Using the Charity Governance Code in practice

I very much enjoyed joining the NCVO Governance Forum last week to talk about how the Charity Governance Code could be used to support good trustee practice in board rooms. We were joined by Holly Riley and Jess Williams from the Charity Commission, who talked about the Commission’s current priorities, and we had a panel Q&A session to discuss governance challenges. 

As a reminder, the Charity Governance Code was revised extensively last autumn. It’s not a legal requirement and doesn’t try to explain the law – in fact, it assumes you are already complying with it. Instead, it’s designed as a practical tool to help trustees understand what good governance looks (and feels) like, and how to get there. 

I would recommend approaching the code in three ways: it can help improve compliance with legal duties, it can enhance decision-making, and it remains a great tool for developing board effectiveness.

Looking at these in turn: 

• The code is designed to complement the Charity Commission’s guidance The essential trustee: what you need to know, what you need to do (CC3), which sets out the six key legal duties for trustees. One novel change in the new code is the inclusion of “behaviours” that boards can adopt to help ensure they are meeting their legal duties. For example, dedicating time to trustee induction, and being curious and keen to learn, to improve the likelihood of boards successfully understanding their governing documents and legal duties.
• We’re noticing an increasing regulatory trend away from guidance which tries to detail what to do in specific situations, towards simpler high-level principles which place the onus on good decision making. The code has a whole section on decision-making, and its emphasis on good behaviours and culture as an enabler of good decision-making is really helpful – after all, good decisions don’t happen in a vacuum.
• In particular, the code can be an incredibly useful tool to remind boards of good behaviours when they are facing difficult decisions – especially when individuals may be under stress. Checking that you are consciously thinking about behaviours, such as being open to challenge, is as important as having good board papers in reaching a good decision.
• Finally, the code remains an excellent tool for regular governance reviews and skills audits. A key criticism of the previous code was that it was not practical enough. The new code still helps to identify gaps, but also now provides real-world examples of what good looks like. 

The Charity Commission also talked about their current priorities. It was encouraging to hear about the Commission’s digital transformation project, boosted by the extra funding it announced in January, which is looking to make data improvements for users within the next three years. 

The Commission’s increasing focus on combatting foreign influence, extremism and terrorism was a sobering reminder of the increasingly hostile environment for the sector. In this context, the fact that charity trustees do not have to verify their identity is a clear policy concern for the Commission. The Commission’s other priority to update their guidance is well underway – we heard that updates on risk, grant-making and collaboration between charities are all expected this year. Interestingly, their fourth priority was impact reporting, reflecting its inclusion in the new Charity SORP as a requirement now in many annual trustee reports, and a new challenge for boards to get right. 

The panel discussion that followed highlighted how the code could be a flexible tool to help in situations where boards were divided, or there were tensions between boards and executives, by providing objective examples of what good looks like.  

Our huge thanks to NCVO for inviting us and hosting such an interesting and timely forum.