The latest version of the Charity Governance Code was published in July with different versions for large and small charities (with a typical threshold suggested of £1m of income for large charities). It is also suggested that the code can be applied to other not-for-profit organisations delivering a public or community benefit.
Application of the code remains voluntary, but is deemed best practice within the sector and, generally, charities are expected to follow its principles. The Charity Commission is supportive of the code and does direct people to it within its own guidance.
The new Charity Governance code has seven key areas:
- Organisational purpose
- Leadership
- Integrity
- Decision-making, risk and control
- Board effectiveness
- Diversity
- Openness and accountability
One of the new recommendations in the code is for larger charities to carry out external reviews of their governance arrangements at least every three years. The code further emphasises the role of the chair (although in a legal sense the chair still has no more responsibility than any other trustee), encourages greater diversity on boards and imposes a nine year term limit for trustees (unless a good reason exists to extend this period). Lastly, one other new area of emphasis is on the control and review of subsidiaries, ensuring that relationships between the charity and any subsidiary are formalised and that the charity regularly reviews these arrangements to ensure they remain appropriate.
The code has been developed by a steering committee comprising the following sector bodies: The Association of Chairs, ACEVO, ICSA, The Governance Institute, NCVO, the Small Charities Coalition and the Wales Council for Voluntary Action.
Please do get in touch with your usual Menzies’ contact if you would like to discuss the issues raised by the code or if you would like us to benchmark your governance arrangements against the new standards.
Andrew Roberts is a member of Menzies NFP sector advisor team. To discuss the implications of the new Charity Governance Code, contact him by phone on 01372 226308 or via email at aroberts@menzies.co.uk