About the Code

About the code and how to use it

About the Code

Good governance in charities is fundamental to their success.

A charity is best placed to achieve its ambitions and aims if it has effective governance and the right leadership structures. Skilled and capable trustees will help a charity attract resources and put them to best use. Good governance enables and supports a charity’s compliance with relevant legislation and regulation. It also promotes attitudes and a culture where everything works towards fulfilling the charity’s vision.

It is the aim of this Code to help charities and their trustees develop these high standards of governance. As a sector, we owe it to our beneficiaries, stakeholders and supporters to demonstrate exemplary leadership and governance. This Code is a practical tool to help trustees achieve this.

The Code is not a legal or regulatory requirement. It draws upon, but is fundamentally different to, the Charity Commission’s guidance. Instead, the Code sets the principles and recommended practice for good governance and is deliberately aspirational: some elements of the Code will be a stretch for many charities to achieve. This is intentional: we want the Code to be a tool for continuous improvement towards the highest standards.

This Code has been developed by a steering group, with the help of over 200 charities, individuals and related organisations. We would like to thank everyone who has given comments and assistance during the consultation. Development of the Code would not have been possible without The Clothworkers’ Company or the Barrow Cadbury Trust, whom we thank for their support.

We hope you find it useful in helping your charity to make an ever bigger difference.

Using the Code

Steering group and sponsors 

Steering group and sponsors

The Charity Governance Code Steering Group is a cross-sector collaboration with an independent chair, Rosie Chapman. The group’s purpose is to review, develop, promote and maintain the Code for the sector.

Using the Code

Who is the Code for?

This Code is intended for use by charities registered in England and Wales. Much of it will also apply to other not-for-profit organisations that deliver a public or community benefit and those with a social purpose. Organisations or subsectors may find it helpful to adapt the Code to reflect their context.

The Code’s principles, rationale and outcomes are universal and apply equally to all charities, whatever their size or activities.

The recommended good practice to meet these principles will vary. Although it’s hard to be precise about the distinction between larger or more complex charities, governance practice can look significantly different depending upon a charity’s size, income, activities or complexity. We have produced different versions of the recommended practice to reflect and address some of these differences.

Which version you choose to use will depend on a range of factors. In general, we recommend that charities with a typical income of over £1m a year, and whose accounts are externally audited, use the larger version and charities below this threshold use the smaller version.

How it works

This Code is designed as a tool to support continuous improvement. Charity boards that are using this Code effectively will regularly revisit and reflect on the Code’s principles.

Compliance with the law is an integral part of good governance. This Code does not attempt to set out all the legal requirements that apply to charities and charity trustees, but it is based on a foundation of trustees’ basic legal and regulatory responsibilities. The seven Code principles build on the assumption that charities are already meeting this foundation.

The Code sets out principles and recommended practice. See the Code’s useful resources and links section on the Code’s website for more detailed guidance on how to meet the Code.

Each principle in the Code has a brief description, a rationale (the reasons why it is important), key outcomes (what you would expect to see if the principle were adopted) and recommended practice (what a charity might do to implement the principle).

Apply or explain

We anticipate that how a charity uses the Code is something which will develop and mature, particularly where the charity is growing and changing. Given this, some of the recommended practice may not be appropriate for a particular charity to follow initially, but it may become so in the future.

It’s important that trustees discuss the Code’s principles and recommended practice and make well-considered decisions about how these should be applied in their charity.

A charity should explain the approach it takes to applying the Code, so it is transparent to anyone interested in its work. We call this approach ‘apply or explain’. All trustees are encouraged to meet the principles and outcomes of the Code by either applying the recommended practice or explaining what they have done instead or why they have not applied it. We have not used the phrase ‘comply or explain’, which is used by some other governance Codes, because meeting all the recommended practice in this Code is not a regulatory requirement.

Charities that adopt the Code are encouraged to publish a brief statement in their annual report explaining their use of the Code. We anticipate that this statement will be a short narrative rather than a lengthy ‘audit’ of policies and procedures.

Some charities work in areas, such as housing and sport, that have their own sector-specific governance Codes. These Codes may well take precedence over this Code, and such charities are encouraged to say in their annual reports which governance Code they follow.

The principles

There are seven principles which make up this Code. These seven principles build on the assumption that a charity is meeting its legal and regulatory responsibilities as a foundation.

CGC temple diagram

1. Organisational purpose

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

2. Leadership

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

3. Integrity

The board acts with integrity, adopting values and creating a culture which help 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.

4. Decision-making, risk and 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.

5. Board effectiveness

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

6. Diversity

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

7. Openness and 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.

Support the Code

The Charity Governance Code is authored by a voluntary steering group without dedicated staff resource. The Code has been developed by the sector, for the sector. This set up is unlike any other sector’s governance code and, unlike some other codes, we do not charge for, nor receive a license fee.

We are grateful to Clothworkers Company and Barrow Cadbury Trust for supporting the development of the new Code.

We want the Code to remain relevant, sustainable and freely available for every charity to use. Our aspiration is that all charities are aware of the Code and its value.

To achieve this, we rely on the generosity of our supporters and those who benefit from the Code. We very much welcome donations from organisations and individuals who use the Code and want to contribute to ensuring its take-up, use and success.

The Code steering group has exciting plans to promote use of the Code, monitor impact and to ensure resources exist to help charities implement the practice. We’d encourage regular donations to help support this important work in strengthening the sector’s governance.

To make a donation please email charitygovernancecode@ncvo.org.uk include your name, organisation and the amount you would like to donate.

All donations are made to the National Council for Voluntary Organisations (NCVO) charity number 225922 and company number 19834. NCVO holds all donations in a reserve fund on behalf of the Governance Code steering group. All funds are used to support the work of the Code steering group.

NCVO is registered with the fundraising regulator.

Keeping the Code up to date

As a steering group, we want to continually improve the Code. Understanding of what good governance is evolves, as do the expectations of the sector’s various stakeholders. When we published the new edition of the Code in summer 2017, our intention was to review the contents and impact of the Code at three-year intervals, to make sure that it remains current. As such we launched a consultation on how the Code can be improved which ran between November 2019 and February 2020.

The steering group received over 800 responses to the consultation. Having reviewed and analysed all the feedback, we published the findings of our report in August 2020. The next phase of the steering group’s work involves reworking the code’s practice based on these findings. Our objective is to publish a refreshed code before the end of 2020.

Why review the Code?

We believe we need to strike a balance between continually updating the Code and potential disruption to those using the Code, especially as it can take some time to work through all the recommendations. For this reason, we are proposing a ‘light refresh’ of the Code in 2020, with more far-ranging changes taking place in 2023. As part of the consultation we will test this approach to ensure users agree with a ‘light refresh’.

By ‘light refresh’ we mean to say we will set a high bar for making changes in 2020, particularly to the seven principles of the Code and their associated rationale and outcomes. We will focus more on additions and revisions to the Code's recommended practice. In the consultation document we have identified a few areas where we think there is a case for urgent change.

We have had consistent feedback that users of the Code like its structure, language and user-friendliness. The steering group sees the role of the Code as setting standards, and we see it as a role for others to produce tailored guidance to support the Code. We do intend however to add more signposts to useful resources. In the consultation we asked for suggestions on resources you have found useful for each principle.

Future changes

In addition to the refresh we plan to develop a ‘route map’. This will allow us to set out other suggested changes that we think have merit for a more in-depth revision in 2023. This will be useful for people who are already fully complying with the Code and seeking additional guidance on emerging good practice. We hope it also allows existing users to be aware of further changes that may be expected in the coming years. We plan to publish a series of blog posts exploring these potential longer-term changes during and after the consultation.

The consultation and its findings

The public consultation closed in February 2020. The steering group have spent the past few months reviewing each of the responses and considering what these mean for the revision to the Code.

The consultation report published in August 2020 details the key themes identified in the consultation. You can download the report here (PDF, 194KB).

Should you wish to read the original consultation document you can download it here (PDF, 90KB).

Updates from the Code steering group

To find out more about the consultation or specific areas we are keen to explore, read the Charity Governance Code blog on Medium.

 

charity consultation.pdf

Diversity Principle Review

Background

The Charity Governance Code is led by a steering group with an independent chair. The last version of the Code was published in summer 2017 and, for the first time, this version contained a principle specifically addressing diversity. Since then the Code has been widely adopted and gained respect across the sector as a coherent and practical tool for governance improvement. Research has shown that using the Code improves charity governance.

As a steering group, we want to continually improve the Code to reflect evolving understanding of what is good governance and expectations of the sector’s various stakeholders. When we published the last edition the intention was to review the contents and impact of the Code at three-year intervals, to make sure that it remains current. As such we have recently consulted on how the Code can be improved and we intend to publish an updated Code in summer 2020.

We believe we need to strike a balance between continually updating the Code and potential disruption to those using it, especially as it can take some time to work through all the recommendations. For this reason, we are only proposing a ‘light refresh’ of the Code this time round. However, one of the main areas where we feel there is both a requirement and appetite for change relates to the Code’s diversity principle.

The existing Code played a part in ensuring diversity is considered as core to effective charity boards. Yet the Code’s practice is focused very much on how a board recruits, retains and monitors their own diversity and, as a framework, it focuses on how a board should be more diverse in its own composition.

In this update to the Code, the steering group is keen to explore how the diversity principle might be enhanced, for example by also including practice on how a board should embed good diversity and inclusion practice throughout the organisation such as in the design of strategy, the delivery of services, management of staff and volunteers.

The Opportunity

Following an open recruitment process the code steering group is pleased to have appointed Pari Dhillon and Chaka Bachmann to:
• Lead an engagement exercise designed to identify good practice on board diversity and inclusion
• Support the Code steering group in develop understanding on barriers
• Based on feedback and engagement exercises propose draft changes to the principle
• Advise the steering group and facilitate decisions on changes


This work is due to conclude with the revision of the diversity principle toward the end of 2020.

Refreshing the Charity Governance Code.pdf

Refreshing the Charity Governance Code.pdf