hello,

    I’ve just found out Our school treasurer takes the takings home after school events without it being counted or signed off by anyone. Apparently this has been the practice for the last few years. I’m concerned about this not being good practice. I approached my PTA chairman who had forwarded my email to the whole PTA of the school. How do I get some advice on best way to deal with this plz

    Reply

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