The Charity Code of Governance
This Code is a practical tool to help charities and their trustees develop high standards of governance.
A refreshed version of the Charity Governance Code (the Code) was published in December 2020, after consultation.
The Code is one of apply or explain; this means that if your organisation adopts the Code, it must comply with it. In the event that there are some areas where compliance is not possible, then it will be expected to explain non-compliance and how good governance is achieved by other methods.
The Code itself is not a legal or regulatory requirement. However, charities must adopt a code of governance, whether it be one of the various options available from various sources, as drafted or adapted, or one they draft themselves. The Code is intended for use by registered charities, although it may also have been adopted by other not-for-profit organisations that deliver a public or community benefit and those with a social purpose.
The Code assumes that all charity trustees:
- are committed to their charity’s cause and have joined its board because they want to help the charity deliver its purposes most effectively for public benefit;
- recognise that meeting their charity’s stated public benefit is an ongoing requirement;
- understand their roles and legal responsibilities, and, in particular, have read and understood the Charity Commission’s guidance The Essential Trustee (CC3) and their charity’s governing document; and
- are committed to good governance and want to contribute to their charity’s continued improvement.
A list of the seven principles is below:
- Organisational purpose – clear aims and effective delivery
- Leadership – an effective board leading on strategy
- Integrity - the board must act with integrity, adopting values, applying ethical principles to decisions and creating a welcoming and supportive culture which helps achieve the charity’s purposes. The board must be aware of the significance of the public’s confidence and trust in charities and reflect the charity’s ethics and values in everything it does. Trustees are to undertake their duties with this in mind.
- Decision-making, risk and control - decision-making processes are to be informed, rigorous and timely, and effective delegation, control, risk assessment and management systems are to be set up and monitored
- Board effectiveness – the board is an effective team which applies an appropriate balance of skills, experience, backgrounds and knowledge to make informed decisions
- Equality, diversity and inclusion - the board has a clear, agreed and effective approach to supporting equality, diversity and inclusion throughout the charity and in its own practice, supporting good governance and the delivery of charitable purposes
- Openness and accountability – be transparent
As a result of the consultation and review, the Code has been refreshed, and in particular focus has been on changes to principles around integrity and equality, diversity and inclusion.
The updated integrity principle has been amended to ensure that all people who have contact with a charity are treated with dignity and respect, within a safe and supportive environment. The Code includes new recommended practice around safeguarding and requires charity trustees to:
- Understand their safeguarding responsibilities
- Establish appropriate procedures that are integrated with the charity’s risk management approach
- Ensure that everyone in contact with the charity knows how to speak up and raise concerns.
In more detail
Charities operate for the benefit of the public and so the public must have trust and confidence in those who run the charity. Boards must ensure that they act in the best interests of the charity and its beneficiaries and acting with high levels of personal integrity. Board members must protect the reputation of charity, as its ambassadors, and treat every person who has contact with the charity with dignity and respect. It is imperative to create a culture in which people feel safe and the values and policies and procedures should reflect this:
- Charities need to be mindful of potential power imbalances which could arise, both in their internal and external dealings, and adopt or draft a suitable code of conduct for people to follow
- Charities must ensure that their actions and dealings are in line with their values, powers and objectives
- Charities must follow charity and other applicable law. They should also consider other guidance, codes and standards, such as charity commission guidance, the seven principles of public life (the Nolan Principles) and fundraising regulation.
- Conflicts of interest must be understood by all, and a conflicts of interest policy should be adopted detailing how to deal with conflicts; there should also be a register of interests
- Charities should have a safeguarding policy which is regularly reviewed and on which all trustees, staff and volunteers should have training – any safeguarding issues should be recorded and managed
Actions to consider
- Draft, adopt or review codes of conduct, safeguarding policies and conflicts of interest policies
- Have a board training session on conflicts of interest and loyalty and the duties and responsibilities of charity trustees/board members
- Refresh boards and staff on the objects and powers of your charity
- Review or draw up a register of interest
Equality, diversity and inclusion (EDI)
The changes to the EDI principle are to enable charities to better reflect a diverse society and to provide guidance on best practice for EDI matters. This includes ensuring that the boards of charities are themselves diverse and inclusive and that decision-making processes and outcomes comply with EDI principles and best practice, as well as being within the charitable objects, hearing from, and serving the needs of, the community.
The Code recommends four stages for charities when reviewing EDI matters, and sets out that boards should:
- Think about why equality, diversity and inclusion is important for the charity and assess the current level of understanding
- Set out plans and targets tailored to the charity and its starting point
- Monitor and measure how well the charity is doing
- Be transparent and publish the charity’s progress
In more detail
A board operating best practice in EDI will be more effective and able to address the varying and current needs of both its internal and external stakeholders. Board diversity is of particular importance to allow for balanced decision-making, where all members are able to contribute and feel valued. Addressing diversity can mean that obstacles to participation are reduced and boards are more effective because they reflect different perspectives, as well as a wider range of experience and skills.
Boards need to analyse how excellent EDI will contribute to the overall aims of the charity and also regularly assess its approach to EDI, including in relation to board membership and skills/qualities needed by the charity. Inclusivity is a theme that should run through a charity both internally and externally and the board should assess how it does/can make environments inclusive.
Charities should set a clear approach to EDI which meets its aims, strategy, culture and values, to be supported by a variety of plans, policies, milestones, targets and timelines. Any lessons learned from EDI assessments should be used to inform any changes and/or reviews in relation to these plans.
Actions to consider
- Charities should assess current EDI policies and procedures, and more general approach, and their general dealings with internal and external stakeholders
- Carry out a board appraisal and/or EDI training
How we can help
We at Weightmans can offer assistance with addressing any issues you may wish to consider around the topics of equality, diversity and inclusion and integrity by reviewing, updating or drafting relevant policies and procedures, carrying out training for staff and boards.
We can, more widely, assist you with deciding upon the best code of governance for your charity, where you may need to explain non-compliance, or work with you to draft a bespoke code. We can also draft, review or update policies and procedures, and provide training on all matters mentioned in the Code, including conflicts, conduct, board member recruitment, risk management, board structure and decision-making and advise on the various options for guidelines, codes of best practice, and other sources which help to ensure good governance.
If you are thinking of setting up a new charity, or are looking for some advice for your current charity, we have a team of charity experts who can assist with all your charity questions, to ensure that your charity is compliant and able to continue its good work.