The Charity Governance Code Consultation: What we are hearing so far.
Testing the water
Prior to the launch of the Charity Governance Code consultation, the Steering Group hosted a series of roundtables to identify areas on which to focus as part of the 2020 refresh. In doing so, we canvassed opinion from a range of stakeholders in the sector: individual charities, sector bodies, funders and professional services providers.
We wanted to test the water about how the Code has been received and implemented, what has worked well and which areas require attention. The conversations complemented the ongoing discussions the Steering Group has with the sector and together these formed the basis of the consultation document.
It was, of course, hugely pleasing to hear the high regard in which the Code is held. The sector really values it and it has been demonstrated that the Code is ahead of the curve on many issues and has set a high bar for other sectors too.
But the Code is also an aspirational document. It aims at continuous improvement and the Steering Group applies that to the Code itself. Hence, we were keen to identify areas for development, to enable the Code to continue to support charities in their work and to pre-empt — insofar as that is possible — the challenges of the future. Some of the themes which emerged are evident in the consultation document.
Naturally, no code can cover absolutely everything and, sitting at a high level, the Charity Governance Code should seek to ensure mechanisms for addressing issues rather than covering each by name. To do otherwise risks unwieldiness and the Code becoming overly prescriptive and overwhelming.
That said, certain areas were highlighted.
Foundation Principle
The point was made that charities often get stuck at the Code’s Foundation Principle which is comparatively short and which, it was argued, perhaps assumes too much regarding trustees’ knowledge of the role they have taken on. Fuller reference to statutory duties, the Commission’s CC3 guidance and charity and company legislation was suggested as a way of raising awareness of the obligations trustees are under. Or is the purpose of the Code to address the trustee role — through governance and behaviour — rather than duties? Is such a distinction practicable or even desirable? The Code acknowledges, after all, that understanding their statutory duties is one of the very starting points of good governance for trustees.
Particular problems were highlighted around trustees who are elected by the membership or a component part of a charity. Their duty is to the charity, not to those who returned them and the Code, it was argued, assumes that boards are self-selecting and doesn’t address other recruitment mechanisms.
Diversity
It is well recognised that the charity sector struggles with diversity. Principle 6 of the Code is devoted to the issue, but its application still seems challenging for boards.
Diversity means different things to different groups. Too often the conversation interprets the term with reference to gender and ethnicity alone, rather than to all the non-visible elements of experience, perspectives and thought which enrich decision making. Is the importance of these sufficiently well covered in the Code?
Questions to be asked about the Code and diversity might include: is there a need to make specific mention of user involvement and lived experience? Do charities need to think of ways of representing different viewpoints other than through a place on the board?
While it is essential that the issue is fully addressed, at a fundamental level, it might also be worth asking whether the Charity Governance Code is the appropriate place to show organisations how to ‘do’ diversity.
Ethics, culture & behaviour
Since the current iteration of the Code was released, behaviour in charities and the reputational impact this has had continues to be of interest to the sector. The Steering Group wants to ensure that the Code is at the forefront of the sector’s response. Many, perhaps most, charities have a set of values. But these are largely meaningless if they are not manifested in behaviour, internally and externally. It might be fruitful to explore ways in which values and behaviour can be linked.
NCVO’s Charity Ethical Principles were part of the sector’s response. Of those principles, all bar that on the right to be safe are diffused throughout the Code. Establishing safeguarding, the right to be safe and ethics more generally as a golden thread which runs through charity governance might be one refinement which comes out of the process.
It has not gone unnoticed that in RSM’s recent research on implementation of the Code, the Integrity principle was ranked 6th out of the seven principles. It appears to be an area that requires a little attention.
Impact
Perhaps future iterations of the Code might want to provide impetus to effective consideration (and reporting) of a charity’s impact, placing this at the heart of decision making and strategy formation, but also embedding the relationship between impact and charitable purpose.
In a landscape where environmental, social and governance (ESG) considerations are taking on greater centrality, does environmental sustainability warrant increased prominence in charity governance? In Wales, responsibility for sustainability and the environment is embedded in the Well-being of Future Generations Act. But then, what is the balance to be struck by trustees when pursuing organisational purpose against the wider ESG context?
Signposting
It has also been suggested that future iterations of the Code could incorporate increased signposting to guidance material and supporting documents. There is an enormous amount of quality guidance available — not least from the Steering Group members — so while there is no need to reinvent the wheel, pointing users in the direction of a larger corpus of useful resources might be one service which could be developed over the life of the new edition of the Code.
A number of other areas have come up so far in the consultation process. Those mentioned here are just some of the more prominent, intended to prompt reflection as readers consider their responses to the consultation.
