• Charity Governance Code updates:
    what you need to know

Charity Governance Code updates: what you need to know

26 February 2021

The Charity Governance Code, which all charities must abide by was updated in December 2020. The Steering Group responsible for the update recognised the ongoing need to have robust and rigorous governance in the sector. This is reflected in the updates to the Integrity Principle, emphasising sound ethics and the right of everyone who has contact with the charity to be safe, and to Principle 6, which has been renamed Equality, Diversity and Inclusion.

What has changed?

  • The diversity principle has been expanded to include equality, diversity and inclusion, recognising the importance of creating equal opportunity and promoting the feeling of inclusion within charities. Charities should:
    • Think about why equality, diversity and inclusion is important to them and assess the current level of understanding
    • Set out plans and targets accordingly
    • Monitor and measure how well the charity is doing against those plans and targets
    • Be transparent by publishing the charity’s progress.
  • The Integrity Principle includes new recommended best practice on the right to feel safe, which builds on the Charity Commission’s regulatory guidance setting out trustees’ safeguarding duties. The Code also recommends new best practice on the right to be safe (safeguarding); that asks trustees to:
    • Understand their safeguarding responsibilities
    • Establish appropriate procedures that are integrated with the charity’s risk management approach
    • Ensure that everyone in contact with the charity knows how to speak up and raise concerns.
  • The Integrity Principle has also been strengthened to emphasise the importance of a charity’s values, ethical decision making and the culture this creates.

Why was the Charity Governance Code updated?

Safeguarding has rightly been increasingly prominent on the charity agenda and there has been growing awareness of the need to tackle racism and wider inequality. These are the two drivers for change in the way charities are run and managed.

Headlines like “NGOs considered less ethical and competent”, “#charitysowhite: time for an urgent commitment to racial equality” and “Charity apologises after report reveals long-term culture of racism and discrimination” all point towards the urgent need for updating the Governance Code and to change culture within some charities.

Charity Governance has been challenged from the impact of COVID-19. The demand on charity workers’ time to support front line and often-excluded populations, the constant juggling that comes with home schooling, looking after loved ones and using the kitchen dining table as your office space is taking its toll.  Many people are beginning to feel burned out. This will have a bearing on workplace culture – what we do in times of crisis is what will be remembered and integrity should be at the centre of these actions.

Culture is an interesting creature and famously ‘eats strategy for breakfast’. The best laid plans will not deliver for beneficiaries if charities fail to address actual or emerging toxic culture. Having aspirational values, publicly speaking about allyship (building relationships of trust, consistency and accountability with marginalised individuals and/or groups of people) and using digital channels to communicate are no longer considered enough. Charities must address unacceptable behaviour and culture both in their leadership and throughout their organisations.

Transformation has to start at the top of the organisation.  It has to start with the board and leadership. Perhaps this is why the Steering Group refreshed the code in December 2020.

Leadership is clearly pivotal to changing culture and behaviours. The recent update of the Charity Governance Code places greater onus and responsibility on those leading charities to tackle safeguarding and equality and diversity issues.  

Good governance breeds good culture

The updated Governance Code provides boards with a real opportunity to evaluate governance against recommended practices. For example, for leaders the recommended practices centre on being aware, knowing your responsibilities and how you delegate them. There is renewed emphasis on creating an inclusive environment and culture where everyone is assured of their right to be safe.

If the sector is going to build on commitments to social justice, equality and change, then trustees and leaders should be using the Code and the assessment tools that come with it to understand and, if need be, transform the culture of their organisation.

If you want to better understand how to tackle race issues in your charities, I would recommend reading ACEVO’s Home Truths: Undoing racism and delivering real diversity in the charity sector. It provides practical advice as well as revealing the scale of the issue.

Maintaining good charity governance – We can help

To discuss the changes to the Charity Governance Code and the implications for your charity or to discuss your charity governance more generally, please get in touch with your BDO charity adviser or Contact us and we will get back to you.

You may also be interested in our Charity Update webinars, that provide news and technical advice for the sector, and our Non-Executive Directors hub, which Trustees will find useful.