19th October 2017

First published in 2005, the Charity Governance Code is designed for use by all charities in England and Wales as a tool to support their continuous improvement.

The spotlight has been firmly placed upon governance in the charity sector, particularly since the collapse of Kids Company in 2015, and in response, the Charity Governance Code was updated during the summer to encourage higher standards of governance and leadership across the sector.

The Code is broken down into seven principles, with a central focus on the role of the chair, a limit on the length of trusteeship and the need for increased diversity within boards.

The seven principles of the Charity Governance Code:

Organisation – The board is clear about the charity’s aims and ensure that these are being delivered effectively and sustainably

Leadership – Every charity is headed by an effective board that provides strategic leadership in line with the charity’s aims and values.

Integrity – The board acts with integrity, adopting values and creating a culture which help 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

Decision-making, risk and control – 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.

Board effectiveness – The board works as an effective team, using the appropriate balance of skills, experience, backgrounds and knowledge to make informed decisions.

Diversity – The board’s approach to diversity supports its effectiveness, leadership and decision-making.

Openness and accountability – 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.

The Code is easy to access via the dedicated website (www.charitygovernancecode.org) and can be used as an online tool or as downloadable pdf documents.

The decision as to exactly how you adopt the Code is dependent on your charity’s circumstances, but as a guide the ‘larger charity’ version is recommended for use if you have typical income of over £1 million a year and your accounts are audited externally.

Although not mandatory, compliance with the Code represents (and demonstrates) a standard of good governance. I expect to see a growing trend of statements in Trustees annual reports around the charity’s approach to compliance with the Code, or in areas of noncompliance, why not and what has been done instead, in an “apply or explain” culture.

We have created a checklist of the recommended practices, for both large and small charities. Please click the following links.

For further information, please get in touch with a member of the team who would be happy to discuss how you may address any gaps identified.

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