December 17th, 2020 / Insight posted in Articles

Charity Governance Code update – December 2020

Following the conclusion of the Charity Governance Code consultation earlier in 2020, the Steering Group has issued an updated version of the Code in December 2020. The ’Foundation and Seven Key Principles’ framework remain unchanged, but as signposted during the consultation exercise, two of the principles have been updated with one being significantly altered from its previous version. The key changes are as follows:

Integrity Principle

This principle has undergone a ’light refresh’ with the key changes being in relation to:

  • A more significant focus on ensuring the charity acts in line with ’its values’ in everything that it does. At Moore Kingston Smith we have been surprised during our governance work to date that many of the charitable organisations we engage with do not have a set of agreed values across the Trustee and Senior Management team. The Code refresh now brings this area into sharper focus.
  • The key underlying principle of integrity, and putting the charity’s best interest’s first in every situation, has been expanded from just one section in the previous Code to four sections covering:
    • not being unduly influenced by those with personal interests
    • ensuring no person or group has undue influence in the charity
    • regularly checking for power imbalances at Board level
    • the Charity Ethical Principles (NCVO guidance that was signposted during the consultation phase) have been included in the ‘non-binding rules and other Codes’ that charities may wish to have due consideration of.
  • Lastly it was felt that during the consultation process, the critically important issue of safeguarding was not sufficiently prominent in the Code. In this refreshed version, there is now an entirely new section that considers the governance around safeguarding, as follows:

3.7 Ensuring the right to be safe
3.7.1 Trustees understand their safeguarding responsibilities and go beyond the legal minimum to promote a culture in which everyone feels safe and respected.

3.7.2 Where appropriate:

    • the board makes sure that there are appropriate and regularly reviewed safeguarding policies and procedures
    • as part of a charity’s risk-management process, the board checks key safeguarding risks carefully and records how these are managed
    • all trustees, staff, volunteers and people who work with the charity have information or training on the safeguarding policy, so they understand it, know how to speak up and feel comfortable raising concerns.

Much has been written regarding safeguarding (headlines, Charity Commission bulletins or governance case findings) and this amendment to the Code serves to ensure that Trustees at Board level understand both their legal requirements and safeguarding policies & procedures.

Diversity Principle

Unlike the Integrity Principle update, a comparison of the old Code to the refreshed version in the area of diversity is not as useful an exercise. It was the Moore Kingston Smith governance team’s feedback to the consultation that the Diversity Principle was the one area of the 2017 Code that “had not best stood the test of time and needed a significant refresh”. This feedback was agreed by the Steering Group (and the feedback even made its way onto the consultation update slides presented back in September!) and the Diversity Principle has been, with the aid of external consultants, completely reworked.

  • The Diversity Principle is now entitled the ’Equality, Diversity and Inclusion Principle (EDI)’, reflecting both a shift in the importance of all of these three key areas – not just diversity and also mirroring more widely used charity sector terminology.
  • Whereas the previous Code focused largely on considering diversity internally within a charity (perhaps with some Trustee report disclosures), the new Code outlines a ’four step’ process which ensures that EDI practices and policies are not only considered internally, but are also shared with key stakeholders, monitored and measured during this principle’s ’journey’.

Some considerations:

1. Think about why EDI is important for the charity and assess the current level of understanding.
2. Set out plans and targets tailored to the charity and its starting point.
3. Monitor and measure how well the charity is doing.
4. Be transparent and publish the charity’s progress.

The Steering Group has also recognised that many charities are at different stages of their EDI journey and that more guidance on how to practically manage this process and how it may differ for sub-sectors is required. More guidance will be shared in due course.

Feedback from the Steering Group

Rosie Chapman, Chair of the Charity Governance Code Steering Group said: “These improvements to the Charity Governance Code reflect changes in society and the broader context in which charities are working. The updated Code is designed to help charities adopt good practice and secure better outcomes for the communities they serve. We know that charities are at varying stages in their efforts to fully adopt the Code, particularly in relation to achieving equality of opportunity, diversity and inclusion, and the updated Code is designed to help charities on this journey.

We’ve also heard that charities and boards would like more guidance on how to improve their approach to EDI. In response, we are asking charity umbrella and infrastructure bodies to provide more guidance and support to charities to help them meet the recommended practice in the Code. We’ve also updated the integrity principle to reflect the importance of everyone who comes into contact with a charity being treated with dignity and respect and to feel that they are in a safe and supportive environment.”

The Moore Kingston Smith Governance team continues to undertake a number of governance reviews in the sector, ranging from ’one-off’ governance engagements to full reviews against the Code. If you would like to consider this in more detail, please contact either Luke Holt, or your usual Moore Kingston Smith contact.