The Charity Governance Code: Am I applying or explaining?
Through our consulting and training we are starting to support organisations to review their governance using the new Charity Governance Code which was published in July. As I have discussed in earlier blogs the latest version of the code represents a significant reworking of the framework, introducing new principles, outcome and recommended practice for both large and smaller charities.
One of the new features and one of the areas we are getting lots of questions is around the concept of apply or explain and what this means for using the code. I explain this concept in three parts:
- First, the Code is designed as a tool to support continuous improvement. Its outcomes and recommended practice represent good practice, some of which may be a stretch or aspiration for certain organisations. This means that not meeting all the recommended practice should not be seen as a failure. Instead trustees should decide which areas to prioritise and focus on, and boards should revisit the Code to review progress.
- Second, the Code does not attempt to set out all the legal requirements that apply to charities and trustees. While the Charity Commission has endorsed the Code and withdrawn its hallmarks of good governance guidance in support of the code, the regulator is also clear that there are other Codes that charities can follow to meet its regulatory requirements – eg in housing and sport – and that it’s not the Commission’s role to own or to enforce the Code. For this reason, we do not ask people to ‘comply’ but ‘apply’ the practice.
- Third, while some things are consistent for all charities hence why it’s worthwhile developing a single sector wide code. It’s also important to recognise that lots will depend on context. Questions like: Who are the beneficiaries? What size is the charity? What do the articles say? How was the organisation established? Who are the members? Where does the charity operate? will all impact on how the recommended practice applies to your charity. It’s for this reason that some sub-sectors choose to formally adapt the code to their operating environment.
Given these three, trustees using the code should engage with the recommended practice. Where something doesn’t feel like it applies to your charity’s context then trustees should discuss this and agree an alternative approach which as far as possible supports the same outcomes. There isn’t an expectation that trustees should have to catalogue every time they choose to take a slightly different approach, although capturing these discussions may help future trustees understand your rationale.
In addition to the apply or explain concept, charities that adopt the Code are encouraged to publish a brief statement in their annual report explaining their use of the Code, we anticipate that this statement will include:
- an overview of the extent to which the organisation applies the Code
- any highlights or areas of particular focus during the year
- a brief explanation of what the organisation does instead in those areas where they don’t apply a particular recommended practice.
We would advise avoiding including a lengthy ‘audit’ detailing how you have approached every recommended practice.
Charity registration response times
The Charity Commission has apologised for delays to the charity registration process saying that their registration team is ‘currently experiencing extremely high demand for its services’. There may be a 12 week wait for responses from the registration team.
The Commission says that in the last year they have seen a record number of new applications for charity registrations, and that the demand continues to rise. This is impacting on the commissions published guidelines for registration decisions and response times.
This year, Trustees Week will begin on 12 November. At NCVO we will be celebrating the contribution that trustees make by making some key resources free and offering discounts on lots of training and publications which relate to governance. We are also hosting our Trustees Conference during the week. Look out for my special blog next month for all the details.
William Plowden Fellowship
To conclude her work on the William Plowden Fellowship, Rebecca Johnstone will be giving a free to attend lecture at NCVO on the evening of 20 November. The lecture will focus on involving children in organisational governance within the charity sector. This will include reference to current practice within the sector. To receive an invite please contact NCVObefore 6 November. The lecture will be followed by drinks and an opportunity to network with colleagues within the charity sector.
Upcoming training and events…
- Understanding the numbers: Financial intelligence for trustees – 20 October 2017
- NCVO Trustee Conference – 14 November 2017
- Charity trustees: Induction and refresher – 8 December 2018
- Charity Trustees: Induction and refresher – 12 January 2018
- Supporting Good Governance: Effective board servicing and governance administration – 26 January 2017
- Charity Trustees: Induction and refresher – 9 March
- High performance board: using the governance code – 16 March 2018