Charity Governance Code refresh: findings from the consultation and next steps - Questions & Answers

Questions & Answers

The following is an overview, by theme, of the questions received during the above webinar and the steering groups’ responses.

What’s changing?

Will the refresh look to make any amendments or adjustments to the other principles of the Code, or focus only on Diversity and Integrity Principles?

85% of respondents agreed that the Code should be subject to a limited refresh at this time, so, for now, we are not planning any wider changes. The steering group will focus its efforts on making the changes considered under the consultation exercise. Future changes that feed into the 2023 review are covered below and in the report.

It is noted that the steering group does not wish to amend the Code with a view to adding lots of links to other documents. However, please ensure there is full referencing to, particularly any legislative documents and whether the Code is adopting the referenced document in full, or alternatively taking the principles from it.

We will provide key links to the changes to the integrity and diversity principles as part of the refresh. The steering group will consider your suggestions as part of the wider review to be undertaken in 2023.

Impact of the Code on the sector’s standards and take-up

Have you any plans to reach out to those charities who either do not know about the Code or do not know how to implement it, especially smaller charities?

The Code is a tool to help promote and embed good governance practices throughout the sector. It seeks to support the fundamental legislative and regulatory architecture that applies to the charities in England and Wales. The Code is voluntary in nature and as such, has no ‘sticks’ with which to encourage application.

There is a role for everyone who understands the importance and value that good governance plays in promoting better standards. The Code cannot achieve these things alone; it requires others to participate, such as trustee, senior managers, consultants and advisers, professional services, funders and regulators. For the good of the sector, it has to be a joint endeavour. The steering group will therefore continue to work with these groups to increase awareness and take-up and we are encouraged by the progress that has already been made over the past few years.

What are you planning to do to encourage the charities who are not aware of it, or who are less good at governance, to engage with it? This will be crucial if higher standards of governance are to be more consistently adopted across the whole sector.

The Code is a tool to help promote and embed good governance practices throughout the sector. It seeks to support the fundamental legislative and regulatory architecture that applies to the charities in England and Wales. The Code is voluntary in nature and as such, has no ‘sticks’ with which to encourage application.

There is a role for everyone who understands the importance and value that good governance plays in promoting better standards. The Code cannot achieve these things alone; it requires others to participate, such as trustee, senior managers, consultants and advisers, professional services, funders and regulators. For the good of the sector, it has to be a joint endeavour. The steering group will therefore continue to work with these groups to increase awareness and take-up and we are encouraged by the progress that has already been made over the past few years.

There are too many big charities (aka large not for profit big businesses), whose actions do not meet the highest of standards, and this affects the public trust of the whole sector. How can the Code change the mindset of these type of charities?

The Code is a tool to help promote and embed good governance practices throughout the sector. It seeks to support the fundamental legislative and regulatory architecture that applies to the charities in England and Wales. The Code is voluntary in nature and as such, has no ‘sticks’ with which to encourage application.

There is a role for everyone who understands the importance and value that good governance plays in promoting better standards. The Code cannot achieve these things alone; it requires others to participate, such as trustee, senior managers, consultants and advisers, professional services, funders and regulators. For the good of the sector, it has to be a joint endeavour. The steering group will therefore continue to work with these groups to increase awareness and take-up and we are encouraged by the progress that has already been made over the past few years.

Outside of the respondents to the consultation, is there any data on sector-wide adoption of the Code?

There is no mechanism for recording take-up of the Code, but the Code does encourage charities to report that they abide by one governance code or another as part of good governance. RSM, a professional accounting service firm, undertook some research on take-up last year. The findings can be found at https://www.rsmuk.com/ideas-and-insights/decoding-the-charity-governance-code

Of the 58% of small charities that were ‘neutral’ in their response to the Code, did they not know about the Code or were they not using it?

The Small Charities Coalition Survey found that 71% of respondents had heard of the Code so although we can’t be certain, we think it’s that they are not formally using it. Of those who are using it, they tend to use it for good practice suggestions, as a checklist, for self-evaluation, induction and training, or for information. Not surprisingly perhaps they are less likely to use it for board reviews and evaluation than larger charities responding to the consultation survey. Finally, the steering group was pleased to see that out of 41 responses to the SCC survey, only four people were dissatisfied with the Code.

The Code’s website quotes the Charity Commission. What about good practice/work by charities operating, for example, in Scotland?

The Code was developed for England and Wales. Scotland and Northern Ireland have their own codes specific to the needs of their charity sectors.

The 2017 edition of the Code reflects wider good practice, not least because we know that some charities work across nations and we will continue to adopt this approach when we carry out the next review of the Code, currently scheduled for 2023 and provide an opportunity for charities in other countries to suggest good practice to be included in that version of the Code.

Integrity Principle, ‘ethics’ and the ‘right to feel safe’

Why did you link ‘ethics’ and ‘right to feel safe’ in the consultation question - would they not be better asked/considered separately?

The issue of safeguarding was firmly linked to the way a charity acted and behaved when highlighted in reports on the overseas aid sector. The Code deals with culture and values as part of the Integrity Principle. It, therefore, seemed logical that ethics and the right to feel safe sat within the Integrity Principle, though we acknowledge there are other areas where the issues apply. To reduce repetition and duplication, the steering group plans to address the right to feel safe under the Integrity Principle. Of course, the full review in 2023 may support a different approach.

Will the revised Code offer any practical guidance on a standard of independence for trustees (e.g. as the UK Corporate Governance Code does for company directors). This is, I think, particularly important for membership charities where there may be some measure of cross-over between beneficiaries, association members and the board.

Not explicitly, as we see this as primarily a role for membership charities’ infrastructure bodies to develop, building on the Charity Commission’s regulatory guidance.

The way in which boards respond to issues that are raised to them has been demonstrated to be vitally important, and this was particularly clear in recent Charity Commission reports such as the one into Oxfam. On the transparency element of the Integrity Principle, will there be any guidance on practice around issues being raised to the board - and for example internal audit reporting lines/acting on issues raised in internal audit reports.

Internal audit was an area highlighted by a few people in their consultation responses for consideration. It is the steering group’s view that this issue will be included in the road map for the 2023 consultation and Code revision.

In developing the best way forward for the Code at this stage, the steering group is addressing the following questions:

  • What do we mean by 'ethics'?
  • If, and how, NCVO's Charity Ethical Principles should be incorporated into the refreshed Code
  • What do we mean by the 'right to feel safe'?

Diversity and inclusion

In small charities, it is very difficult, if not impossible, to get a diverse board of trustees if people from different backgrounds do not wish to put themselves forward to help a small charity.

Questions about diversity, equity/equality and inclusion received a lot of responses in the consultation and a significant proportion of questions in the webinar.

Due to the question asked in the consultation, there was strong support to change the name of the principle, however, the responses also asked for wider change within the principle mentioning the need for cultural change and creating more accountability.

These responses have led to the steering group reviewing the fundamentals of the Diversity Principle, including the supporting key outcomes and recommended practice, as well as a change of the name.

The issues around diversity, equality and inclusion are manifold and pressing. The steering group has appointed external consultants, who are specialists in this field, to support further work on developing this principle and to facilitate additional stakeholder engagement as we progress it.

This work is extensive and includes working with a number of sector experts. The work is still in its early stages, and the questions above will be shared and used to inform discussions and decisions about the revised principle.

We know from the interest that’s been shown in this area that diversity, equality and inclusion it is a timely and urgent part of the Code for review Also, to help share the steering group’s thinking on how best to frame up updated principle we will organise another free webinar focused specifically on diversity, equity/equality and inclusion. Further details will be provided via the Code website, Twitter or LinkedIn accounts in due course.

Where are charities meant to find diverse trustees?

Questions about diversity, equity/equality and inclusion received a lot of responses in the consultation and a significant proportion of questions in the webinar.

Due to the question asked in the consultation, there was strong support to change the name of the principle, however, the responses also asked for wider change within the principle mentioning the need for cultural change and creating more accountability.

These responses have led to the steering group reviewing the fundamentals of the Diversity Principle, including the supporting key outcomes and recommended practice, as well as a change of the name.

The issues around diversity, equality and inclusion are manifold and pressing. The steering group has appointed external consultants, who are specialists in this field, to support further work on developing this principle and to facilitate additional stakeholder engagement as we progress it.

This work is extensive and includes working with a number of sector experts. The work is still in its early stages, and the questions above will be shared and used to inform discussions and decisions about the revised principle.

We know from the interest that’s been shown in this area that diversity, equality and inclusion it is a timely and urgent part of the Code for review Also, to help share the steering group’s thinking on how best to frame up updated principle we will organise another free webinar focused specifically on diversity, equity/equality and inclusion. Further details will be provided via the Code website, Twitter or LinkedIn accounts in due course.

Should boards appoint diversity champions as board members?

Questions about diversity, equity/equality and inclusion received a lot of responses in the consultation and a significant proportion of questions in the webinar.

Due to the question asked in the consultation, there was strong support to change the name of the principle, however, the responses also asked for wider change within the principle mentioning the need for cultural change and creating more accountability.

These responses have led to the steering group reviewing the fundamentals of the Diversity Principle, including the supporting key outcomes and recommended practice, as well as a change of the name.

The issues around diversity, equality and inclusion are manifold and pressing. The steering group has appointed external consultants, who are specialists in this field, to support further work on developing this principle and to facilitate additional stakeholder engagement as we progress it.

This work is extensive and includes working with a number of sector experts. The work is still in its early stages, and the questions above will be shared and used to inform discussions and decisions about the revised principle.

We know from the interest that’s been shown in this area that diversity, equality and inclusion it is a timely and urgent part of the Code for review Also, to help share the steering group’s thinking on how best to frame up updated principle we will organise another free webinar focused specifically on diversity, equity/equality and inclusion. Further details will be provided via the Code website, Twitter or LinkedIn accounts in due course.

Is there anything that will cover how to manage a diverse board? For example, those with diverse values or diverse thought processes as well as culture and age etc., how will meetings be managed and the governance structure arranged to get the best out of that diverse board/organisation?

Questions about diversity, equity/equality and inclusion received a lot of responses in the consultation and a significant proportion of questions in the webinar.

Due to the question asked in the consultation, there was strong support to change the name of the principle, however, the responses also asked for wider change within the principle mentioning the need for cultural change and creating more accountability.

These responses have led to the steering group reviewing the fundamentals of the Diversity Principle, including the supporting key outcomes and recommended practice, as well as a change of the name.

The issues around diversity, equality and inclusion are manifold and pressing. The steering group has appointed external consultants, who are specialists in this field, to support further work on developing this principle and to facilitate additional stakeholder engagement as we progress it.

This work is extensive and includes working with a number of sector experts. The work is still in its early stages, and the questions above will be shared and used to inform discussions and decisions about the revised principle.

We know from the interest that’s been shown in this area that diversity, equality and inclusion it is a timely and urgent part of the Code for review Also, to help share the steering group’s thinking on how best to frame up updated principle we will organise another free webinar focused specifically on diversity, equity/equality and inclusion. Further details will be provided via the Code website, Twitter or LinkedIn accounts in due course.

How do you see charity boards being more accountable when it comes to diversity? Is that an annual report for the Charity Commission or in their own report or both?

Questions about diversity, equity/equality and inclusion received a lot of responses in the consultation and a significant proportion of questions in the webinar.

Due to the question asked in the consultation, there was strong support to change the name of the principle, however, the responses also asked for wider change within the principle mentioning the need for cultural change and creating more accountability.

These responses have led to the steering group reviewing the fundamentals of the Diversity Principle, including the supporting key outcomes and recommended practice, as well as a change of the name.

The issues around diversity, equality and inclusion are manifold and pressing. The steering group has appointed external consultants, who are specialists in this field, to support further work on developing this principle and to facilitate additional stakeholder engagement as we progress it.

This work is extensive and includes working with a number of sector experts. The work is still in its early stages, and the questions above will be shared and used to inform discussions and decisions about the revised principle.

We know from the interest that’s been shown in this area that diversity, equality and inclusion it is a timely and urgent part of the Code for review Also, to help share the steering group’s thinking on how best to frame up updated principle we will organise another free webinar focused specifically on diversity, equity/equality and inclusion. Further details will be provided via the Code website, Twitter or LinkedIn accounts in due course.

Why are you not using the language of lived experience as a way of reshaping diversity principle?

Questions about diversity, equity/equality and inclusion received a lot of responses in the consultation and a significant proportion of questions in the webinar.

Due to the question asked in the consultation, there was strong support to change the name of the principle, however, the responses also asked for wider change within the principle mentioning the need for cultural change and creating more accountability.

These responses have led to the steering group reviewing the fundamentals of the Diversity Principle, including the supporting key outcomes and recommended practice, as well as a change of the name.

The issues around diversity, equality and inclusion are manifold and pressing. The steering group has appointed external consultants, who are specialists in this field, to support further work on developing this principle and to facilitate additional stakeholder engagement as we progress it.

This work is extensive and includes working with a number of sector experts. The work is still in its early stages, and the questions above will be shared and used to inform discussions and decisions about the revised principle.

We know from the interest that’s been shown in this area that diversity, equality and inclusion it is a timely and urgent part of the Code for review Also, to help share the steering group’s thinking on how best to frame up updated principle we will organise another free webinar focused specifically on diversity, equity/equality and inclusion. Further details will be provided via the Code website, Twitter or LinkedIn accounts in due course.

Do you have any guidance for charities which are faith organisations, where diversity is, inevitably, lacking - apart from the diversity of thought?

Questions about diversity, equity/equality and inclusion received a lot of responses in the consultation and a significant proportion of questions in the webinar.

Due to the question asked in the consultation, there was strong support to change the name of the principle, however, the responses also asked for wider change within the principle mentioning the need for cultural change and creating more accountability.

These responses have led to the steering group reviewing the fundamentals of the Diversity Principle, including the supporting key outcomes and recommended practice, as well as a change of the name.

The issues around diversity, equality and inclusion are manifold and pressing. The steering group has appointed external consultants, who are specialists in this field, to support further work on developing this principle and to facilitate additional stakeholder engagement as we progress it.

This work is extensive and includes working with a number of sector experts. The work is still in its early stages, and the questions above will be shared and used to inform discussions and decisions about the revised principle.

We know from the interest that’s been shown in this area that diversity, equality and inclusion it is a timely and urgent part of the Code for review Also, to help share the steering group’s thinking on how best to frame up updated principle we will organise another free webinar focused specifically on diversity, equity/equality and inclusion. Further details will be provided via the Code website, Twitter or LinkedIn accounts in due course.

Types of diversity is important to consider and acknowledge that some areas of the country are demographically less diverse than others - and so will probably have mostly WASP potential trustees. Diversity of thought can go beyond the protected characteristics.

Questions about diversity, equity/equality and inclusion received a lot of responses in the consultation and a significant proportion of questions in the webinar.

Due to the question asked in the consultation, there was strong support to change the name of the principle, however, the responses also asked for wider change within the principle mentioning the need for cultural change and creating more accountability.

These responses have led to the steering group reviewing the fundamentals of the Diversity Principle, including the supporting key outcomes and recommended practice, as well as a change of the name.

The issues around diversity, equality and inclusion are manifold and pressing. The steering group has appointed external consultants, who are specialists in this field, to support further work on developing this principle and to facilitate additional stakeholder engagement as we progress it.

This work is extensive and includes working with a number of sector experts. The work is still in its early stages, and the questions above will be shared and used to inform discussions and decisions about the revised principle.

We know from the interest that’s been shown in this area that diversity, equality and inclusion it is a timely and urgent part of the Code for review Also, to help share the steering group’s thinking on how best to frame up updated principle we will organise another free webinar focused specifically on diversity, equity/equality and inclusion. Further details will be provided via the Code website, Twitter or LinkedIn accounts in due course.

Our priority has been to identify new board members with particular specialisms such as property or legal. Do you have evidence to suggest that people from different ethnic or other backgrounds offer different approaches/insights to such specialisms?

Will there be consideration of structured performance indicators on integrity and diversity, graduating through a structured change process?

As with other principles in the Code, there will be supporting rationale and recommended practice for charities to consider and adopt as they see appropriate. It is for the board, with senior managers, to discuss and agree on the exact nature of performance indicators required for their charity.

Overlap of the Charity Governance Code with Charity Commission guidance

The Code is referenced in the Commission's recent alert to charities following its inquiry in RNIB. There's quite a lot of overlap between the alert's advice and the Code. Is there any thought to coordinating these two documents to provide a single toolkit/template for charities to work through with trustee boards?

The point about the RNIB inquiry is interesting and one the steering group will consider at a future meeting. As we note in para. 4.2 of the report:

Many respondents asked for more guidance, case studies and templates to help with the implementation of the Code. Comparisons with other governance codes would suggest that it is for the sector to fill any gaps in terms of how to implement the Code. However, that does not address the genuine calls from charities for more help.

There is a wealth of guidance available to the sector covering every aspect of the Code: much of it is free to access or included as part of a membership fee to an umbrella body. Given the diversity of the sector, it would be impossible for the steering group to produce guidance specific for each type of charity and the scenarios they meet. That being the case, charities still appear to struggle to identify sources of support.

As the steering group is resourced by the goodwill of steering group members (via gifts in kind, technical know-how and time), with financial donations from Barrow Cadbury and the Worshipful Company of Clothworkers, there is limited capacity available to develop supporting resources. We will therefore investigate the options available to better support signposting to existing guidance.

Future changes to the Code

The Code does not currently meet the requirements of small charities. Will this be reviewed?

There is a specific version of the Code for small charities. It can be found at https://www.charitygovernancecode.org/en/pdf along with diagnostic tools for both large and small entities. NCVO also produces a resource for micro charities.

The issue of take-up by smaller charities and the relevance of various aspects of the Code to them was highlighted in the consultation exercise. It is an area that requires further insight and is likely to be incorporated into the 2023 review.

Are you looking to change the threshold of £1m income to define a 'small' and 'large' charity? Regardless of what threshold is, will there be more distinction between the two versions as currently, they aren't different enough in my view. The NCVO adaption for micro charities - less than £100k - is really good and I'd recommend that to smaller charities rather than the 'small' version of the CGC.

There is a specific version of the Code for small charities. It can be found at https://www.charitygovernancecode.org/en/pdf along with diagnostic tools for both large and small entities. NCVO also produces a resource for micro charities.

The issue of take-up by smaller charities and the relevance of various aspects of the Code to them was highlighted in the consultation exercise. It is an area that requires further insight and is likely to be incorporated into the 2023 review.

Do you still intend to retain the 'apply or explain' provision, notwithstanding the proposed changes you outline which sound rather more mandatory than the current version?

The Code will retain its ‘apply or explain’ approach for the changes to be made this year. This approach may be reviewed as part of a broader review of the Code planned for 2023.

What were the findings from the consultation about the role of board behaviours and culture in the Code? This is now included in the UK Corporate Governance Code.

While boardroom behaviours was not included as a discrete theme within the Code consultation, the issue is covered to some degree in the discussion around the Integrity Principle. It is already recommended practice within the Board Effectiveness section of the Code – see, for example, 5.5.4.

The steering group are also looking at how best to amend the Integrity Principle to incorporate behavioural expectations.

What areas have been flagged for change in a future more in-depth review of the Code?

The summary report highlights possible areas to be considered for review in the 2023 update of the Code. These are listed in para—3.20 of the summary reports. The steering group will review these issues and consider the best approach to developing a framework for informing a more wide-ranging review in 2023: a road map of some kind. It is our intention to be transparent and consultative in the approach taken to inform the 2023 review. Interested parties should keep an eye on the Code’s website for future opportunities to get involved.

What is the current anticipated timetable for a wider review of the Code?

The Code will be updated and published before the end of the year to take account of the feedback received from this year’s consultation exercise, focusing on diversity and inclusion.

The steering group plans to have a major review of the Code in 2023 with the aim of ensuring it is updated to reflect the challenges and opportunities reflected at that time.

Does the steering group track developments in the UK Governance Code and the work of the FRC?

The steering group tracks the developments of governance codes in different sectors of the UK economy and overseas. The Code is informed by good practice wherever it may be and is carefully adapted so as to be relevant to the charity sector in England and Wales.

To what extent are you linking into the SORP Committee's work on the revisions to the next Charity SORP, specifically to the trustees' annual report - for example, whether disclosure about the charity's use or otherwise of the Code will be 'mandatory'?

Steering group members are involved with the work of the Charities SORP, so there is an effective mechanism for sharing information and insights insofar as protocols permit. The change in the SORP has been identified as a future change to the Code. Thus, the steering group will have an interest in the SORP’s development and will probably contribute to any future consultation exercises produced by the SORP Committee.

The Code and COVID-19

What particular relevance does the Code have during the pandemic?

The Code is a good practice resource and as such, should be relevant over time. The Code could not foresee the pandemic and as such did not cater specifically to the needs that challenge presented. However, as stated by the Charity Commission and various other bodies throughout the pandemic, COVID-19 does not mean that good governance should be left to slip, but in fact, good governance practice should be a higher priority in order to demonstrate trustees have acted accordingly in fulfilling their legal and ethical duties.

Misc. Questions

Is there a similar exercise going on with the governance codes for sectors, e.g. sport, so there continues to be common ground?

Different bodies are responsible for the review of the various governance codes. The National Housing Federation (NHF) is currently consulting on its Code (deadline for comments 6/9/20), and UK Sport and Sport England are currently planning a review of the sports governance code. Earlier in the year, the CUC undertook a review of its governance guidance for universities. Individual members of the steering group will be involved in some or all of these reviews as part of the work for the organisations they represent. This information will inform the wider group’s discussions.

Do you have a checklist for this Code?

There are diagnostic tools available from the Charity Governance Code website https://www.charitygovernancecode.org/en. A number of organisations have also produced resources which are either free or subject to a fee.

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