Charity Law Update: Charities Regulator Publishes New Governance Code

The “Charities Governance Code”, which was published by the Charities Regulator on 7 November, is an essential document for charity trustees. A copy of the Code is available here.

Does my charity have to comply with the Code?

Adherence to the Code is not a choice for charities. Rather, every charity must abide by the Code’s principles. The Code is drafted on a “comply or explain” basis, meaning that charities must comply with the Code or else explain why they have not done so. All charities will be expected to implement the Code from 2020 onwards.

The six principles of governance

The Code contains six “principles” of governance which require the charity trustees of every charity to ensure that the charity is:

1. Advancing its charitable purpose

2. Behaving with integrity

3. Leading people

4. Exercising control

5. Working effectively, and

6. Being accountable and transparent

Core and additional standards

Each of the six principles has an accompanying core set of standards, which provides practical guidance to charities for implementing each principle. These core standards must be met by all charities, on a “comply or explain” basis.

The Code also suggests some additional standards, which should be met by more complex charities or by charities that have the capacity to meet those standards.

How should my charity demonstrate compliance with the Code?

From 2021, charities will be required to report on their compliance with the Code on an annual basis, by filling out a Compliance Record Form. The Form requires each charity to provide the Charities Regulator with evidence as to how the charity complied with each core and / or additional standard within the Code.

Conclusion

The Code is an essential document for charity trustees to assist in ensuring that each charity meets certain minimum standards relating to governance. The Charities Regulator intends that 2019 will be a “year of learning and preparation” for charities in relation to the Code.

If you are a charity trustee, you should read the Code, table it for discussion at your next charity trustee meeting and use the opportunity of next year to get to grips with how the Code will work. You should consider how you might develop any existing governance code your charity already has in place to accommodate the requirements of the Code.

For more information on ensuring compliance with the Code, contact a member of our Charities & Not-for-Profit team.

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The content of this article is provided for information purposes only and does not constitute legal or other advice.