What does the new Charity Governance Code mean for charities? Mark Abbott from Bates Wells takes a look at the changes and urges organisations to sign up to a special webinar on 13 November.
The charity sector has had its own governance code for twenty years: the latest iteration was released today (check out the new Code here). It’s evolution, not revolution, but there are some important changes. We take a first look here:
1. It is still fundamentally what it has always been: aspirational best practice for charities. Not law and not a regulatory requirement. But invaluable as a starting point when assessing a charity’s specific circumstances.
The Code has helpfully retained the “apply or explain” principle – the recommendation that charities should either apply the code or explain where they have chosen not to do so.
This recognises that charities come in all shapes and sizes and any attempt to generalise about good governance in the sector, or to divide it into parts, cannot be a scientific exercise. There will clearly be situations where parts of the Code do not apply to a particular charity, or where additional behaviours and activities may be desirable for good governance.
It is helpful they note that – if you talk about the Code in your annual report, “this does not need to be a long list of policies or procedures – a short statement is fine”.
2. It is still about governance and board behaviours
The Code broadly keeps the same 7/8 “principles” as in the last version: “integrity” is now “ethics and culture” and there is a new focus on “managing resources and risks” instead of the standalone principle of “openness and accountability”. “Equality” in EDI is now “equity”, reflecting the evolution in understanding of these principles in recent years.
During the 2024 consultation on the new Code, there were concerns that it would expand into other areas of regulation – such as safeguarding, fundraising or data privacy. These areas are governed by other regulators, guidance and codes – and so there was a risk of duplication, and of subtle changes arising.
Helpfully the current document focuses keenly on trustee behaviours, and does not expand into these areas.
3. It recognises the role of charities and trustees in civil society
There is no requirement for trustees to limit themselves to being “lovely people doing lovely things”.
On the contrary, the Code reflects that trustees should “where appropriate… support… the charity’s right to speak out about its mission, even if unpopular”. It says that they should “actively champion the charity’s values” and “lead… by example”.
Perhaps reflecting the broader discussions in many board meetings, and developments like the Butler-Sloss decision, trustees should also “consider how the charity’s purpose and values link directly with any other moral, social or environmental responsibilities”.
4. It wants trustees to focus on the issues and seek to avoid disputes
There is a new suggestion that trustees strive to be “courteous”, as well as to “actively listen and show respect in meetings” (we would extend this to other types of trustee decision-making too).
We think this first term is helpful. It is possible to robustly disagree with people – which of course is sometimes necessary on boards – while still being courteous and respectful to the other person and respecting the process of the meeting.
5. EDI
The EDI provision (now titled Equity, Diversity & Inclusion) is more concise and direct – accepting as its starting point that there is discrimination and inequality in society and asking trustees to “seek to understand… how” it manifests in their charity. There is also a focus on engaging with stakeholders to set an approach to EDI.
In some ways it is less prescriptive than the previous version, requiring only that a charity publish “its success and challenges in progressing EDI aims” – the old code for larger charities was much more specific (including publishing “progress towards achieving its targets, including challenges, opportunities, and learning”) – but there is helpful suggested evidence and assurance to back it up (e.g. that they should publish information on the charity’s progress against plans and targets).
6. It remains a stretch, particularly for smaller charities – but that’s the point
A new trustee might look at the suggested behaviours and actions, and think it is a lot to ask a volunteer. They would be right. This is a reflection on charity trusteeship rather than the Code per se.
There is also a lot of paperwork for charities to consider. The new code lists some “suggested evidence and assurance” for each principle, including some which you may not have yet (e.g. a policy for the use of AI tools). Smaller charities, in particular, may baulk at the idea that they should be seeking “feedback and evaluation reports” demonstrating their public benefit, a theory of change, SWOT and PESTLE analyses and a procurement policy.
The answer lies in the introduction section. If we don’t treat it as “additional rules for charities” but as a helpful tool which charities can use to scrutinise their governance in their own circumstances and use to stress-test their processes – then it can be a very effective tool.
Interested in learning more about the new Code?
Bates Wells is running a webinar for all charities and trustees to discuss the new Code – looking at each of the principles and changes in more detail – on Thursday 13 November (11am-12pm). Please sign up here.
The material in this article is provided for guidance and general information only and is not intended to constitute legal or other professional advice upon which you should rely. In particular, the information should not be used as a substitute for a full and proper consultation with a suitably qualified professional. Please do contact the Bates Wells team if you require further information.
This article was reproduced with kind permission from Bates Wells. It was previously published here.