UK Charity Governance Code Guidance

UK Charity Governance Code guidance for trustees - larger and smaller charities versions

The UK Charity Governance Code Guidance

A simple explanation of the Charity Governance Code for trustees. What good charity governance is, how trustees should use the Charity Governance Code and key questions to use as a checklist for your trustee board's governance and conduct.

Charity Governance Code Versions - Larger and Smaller Charities

The Charity Governance Code is a practical tool that sets the principles and recommended practice. One version is for larger charities, with income in excess of £1m pa and the 2nd for smaller charities.  It's aspirational rather than a legal or regulatory requirement.

Equally, there are other codes of governance that may be applicable to certain charities, such as those working in sport and, if you’re involved with the Public Sector, you may also hear about the 7 Nolan Principles.

Each code of governance is different, but based on similar foundations along the lines of selflessness, leadership, effectiveness, integrity, openness and accountability.

Charity Governance Review

The Charity Governance Code recommends that a governance review every 3 years.  You could pay a consultant, but better still you can do that for free by scoring the governance questionnaire in just 30 mins.  It enables trustees to comply with the Charity Commission guidance for trustees and the Charity Governance Code, as well as other laws and regulations, which it reports in the governance area of your interactive dashboard.  It also connects you to a huge range of free help and resources.

There are also 3 online directories Funding FinderHelp Finder and Data Finder and 100+downloadable funder lists.  To access help and resources on anything to do with running a charity, including governance, click the AI Bunny icon in the bottom right of your screen and ask it short questions, including key words.  Register, then login and the in-system AI Bunny is able to write funding bids and download 40+ charity policy templates as well.

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What is Good Charity Trustee Governance?

Whilst we all recognise the importance of good governance, in ensuring that a charity is well-run, it’s easier said than defined. Here’s the definition I prefer:

The Board’s responsibilities in setting the strategic direction and culture of the organisation and ensuring it is well led and managed, to achieve its charitable objectives.

How Do We Use The Charity Governance Code?

The Charity Code is applicable to all charities, but is deliberately aspirational.  It has been endorsed by the Charity Commission, but is neither a legal nor regulatory obligation. Consequently, trustees should make use of the code, by using the ‘apply or explain’ approach recommended in the code. That is, to either:

·        Apply each area of the code, or;

·        Be able to explain what is being done instead to meet the principle, or;

·        Why it is not applicable.

Perhaps the greatest value in the Governance Code is not the extent to which any organisation complies with it, but rather in following a robust, objective process in assessing how best to meet the principles below.

Charity Governance Guidance For Trustees

The Charity Commission recognises the UK Charity Governance Code, but it's not formally part of its guidance for trustees.  The key document that all charity trustees must read and comply with is CC3 - The Essential Trustee: What's Involved.  Trustees have 6 main responsibilities:

  1. Ensure your charity is carrying out its purposes for the public benefit.
    1. There's no legal definition of public benefit, but generally your purposes must be charitable, beneficial and benefit the public or a sufficient section of it.
  2. Comply with your charity’s governing document and the law.
  3. Act in your charity’s best interests.
  4. Manage your charity’s resources responsibly.
  5. Act with reasonable care and skill.
  6. Ensure your charity is accountable.

This is what the Charity Commission requires trustees to do.  The UK Charity Governance code is what they should do collectively, but it is not a legal or regulatory requirement.

Charity Commission Guidance For Trustees

There is Charity Commission guidance for trustees on a wide range of issues.  Here are some of the most commonly used ones.  If you need specific guidance, ask the AI Bunny and it'll find it for you.

THE 7 CHARITY GOVERNANCE CODE PRINCIPLES

The 7 principles in the Charity Governance Code are outlined below. However, make sure that any assessment of these is not simply a 'tick-box' exercise. Organisational values, terms of reference, and policies and procedures provide essential clarity and structure, but it's what an organisation actually does, not what it says, that makes a difference. Far too many charities do the paperwork and talk, but don't act.

Ask yourself, to what extent can I see our board and senior team individually and collectively, behaving in a way that consistently meets each of the principles below?

Governance Code 1 - Purpose

The Board is clear about the charity’s aims and ensures that these are being delivered effectively and sustainably.

·        What processes are in place to review and exercise oversight of the above and how do you know these are these effective?

·        Do you have objective analysis and data that confirms this? If you're doing the same thing in the same way you always have, probably not. The world has changed, we need to as well.

Governance Code 2 - Leadership

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

·        Does the Board lead on strategy, ask the difficult questions, act decisively and always in the charity's best interests?

·        If your board focusses on operational detail, rubber stamps decisions and there are personal agendas being pursued, probably not.

Governance Code 3 - Ethics & Integrity

The Board acts with integrity, adopting values and creating a culture which helps 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.  Does the Board:

·        Live its own values and is it open to and seen to respond constructively to criticism?

·        Both positively challenge and support each other and the staff team?

·        Always act in the charity's best interests only?  There should be no room for personal agendas.

Governance Code 4 - Decision Making, Risk & 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.

·        Does the Board have processes to ensure that all key issues are debated adequately?

·        Are there effective oversight systems for the whole organisation, and are these demonstrably working?

Governance Code 5 - Board Effectiveness

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

·        Does the Board have the capacity and skills it needs and does it act collectively?

·        If you don't have the people you need, you might like to read How to recruit great trustees.

Governance Code 6 - Diversity

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

·        We're all committed to diversity, but far too many charity boards are not. At your next Board meeting have a look round the table. Are at least 30% women and does the Board reflect the diversity of the community you work with?

·        You can find some ideas on how to improve diversity here.

Governance Code 7 - Openness & 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.

·        To what extent does input from your stakeholders actually impact Board decisions?

·        What processes do you have to engage with them, how do you know these are effective and is their input demonstrably reflected in the Board's decisions?

Charity Trustee Code Of Conduct

We have created a Charity Trustee Code of Conduct you're welcome to use.

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Find Funding, Free Help & Resources - Everything Is Free

Register Now!

To access help and resources on anything to do with running a charity, including funding, click the AI Bunny icon in the bottom right of your screen and ask it short questions, including key words.  Register, then login and the in-system AI Bunny is able to write funding bids and download 30+ charity policy templates as well.

Charity Excellence AI Services

In addition to the 6 systems within Charity Excellence, we provide a range of free AI services.

  • Enabling you to find funding, help, resources and data.
  • Ask Me Anything – answering almost any question about running your charity.
  • Funding Bid Writer Service.

Just click the AI bunny icon in the bottom right of any web page or in-system and tell it what you need.  Register, then login and the in-system AI Bunny is able to write funding bids and download 40+ charity policy templates as well.

Charity Governance FAQs

  • What is charity governance? Charity governance is the trustees’ responsibilities in setting the strategic direction and culture of the organisation and ensuring it is well led and managed, to achieve its charitable objectives.
  • What is the Charity Governance Code? The Charity Governance Code is a practical tool that sets the principles and recommended practice. It is applicable to all charities but is aspirational and is neither a legal nor regulatory obligation.
  • What are the 7 principles in the Charity Governance Code? The Governance Code has 7 principles: Organisational Purpose; Integrity; Decision-making, risk and control; Board effectiveness; Equality Diversity and Inclusion and Openness and Accountability.
  • How do you use the Charity Governance Code? Trustees should apply the Charity Governance Code by either applying each area of the code, or being able to explain what is being done instead to meet the principle, or why it is not applicable.
  • How often should a charity have a governance review? The Governance code recommends that trustees should review their governance every 3 years.
  • What is the Scottish Governance Code?  The Scottish Governance Code for the Third Sector was developed by Scotland’s Third Sector Governance Forum. It sets out the core principles of good governance for the boards of charities, voluntary organisations, and social enterprises in Scotland.
  • What is the Sports Governance Code?  The Code for Sports Governance sets out the levels of transparency, diversity and inclusion, accountability and integrity that are required from those organisations who seek – and are in receipt of – UK Government and National Lottery funding from Sport England and/or UK Sport.

Charity Trustee Duties - FAQs

  • What is the role and responsibilities of a charity trustee? Charity Commission CC3 (The Essential Trustee) is the guidance that all charity trustees must be aware of and details their 6 main responsibilities.
  • What are the duties a charity trustee? The role and 6 main responsibilities of a charity trustee are to ensure your charity carries out its purposes for the public benefit, comply with your charity’s governing document and the law, act in its best interests, manage your charity’s resources responsibly, act with reasonable care and skill and ensure your charity is accountable.
  • How long can a trustee be appointed for? The length of a charity trustee appointment will be in your constitution but, in general, most charities opt for 3 years, with the option to reappoint.
  • Can a trustee resign immediately? Yes, a charity trustee can resign at any time.
  • How can I remove a charity trustee? If you need to dismiss a trustee, the board and the charity must follow the rules set out in your governing document. Trustees may be dismissed through a no-confidence process, as long as this is part of your rules.
  • Do charity trustees get paid? Generally, charity trustees are unpaid volunteers who may be paid expenses.  It is possible to pay trustees for services provided but usually requires Commission approval and it would be unusual to pay a trustee for simply being a trustee.
  • How old do you have to be to be a trustee? You must be at least 16 years old to be a trustee of a charity that is a company or a charitable incorporated organisation (CIO), or at least 18 to be a trustee of any other charity.
  • What is a trustee conflict of interest?  There are 2 common types of conflict of interest: Financial conflicts - when a trustee, or person or organisation connected to them, could get money or something else of value from a trustee decision. Loyalty conflicts - other reasons, a board member might not be able to make decisions that are best for the charity.
  • Managing a conflict of interest in a charity?  To manage a conflict of interest you must follow your governing document but usually, the individual should be excluded from all discussions and this and the discussion details recorded in the minutes.
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