24: New year, refresh your governance – The updated charity governance code

The updated Charity Governance Code (the Code) was published on 8 December 2020, reminding trustees of the importance of effective governance and outlining recommended practices in order to fulfil the purposes of their charities. In this blog post, we explore the updates that have been made to the Code and what trustees should consider in terms of governance in light of the updates.

What is the Charity Governance Code?

The Code, found here, is a practical tool to help charities and their trustees develop high standards of governance; it sets out seven principles of good governance, as follows:

• organisational purpose;
• leadership;
• integrity;
• decision making, risk and control;
• board effectiveness;
• equality, diversity and inclusion; and
• openness and accountability.

Each principle has a brief description, a rationale, key outcomes and recommended practice. Although the Code is not Charity Commission official guidance, the Commission does recognise it as the standard for effective charity governance. It is not a legal requirement to follow the Code but it sets a standard against which trustees can expect to be measured.

Why the December 2020 update?

The Code’s steering group had committed to reviewing the Code at three year intervals, and so since the inception of the Code was in 2017, the review was due in 2020. The idea is to refresh the Code as the sector’s understanding of good governance evolves.

In carrying out the review, the steering group held a consultation which received over 800 responses and the outcome was to enhance the principle of integrity and the principle of diversity – now known as equality, diversity and inclusion as these were the principles that received the most consistent feedback in the consultation.

The integrity principle

Within the 2017 Code, this principle focused on protecting a charity’s assets and reputation. The updated Code broadens this to put more emphasis on the ethos and culture of the charity (one result of which should be promoting the charity’s reputation), and the right for everyone who has contact with the charity to be safe.

These updates reflect the increased focus and importance of safeguarding and the right to feel safe within a charity setting that we have seen over recent years. In particular, the Code now includes reference to creating a safe, respectful and welcoming environment.

In light of this revised principle, the Code has been updated to recommend that trustees:

• safeguard and promote their charity’s reputation by living its values and ensure that all of its decisions and actions are consistent with the charity’s values;
• understand and address any inappropriate power dynamics;
• consider how their charity is seen by the people and organisations involved in its work and by the wider public;
• have policies and procedures to make sure that their charity works responsibly and ethically; and
• understand their safeguarding responsibilities and make sure that there are appropriate safeguarding policies and procedures so that all trustees, staff, volunteers and people who work with the charity have information or training on the safeguarding policy and feel comfortable in raising concerns.

The re-named equality, diversity and inclusion principle

There has been increased attention to diversity in the sector in recent years and the updates made to the Code, including broadening the term to ‘equality, diversity and inclusion’, aim to reflect those changes . Taking note of diversity amongst trustees, senior leaders and beneficiaries is no longer enough; trustees should also consider the broader principles of equality and inclusion in order to assist them in making good decisions and delivering the charity’s purposes.

The updated Code now recommends four stages for trustees to follow in achieving good governance in terms of this principle. These stages are as follows:

1. assessing and understanding the systems and culture;
2. setting context-specific and realistic plans and targets;
3. taking action and monitoring performance; and
4. publishing performance information and learning to achieve transparency.

What actions should trustees take?

Good governance should always be at the forefront of trustees’ decisions and actions. As we enter into a new year, with perhaps different challenges than the last, now might be a good time to review internal protocols to see what updates might be needed generally, as well as any to reflect the changes to the Code. In addition to reviewing what is already in place, trustees should consider whether their policies reflect the charity’s values and ethos, comply with safeguarding requirements and how to embed the recommendations contained within the Code in relation to equality, diversity and inclusion principle.

If you have any specific queries in relation to governance in your charity, please do contact your usual BDB Pitmans contact or Preena Patel at [email protected].