Using the code for governance review
How to benchmark governance?
Through our work evaluating boards and their effectiveness we are often asked to benchmark organisations. The challenge with benchmarking is the diversity of our sector. There are over 160,000 general charities in the UK.
How does any charity identify which organisation to compare themselves with? You could opt for organisations which…
- Work on similar issues?
- Have similar beneficiaries?
- Operate in similar geographic locations?
- Have a similar size income?
- Have a similar number of staff?
- Have a similar history?
- Have a similar funding base?
- Or a mix of all of the above?
The problem with these options is that nothing will be a perfect fit. Two organisation’s governance is never the same. Simply modelling ones governance on another charity can risk trying to fit a square peg in a round hole or may involve replicating poor practice.
Start with principles
It is for this reason we prefer starting with a principles-based approach to any review before drawing on practice which comparable organisations might implement.
The principles established in the Charity Governance Code offer a framework for this kind review. The code sets out seven principles and then allows boards to consider how to apply good governance in their own context. We find this combination of principles and detailed recommended practice, developed based on feedback from over 200 charities in 2017, offers a more meaning basis for review than bench-marking.
How to review
We find that most boards using the code choose to nominate a lead trustee or governance subcommittee to undertake the review. This person or group can then use the code’s diagnostic to take a detailed look at performance and invite trustees to contribute their thoughts.
At NCVO we developed our very own governance diagnostic tool the Governance Wheel on these principles. This is a simpler tool than the detailed version on the codes website.
Through our reviews we typically ask trustees to consider how their board performs against the 7 principles on a 1–10 sales. This offers a simple and accessible way to engage with the code at a principle level.
Does it work?
Organisations we work with who use the code are clear that it can help them to breakdown governance into manageable and more focused discussions. Boards can choose to prioritise principles and focus on key areas for development, and they can do all this without needing to pick organisations to benchmark themselves against.
RSM recently undertook an evaluation into the benefits of using the charity governance code. In this work they found that of the 85 charities analysed average governance ratings for charities which stated their alignment to the Code was nearly 10 per cent higher than those that did not acknowledge its adoption.
Review
As we approach the 3 year mark and look to refresh the code’s practice. We want to hear about your experience of using the code for review:
What works and what hasn’t worked so well?
Are the principles still relevant?
Where might we draw on practice which supports the principles to enhance the code?
Please visit the Code website to tell us how you would like the code improved.
