The Charity Governance Code: a guide to good practice for small charities

 

What is the Charity Governance Code?

The Charity Governance Code provides an overview of best practice for managing charities and a useful structure for reviewing how your own charity measures up. There are different versions of the Code, with one designed for small organisations that takes into account the specific challenges that smaller charities face.

The Charity Governance Code replaces the former Code of Good Governance, and was developed by a steering group of charity umbrella bodies including the Association of Chairs, ACEVO, NCVO and the Small Charities Coalition.

The Code is not a legal document but is endorsed by the Charity Commission who will be expecting trustees to be familiar with it and applying it to their charity.

NB The trustees of a charity may also be known as the Executive Committee, Management Committee or Board.

How is the Code relevant for small charities?

However small the charity, the board of trustees are still responsible for ensuring that the charity’s governance is legal and effective. In these days of increased scrutiny and criticism of charities, it is important that trustees understand their responsibilities, have transparent processes for decision-making and are working towards improving their weaknesses.

What areas does it cover?

The Code is based on seven principles:

  1. Organisational purpose
  2. Leadership
  3. Integrity
  4. Decision-making, risk and control
  5. Board effectiveness
  6. Diversity
  7. Openness and accountability

How does the new Code differ from the previous one?

The new Code is more prescriptive in some areas. Some of the key changes include the following statements:

  • Trustees should not serve for terms of longer than 9 years (unless exceptional circumstances apply)
  • A board should typically consist of 5 – 12 individuals
  • The board should review its own performance and that of individual trustees each year, with an external evaluation by a third party every 3 years
  • Trustees should consider the benefits and risks of partnership working, merger or dissolution if other organisations are fulfilling similar charitable purposes more effectively

In addition, the new Code places greater emphasis on:

  • The board having the right mix of skills, knowledge and experience to deliver the charity’s purposes effectively
  • Board diversity, with the board having diversity training and making a positive effort to remove obstacles to people being trustees
  • Openness and transparency
  • The Chair providing leadership to the board ensuring that it has appropriate priorities and structures in place

How can a small charity implement the Code?

There are some online tools based on the Code that can help you do a governance review - see below. The results of a review can form the basis of an action plan, with different trustees taking on responsibilities for different areas to share the load.

Next steps

The Charity Governance Code can be accessed online or downloaded here

You can download NPC’s briefing The Code of Good Governance: How to put it into practice

A template for conducting a governance review based on the Code is available here

Trustees of Lewisham charities are invited to our Trustees Week Charity Governance Code briefing followed by networking on 15 November – more details on our website here.