External reviews every three years, greater openness and limits on how long trustees may serve are among recommendations made by a group of charity membership bodies to strengthen governance and accountability
Key recommendations include more oversight when dealing with subsidiary companies, registers of interests and third parties such as fundraising agencies or commercial ventures; an expectation that the board will review its own performance and that of individual trustees, including the chair, every year, with an external evaluation for larger organisations every three years.
Alongside that, it is proposed that no trustee should serve more than nine years without good reason; boards ‘thinking carefully’ about diversity, how they recruit a range of skills and experience, and how they make trusteeship a more attractive proposition; boards should operate with the presumption of openness; stronger emphasis on the role of the chair and vice chair in supporting and achieving good governance.
The Charity Commission has marked its endorsement for the new code by withdrawing its own publication, Hallmarks of an Effective Charity, in favour of encouraging charities to use the code.
Issues relating to poor governance and fraud at charities have proven damaging, with public faith in effective charity regulation has dropped from 65% in 2015 to 58% in 2017, according to independent research into public and stakeholder trust and confidence in the Charity Commission.
High profile cases, such as that of Kids Company in particular, have proven damaging. A report by the Public Administration and Constitutional Affairs Committee (PACAC), found that throughout its 19-year existence, trustees ‘repeatedly ignored auditors’ clear warnings about Kids Company’s precarious finances’.
Work on the code has been funded by the Barrow Cadbury Trust and the Clothworkers Foundation. Charities were asked for feedback on a draft version of the code. Between November 2016 and February 2017, when the draft guidelines were circulated, there were more than 200 responses.
Rosie Chapman, chair of the Charity Governance Code steering group, said: ’The code for the first time sets out clear aspirations for a charity board to meet. This code is a great stepping off point to help charities navigate the changes. It will be an essential tool for charities to use and will greatly assist them to develop and grow in their effectiveness.
‘It has been achieved through a great deal of effort from many people in many organisations and it is all the richer for their input.’
The Charity Governance Code is an updated version of the previous Code of Good Governance. It has been devised by a cross-sector steering group headed by independent chair Rosie Chapman. It comprises the Association of Chairs; the Association of Chief Executives of Voluntary Organisations; ICSA: The Governance Institute; the National Council for Voluntary Organisations; the Small Charities Coalition; and the Wales Council for Voluntary Action.
The Charity Governance Code is available here.