Charity Governance Code refreshes its guidance for charities

Jul 23, 2021 | Business

The Charity Governance Code has recently refreshed its code on governance structures and practices for charities, big and small.

The changes come after its 2017 edition, updated as times change and charities have to adjust to better complete their goals.

The code is not a legal document and charities are not obliged to follow it, but understanding the code lets a charity fulfil its vision while complying with relevant legislation and regulation. 

A statement from the organisation says:

“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.”

What is in the code?

The code itself is split into seven self-explanatory sections:

  • Organisational purpose
  • Leadership
  • Integrity
  • Decision making, risk and control
  • Board effectiveness
  • Equality, diversity and inclusion
  • Openness and accountability 

These are all things that any functional organisation would want to be considering in 2021. That’s perhaps why the guidance is popular within the charity sector, with 90% of their respondent charities having fully or partially adopted it, or working towards full application of the code.

Changes to the diversity principle

In 2020, the Charity Governance Code conducted a consultation with more than800 people to find out which parts of the code needed to be refreshed from its 2017 edition, with comments received during the process being used to inform the updated guidance.

Perhaps the biggest change concerned the diversity principle, which the CGC has rebranded as ‘equality, diversity and inclusion’ (EDI) after a lot of feedback indicated that diversity is the area that has moved on the most since 2017, opening up an opportunity for a refresh of the code.

In particular, four new stages have been introduced to the code to guide charities in their EDI journey:

  • Boards should ask themselves why EDI is important and assess their current level of understanding.
  • They should set out plans and targets based upon the charity’s starting point.
  • Boards are advised to monitor and measure progress.
  • Finally, boards need to be transparent and publish the charity’s progress in meeting their targets, including challenges and opportunities.

Changes to the integrity principle

The CGC has also changed, and claims to have strengthened, the integrity principle by putting extra focus onto how visitors feel while they are in the charity’s environment.

Its rationale has been completely rewritten and includes the following:

“Everyone who comes into contact with a charity should be treated with dignity and respect and feel that they are in a safe and supportive environment.”

A section on “ensuring the right to be safe” has been added too, completely new from the 2017 edition, which aims to create an environment to “promote a culture in which everyone feels safe and respected”.

This is broadly in line with the National Council for Voluntary Organisations’ own ethical principles concerning individual dignity, which the CGC had previously promised it would aim to incorporate into their own code.

Going forward

Rosie Chapman, chair for the Charity Governance Code Steering Group, described the code as reflecting “ changes in society and the world in which charities are working”.

The code can therefore be more than useful to charities as a ‘best practice’ manual no matter at what stage in their adoption of the code they find themselves.

You can see the entirety of the code here.

As accountants that specialise in working with charities, we would highly recommend that you put thought into what the CGC has to say.

At the same time, you cannot afford to shun your fiscal responsibilities – accurate, transparent financial records go a long way to building trust with stakeholders in the charity sector.

We are always at hand to alleviate any accountancy pressure from you, maybe even while you begin your journey in EDI, so make sure to get in touch with us at 020 8317 6460, or fill out a contact form with us here.

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