Charity Governance Code: what can charities expect from the “refresh”?

Following publication by the steering group for the Charity Governance Code of the results of its consultation on the “refresh” of two of the principles of the Code what kind of changes might we see to this important Code?

The Charity Governance Code replaced the Charity Commission’s guidance “Hallmarks of an effective charity”, and the Commission expects trustees to be familiar with the Code and to apply it to their charity.

It sets out seven principles applicable to all charities:

• Organisational purpose,
• leadership,
• integrity,
• decision making / risk / control,
• board effectiveness,
• diversity, and
• openness and accountability.

For each principle, the Code sets out an overarching principle, why it’s important, key outcomes, and best practice – with the contents of best practice varying depending on whether the charity is large or small.

Charity trustees are encouraged not simply to treat compliance with the Code as a “tick box” exercise, but either to apply the recommended practice for each principle, or explain what the charity has done instead if the recommended practice is not suitable for their charity, in a brief statement in the charity’s annual report.

Earlier this year, the steering group for the Code consulted on changes to the Integrity and Diversity principles.

The consultation revealed a broad consensus in favour of a “refresh” rather than a more substantial overhaul. Of those responding, 90 per cent had either fully or partly adopted, or were working towards full adoption of the Code.

However, satisfaction with the Code was markedly lower amongst the responses received from the Small Charities Coalition members, and the steering group intends to look at how the Code can be made relevant for smaller charities in the future.

What might change?

In relation to the Integrity principle, it has become apparent that the next version of the Code will need to help answer the question as to what is meant by "ethics" in the context of charities. There were mixed responses, as well, on the question as to whether and how to reflect NCVO’s Charity Ethical Principles in the revised Code, and in particular the “right to feel safe”.

Following the consultation, it looks as though the Diversity principle is going to be the more changed of the two principles when the amended Code is published – as seems appropriate given recent developments in the sector.

There was wide support to broaden the Diversity Principle to address aspects of inclusion and equality.

The steering group has noted that the current Code’s focus is very much on how a board recruits, retains and monitors their own diversity.

In the refresh, following the responses to the consultation, it is intended to “explore how the diversity principle might be enhanced, for example by also including practice on how a board should embed good diversity and inclusion practice throughout the organisation such as in the design of strategy, the delivery of services, management of staff and volunteers”.

Specialist consultants have now been commissioned by the steering group to provide expert input on this, and the steering group is aiming to complete the revision of the Diversity principle before the end of 2020.

It is also aiming to publish the amended Code before the end of this year.  A more comprehensive revision of the Code is planned for 2023.