The benefits of following the Charity Governance Code
- The Charity Governance Code outlines the standards that all charities in England and Wales should aspire to
- It helps boards to review and improve their approach to risk management, decision-making and recruitment, among other issues
- Adhering to these standards can improve the image of your organisation, and potentially help you to attract greater support
One of the most important factors in running a successful charity is good governance. Adhering to a nationally recognised set of standards is a way of demonstrating good governance, and can help to gain the trust and respect of potential donors and volunteers.
The Charity Governance Code was launched in 2005 and revised for the third time in 2017. This helpful tool, which is fully endorsed by the Charity Commission, provides a list of principles that charities in England and Wales and their trustees should aspire to. Following the code is not a legal or regulatory requirement, but it can help charities of all shapes and sizes improve how their boards operate.
Regulation and realisation
Governance refers to the systems and processes used to drive the overall direction, effectiveness, supervision and accountability of an organisation. In the case of non-profit organisations, it describes the work of the board of trustees or management committee.
Good governance aids compliance with legislation and regulation, and promotes a culture where everything works towards fulfilling the organisation’s vision.
See NCVO’s introduction to governance for more detail.
The Charity Governance Code is based on seven key principles:
• Organisational purpose
• Decision-making, risk and control
• Board effectiveness
• Openness and accountability
Each principle starts with a definition and rationale, then describes key outcomes and steps for achieving best practice.
Putting the code into action: Youth Concern
Steve Louis is Chair of Youth Concern in Aylesbury, a charity working with young people who have had a difficult start in life. The charity has four members of staff, and ten trustees on the board which meets every two months.
Steve says the charity is at an exciting point in its history and is embarking on expansion.
He says: “In addition to our core services of providing a youth hub, and mental health, addiction and training support, we are busy developing (and fundraising for) a 10-bed youth homelessness accommodation project. Managing this growth and the risk around the project has been of great importance.
“The code has helped us to really think about how we make decisions, and what our risk policy looks like, especially through a time of great change. It has been particularly important for the entire board to take responsibility for risk around growth and the expansion of our brief to include an accommodation service.
“As a board, we reviewed the best practice in section 4 of the code and agreed some changes about how we plan and present decisions around risk. This has really helped us to take collective decisions.
“We have also used section 5 of the code to develop our skills audit. This has led to a rigorous and transparent recruitment process to appoint two new trustees where we previously had skills gaps. I really can endorse this code as a great resource for small charities.”
Putting the code into action: Adoption UK
Tony Breslin, a trustee of Adoption UK, the national charity run by and for adopters, agrees the code is a big help, especially for groups that are still finding their feet. “Navigating the complex demands of charity governance can be hard for the smallest and newest charities, and people who are new to trusteeship,” he says. “This is why the Charity Governance Code is so useful.
“It acts as an enabler of effective governance across the sector. It is comprehensive and rigorous but not onerous in its demands. It reminds trustees that, no matter what the size of their charity or the purpose of their endeavours, good governance is vital if they are to reach their objectives and retain the support and trust of their stakeholders, supporters and potential supporters, and current and future beneficiaries.
“At Adoption UK, the code informs our practice in a range of ways,” Tony continues. “It sets out an induction framework for new trustees, where the seven principles provide an invaluable guide to the ethics and practice of effective trusteeship. It also acts as a reminder to the wider board of our purpose and how we operate.
“Moreover, principles such as ‘decision-making, risk and control’ and ‘openness and accountability’ help to shape our processes and assist in their periodic review.
“As recent high-profile cases – from Carillion to Kids Company, from RBS to Rochdale – have demonstrated, the cost of bad governance is high, with the victims often far from the board table.”
Find out more
To discover more about the Charity Governance Code, visit NCVO’s annual Trustee Conference in London on 5 November. If you can’t be there, follow #TrusteeConf on the day.
Also take a look at the following:
• How to put the Charity Governance Code into Practice – NPC Thinks
• Getting the most out of the revised Charity Governance Code – ACEVO
• The [revised] Charity Governance Code at one year old – NCVO
• Ros Oakley, Executive Officer of the Association of Chairs, discusses the Code at the Charity Governance Awards 2018 (video)