New Charity Governance Code

By Dan Francis, governance consultant, NCVO

When I came to speak at Community Impact Bucks’ trustee conference back in January, we had just launched a draft version of the new governance code and were consulting on the changes we were proposing.  I’d like to thank everyone at the event for their constructive feedback on the code and to those that fed in via the online survey.

Having now analysed over 200 consultation responses and made a series of edits to the draft code I am delighted that earlier this month we launched the final Charity Governance Code. This code is intended to set a range of standards of governance which charities and their trustees can aspire to and work toward.

The new code represents a collective sector contribution to strengthening charity governance with the insight of our chair Rosie Chapman and the cross-sector steering group. I hope you will agree the code is an opportunity for boards to reflect on, and improve, their governance.

There are seven principles and a foundation which make up the new code.

With the support of our funders, Clothworkers Foundation and Barrow Cadbury Trust, we have also developed a new, simple to use, free to access website: www.charitygovernancecode.org. This allows trustees and users to easily access the new code.

Recommended practice

The principles, rationale and outcomes are intended to apply universally to charities, while we have developed varied recommended practice depending on a charity’s income.

There are a range of significant changes to the previous code, including:

  • an expectation that the board will review its own performance and that of individual trustees, including the chair, every year, with an external evaluation for larger organisations every three years
  • that no trustee should serve more than nine years without good reason and that term limits are important for accountability
  • thinking carefully about how boards recruit a diverse range of trustees with the skills and experience required to lead a charity
  • boards involving stakeholders in key decisions and operating with the presumption of openness
  • emphasis on the role of the chair and vice chair in supporting and achieving good governance
  • increased oversight for large charities when dealing with subsidiary companies, registers of interests and third parties such as fundraising agencies or commercial ventures
  • that the board evaluate a charity’s impact by measuring and assessing results, outputs and outcomes.

Adopting the code

I would recommend that trustees use the code as part of their board development exercises. The code is not a legal requirement, it is deliberately aspirational, and it will without doubt be a stretch to achieve some elements of its recommended practice. This is intentional as we want the code to be a tool for continuous improvement rather than a tick-box exercise.

The code encourages trustees to work toward the principles and outcomes of the code by either applying the recommended practice or explaining what they have done instead or why they haven’t applied it.

At NCVO we have a range of tools and support to help you in working with the code, including:

I am also sure that Community Impact Bucks’ will support boards hoping to use the code.

At its core, this code is intended as a practical tool to help trustees improve governance and increase the effectiveness of their charities – I hope you find it useful.

Dan Francis is NCVO’s governance consultant. For more regular updates follow @mynameisdanfran or @NCVO on Twitter.

 

 

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Launch of the Charity Governance Code

By Helen Cracknell, lead support for groups, Community Impact Bucks

The Charity Governance Code  launched in mid-July has been developed through cross-sector collaboration and consultation over the last year. The result is a practical tool to help charities and their trustees develop high standards of governance. Although it is not a regulatory requirement, the need for charities to rebuild public trust and aspire to higher standards of governance has probably never been greater, given some of the high-profile issues which have been in the headlines recently.

The aim of the Code is to help charities and their trustees develop these high standards of governance. As a sector, we owe it to our beneficiaries, stakeholders and supporters to demonstrate exemplary leadership and governance.

The diagram below shows the key principles, building on the foundation of understanding of the trustees’ roles and responsibilities and commitment to high standards of governance.  Each principle in the code has a brief description, a rationale (the reasons why it is important), key outcomes (what you would expect to see if the principle were adopted) and recommended practice (what a charity might do to implement the principle).

There are a range of significant changes to the previous code, including:

  • an expectation that the board will review its own performance and that of individual trustees, including the chair, every year, with an external evaluation for larger organisations every three years
  • that no trustee should serve more than nine years without good reason and that term limits are important for accountability
  • thinking carefully about how boards recruit a diverse range of trustees with the skills and experience required to lead a charity
  • boards involving stakeholders in key decisions and operating with the presumption of openness
  • emphasis on the role of the chair and vice chair in supporting and achieving good governance
  • increased oversight for large charities when dealing with subsidiary companies, registers of interests and third parties such as fundraising agencies or commercial ventures
  • that the board evaluate a charity’s impact by measuring and assessing results, outputs and outcomes.

In the Charity Commission’s response to the consultation their Director of Policy and Communication Sarah Atkinson, said: ‘We intend to continue to endorse and promote [the Code] as the standard of good governance practice to which all charities should aspire (unless some other Code takes precedence), following and applying its principles proportionately to their circumstances. ’The Charity Commission also said it will be withdrawing its guidance ‘Hallmarks of an effective charity’ (CC10) and will refer charities to the Charity Governance Code instead. See her blog for more comment.