What you need to know about the new Charity Governance Code
- A partnership of Charities from across the UK, led by the Charity Commission has launched a new governance code.
- Although not legally binding, the Charity Governance Code lays out best practice for charities based upon their current legal responsibilities.
- This seeks to bring together guidance in a single document which focuses on seven key goals for charities.
At a Glance: Following the revelation of poor governance at a number of charities a collation of charity networks have come together with the Charity Commission to launch new guidance on best practice, which focuses on ensuring organisation remain within the legal boundaries expected of charitable organisations.
Charities across the UK will have to reassess their governance procedures in light of the new Charity Governance Code. The new Code replaces the previous Code of Good Governance and will require large charities to submit to external governance reviews every three years.
Under the new rules, charities will also be forced to consider mergers with other organisations that have the same aims and will call on them to impose a nine-year maximum term on trustees, unless there is a good reason not to.
The guidance provided within the document has also been split into two categories, one for smaller charities and another for larger charities. It covers governance elements including:
- Organisational purpose
- Decision making, risk and control
- Board effectiveness
- Openness and accountability
While the Code does not attempt to set out all the legal requirements that apply to charities and charity trustees, it has been based on a foundation of trustees’ basic legal and regulatory responsibilities and is intended to guide organisations on good practice.
This final document will effectively replace the Charity Commission’s Hallmarks of an Effective Charity guidance, which the regulator withdrew as a gesture of support for the incoming code, bringing together key governance issues into a single document.
Sarah Atkinson, Director of Policy and Communications at the Charity Commission, said: “The Charity Governance Code represents a standard of good governance practice to which all charities should aspire.
“We encourage all charities to use it, following and applying its principles proportionately to their circumstances.”
The Code was developed in partnership by a steering group that comprised of the Association of Chairs, the charity leaders body Acevo, the governance institute the ICSA, the National Council for Voluntary Organisations, the Small Charities Coalition and the Wales Council for Voluntary Action. They have said that the new Code would help charities to focus on governance.
Charities are likely to have a number of queries about this new code and its implication on their organisation.
Our specialist charity team at Mackrell Turner Garrett advises on many aspects of charity law including compliance with legislation.
If you would like further information in connection with this article or you would like to find out more generally about our wide range of services for charities, please contact Mireille Turner.