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A simple explanation of the Charity Governance Code, what charity governance is, the larger and smaller charity versions of the code, governance review, Charity Commission governance guidance and a governance checklist for your charity.
Whilst we all recognise the importance of good charity governance, in ensuring that charities are well-run, it’s easier said than defined. Here’s the governance definition I prefer:
Charity governance is the Board’s responsibilities in setting the strategic direction and culture of the charity and ensuring it is well led and managed, to achieve its charitable objectives.
The Charity Governance Code is a practical tool that sets the principles and recommended practice. One version is for larger charities, with income in excess of £1m pa and the 2nd for smaller charities. It's aspirational rather than a legal or regulatory requirement.
Equally, there are other codes of governance that may be applicable to certain charities, such as those working in sport and, if you’re involved with the Public Sector, you may also hear about the 7 Nolan Principles.
Each code of governance is different, but based on similar foundations along the lines of selflessness, leadership, effectiveness, integrity, openness and accountability.
The Charity Governance Code recommends a governance review every 3 years. You could pay a consultant, but better still you can review your governance for free by scoring the governance questionnaire in just 30 mins. It enables trustees to comply with the Charity Commission guidance for trustees and the Charity Governance Code, as well as other laws and regulations, which it reports in the governance area of your interactive dashboard. It also connects you to a huge range of free help and resources. But we do a lot more than that - we're a free one-stop-shop for anything a charity needs.
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The Charity Code is applicable to all charities, but is deliberately aspirational. It has been endorsed by the Charity Commission, but is neither a legal nor regulatory obligation. Consequently, trustees should make use of the code, by using the ‘apply or explain’ approach recommended in the code. That is, to either:
· Apply each area of the code, or;
· Be able to explain what is being done instead to meet the principle, or;
· Why it is not applicable.
Perhaps the greatest value in the Governance Code is not the extent to which any organisation complies with it, but rather in following a robust, objective process in assessing how best to meet the principles below.
The 7 principles in the Charity Governance Code are outlined below. However, make sure that any assessment of these is not simply a 'tick-box' exercise. Organisational values, terms of reference, and policies and procedures provide essential clarity and structure, but it's what an organisation actually does, not what it says, that makes a difference. Far too many charities do the paperwork and talk, but don't act.
Ask yourself, to what extent can I see our board and senior team individually and collectively, behaving in a way that consistently meets each of the principles below?
The Board is clear about the charity’s aims and ensures that these are being delivered effectively and sustainably.
· What processes are in place to review and exercise oversight of the above and how do you know these are these effective?
· Do you have objective analysis and data that confirms this? If you're doing the same thing in the same way you always have, probably not. The world has changed, we need to as well.
Every charity is headed by an effective board that provides strategic leadership, in line with the charity’s aims and values.
· Does the Board lead on strategy, ask the difficult questions, act decisively and always in the charity's best interests?
· If your board focusses on operational detail, rubber stamps decisions and there are personal agendas being pursued, probably not.
The Board acts with integrity, adopting values and creating a culture which helps achieve the organisation’s charitable purposes. The Board is aware of the importance of the public’s confidence and trust in charities, and trustees undertake their duties accordingly. Does the Board:
· Live its own values and is it open to and seen to respond constructively to criticism?
· Both positively challenge and support each other and the staff team?
· Always act in the charity's best interests only? There should be no room for personal agendas.
The Board makes sure that its decision-making processes are informed, rigorous and timely, and that effective delegation, control and risk-assessment, and management systems are set up and monitored.
· Does the Board have processes to ensure that all key issues are debated adequately?
· Are there effective oversight systems for the whole organisation, and are these demonstrably working?
The Board works as an effective team, using the appropriate balance of skills, experience, backgrounds and knowledge to make informed decisions.
· Does the Board have the capacity and skills it needs and does it act collectively?
· If you don't have the people you need, you might like to read How to recruit great trustees.
The board’s approach to diversity supports its effectiveness, leadership and decision making.
· We're all committed to diversity, but far too many charity boards are not. At your next Board meeting have a look round the table. Are at least 30% women and does the Board reflect the diversity of the community you work with?
· You can find some ideas on how to improve diversity here.
The Board leads the organisation in being transparent and accountable. The charity is open in its work, unless there is good reason for it not to be.
· To what extent does input from your stakeholders actually impact Board decisions?
· What processes do you have to engage with them, how do you know these are effective and is their input demonstrably reflected in the Board's decisions?
We have created a Charity Trustee Code of Conduct you're welcome to use.
For free charity governance training, use of free charity and trustee training resource of our free webinar programme.
You can download 40+ policies, including a range of charity governance policies, in Word format from Charity Excellence.
The Charity Commission E&W recognises the UK Charity Governance Code, but it's not formally part of its governance guidance. The key Charity Commission document that all charity trustees must read and comply with is CC3 - The Essential Trustee: What's Involved. Trustees have 6 main responsibilities:
This is what the Charity Commission requires trustees to do. The UK Charity Governance code is what they should do collectively, but it is not a legal or regulatory requirement.
There is Charity Commission guidance for trustees on a wide range of issues. Here are some of the most commonly used ones. If you need specific guidance, ask the AI Bunny and it'll find it for you.
A registered charity ourselves, the CEF works for any non profit, not just charities.
Plus, 100+downloadable funder lists, 40+ policies, 8 online health checks and the huge resource base.
Quick, simple and very effective.
Find Funding, Free Help & Resources - Everything Is Free.
To access help and resources on anything to do with running a charity, including funding, click the AI Bunny icon in the bottom right of your screen and ask it short questions, including key words. Register, then login and the in-system AI Bunny is able to write funding bids and download 40+ charity policy templates as well.
