Charity Governance Code launched today

I am delighted that today, along with our steering group partners, we are launching a new Charity Governance Code. We have developed this tool jointly to provide a clear set of governance standards which charities and their trustees can aspire to and work toward. I think this offers all charity boards an exciting opportunity to reflect on and improve their governance.

There are seven principles which make up the new code. These build on the assumption that a charity is meeting its legal and regulatory responsibilities as a foundation.

The new code has been almost a year in development – a collective contribution to strengthening charity governance. The final draft has benefited from the insight of our chair Rosie Chapman, the cross-sector steering group, our many critical friends and the feedback from a comprehensive consultation which received over 200 responses.

With the support of our funders, Clothworkers Foundation and Barrow Cadbury Trust, we have also developed a new, simple to use, free to access website: www.charitygovernancecode.org. This allows trustees and users to easily access the new code.

What does the code say?

Each principle in the code has a brief description, a rationale (the reasons why it is important), key outcomes (what you would expect to see if the principle were adopted) and recommended practice (what a charity might do to implement the principle). The principles, rationale and outcomes are intended to apply universally to charities while we have developed varied recommended practice depending on a charity’s size.

There are a range of significant changes to the previous code, including:

• an expectation that the board will review its own performance and that of individual trustees, including the chair, every year, with an external evaluation for larger organisations every three years
• that no trustee should serve more than nine years without good reason and that term limits are important for accountability
• thinking carefully about how boards recruit a diverse range of trustees with the skills and experience required to lead a charity
• boards involving stakeholders in key decisions and operating with the presumption of openness
• emphasis on the role of the chair and vice chair in supporting and achieving good governance
• increased oversight for large charities when dealing with subsidiary companies, registers of interests and third parties such as fundraising agencies or commercial ventures
• that the board evaluate a charity’s impact by measuring and assessing results, outputs and outcomes.

Using the code

I would recommend that trustees engage with the content, regularly revisit and reflect on the principles and use the code to support continuous improvement. This might involve undertaking a comprehensive external review, establishing a sub-group to look at the code in more depth, or simply factoring in time at trustee meetings to discuss the principles.

The code is deliberately aspirational, and it will be a stretch to achieve some elements. This is intentional as we want the code to be a tool for continuous improvement towards the highest standards rather than a tick-box exercise.

Trustees shouldn’t feel they need to apply everything if it doesn’t fit within their charity’s context. Instead we encourage trustees to work toward the principles and outcomes of the code by either applying the recommended practice or explaining what they have done instead or why they haven’t applied it. Where a charity adopts the code we encourage trustees to publish a brief statement in their annual report outlining their use of it.

At NCVO we have a range of tools and support to help you in working with the code, including:

• our board basics resources
• online trustee training modules
• governance publications
• consultancy and training

We are also exploring how we can develop practical a diagnostic tool to help you understand strengths and weaknesses in relation to the code’s recommended practice.

At its core, this code is intended as a tool to help trustees improve governance and increase the effectiveness of their charities – I hope you find it useful.

Dan Francis is NCVO’s governance consultant. For more regular updates follow @mynameisdanfran or @NCVO on Twitter.