Governance Codes: Same difference?

Louise Thompson

Head of policy (Not for profit sector) The Chartered Governance Institute @BloxThom

When the steering group produced the 2017 version of the Charity Governance Code, it looked at various other governance codes for comparison. And there are a lot of codes out there! Once the number of codes identified reached 50, it was decided to be a little more selective in those we wanted to look at more closely.

Common themes

Across those codes there are some common themes presented as universal principles:

· The board being responsible for governance

· Transparency in the reporting of governance arrangements, including the governance architecture in place, key committees and delegations

· Board effectiveness, including induction and ongoing development, the competence of individual board members and the collective effectiveness of the board and its practices, tenure and succession

· Communication and engagement with key stakeholders

· Board independence

· Integrity, ethics and culture

· Strategic direction

· Audit, internal control, financial management and risk.

In some instances, it is only the terminology that has been changed from one code to another, as the principles are seen to be such common sense that there is little point in ‘reinventing the wheel’.

The current version of the Charity Governance Code did however break the mould in some ways.

Breaking the mould

Keen to provide a convincing narrative as to why great charitable outcomes start with good governance, the steering group incorporated a ‘why’ to support each of the seven principles. Furthermore, the Code identifies a number of expected outcomes to help articulate to boards, staff and supporters the benefits of implementing good governance. Finally, there are a number of recommended practices for charity trustees to consider putting in place to help their charities deliver their objectives. These were not limited to traditional governance practices such as policies and procedures but also the need to include behaviours, ethics and values to deliver transformational governance.

Beyond regulation

While regulation can be seen as binary in its approach, good governance should be viewed more as a spectrum. What works for one organisation might not be the best approach for another. As such, the Code’s ‘apply or explain’ mantra better reflects the diversity of the sector and the recognition that good governance is proportionate to the needs, size and complexity of the organisation. A mindset that views the Code as a set of items to be ‘ticked off’ is unlikely to produce effective governance: for an individual organisation or an entire sector.

Charity boards should therefore be thinking about their organisation’s governance needs and how best to inform interested parties of the steps they have taken to ensure their governance is fit for purpose. This requires careful consideration and further thought as to how best to explain those actions to members, volunteers, funders and the wider public. It does not mean that non-compliance is a ‘red flag’, but rather that the board has taken their governance role seriously and thought about what would work best for them.

Continuous improvement

As a member of the steering group, I still think the Code is pretty special, but a commitment to continuous improvement should not just apply to the users of it. As part of the 2019/20 review it is essential that we hear from charities if the Code is to live its values of ‘by the sector, for the sector’, but I will also be keeping an eye on developments in other governance codes, as diversity of thought and experience is as key to the sustainability of the Code as it is to the sector it seeks to support.