Revised Charity Governance Code

Revised Charity Governance Code

The Charity Governance Code (the 'Code') is a voluntary tool that sets out the principles and recommended practices for good governance in charities in England and Wales.   

While not a legal requirement, it is endorsed by the Charity Commission and widely recognised as the benchmark for good practice in charity governance.  It encourages an 'apply or explain' approach which invites boards to either adopt its practices or explain why they have made departed from the Code's recommendations.

Published on 3 November, the revisions to the Code are significant and introduce eight core principles for Charities and their boards to consider when governing.

The key changes are as follows:

1. The Code introduces a new Foundation Principle.  Trustees must understand their legal duties and meet their basic obligations.  As part of this, trustees must make a commitment to ongoing learning, prioritising the charity's mission and its beneficiaries. In relation to continuous learning, the Code emphasises the importance of regular training on topics like safeguarding and ethics. It also recommends that Boards should make efforts to fill skills gaps through training.
2. The principle on 'Integrity, Openness and Accountability' has now merged into 'Ethics and Culture'. As part of that principle, the Code focuses on environmental sustainability in decision making, noting the importance of the board being 'sensitive to the ethical, social and environmental consequences of their decisions'.
3. The revised Code also calls for boards to be 'appropriately' transparent when there are failures.  Where trustees take additional leadership roles, such as Chair or Treasurer, the Code emphasises the need for clear reporting and communication to other members of the board.  
4. The Code also emphasises the importance of digital governance and data ethics, recommending that charities adopt an established set of standards in relation to digital governance, such as the Charity Digital Code of Practice.
5. 'Decision making, risk and control' has now been split into two separate principles: 'Decision making' and 'Managing resources and risks'.
6. There is a greater focus on diversity, with the 'Diversity' principle becoming 'Equity, Diversity and Inclusion (EDI)'.
7. Each of the principles now sets out the principle itself, indicators of good practice, suggested behaviours and sources of assurance which trustees can obtain to provide evidence of good governance. Whilst there is no separate version for larger and smaller charities, the guidance nots do draw a distinction.