The Updated Charity Governance Code

Dan Currie, Associate Consultant, Campbell Tickell

As Channukah, Christmas, Kwanza and New Year are upon us, I’d like to propose some holiday reading to charity trustees in England and Wales. When you need a break from doom scrolling, may I suggest you take a look at the new Charity Governance Code? There is good news and challenging news for trustees. The authors have made the Code more user-friendly than its predecessor, but they have also made it more demanding in three key areas.

Four sections of the charity governance code

First the good news: new Code, new format. Each of the eight principles is now supported by four sections:

• You know it’s working when;
• behaviours;
• policy, processes and practice;
• and suggested evidence and assurance.

‘You know it’s working when’ clearly identifies the outcomes the board needs to achieve in order to deliver each principle. The other sections provide practical guidance from three different points of view.

‘Behaviours’ unsurprisingly looks at how the board, collectively and individually, should behave to deliver the principle.

‘Policy’ sets out the formal guard rails the board should put in place, and will act as a handy checklist for governance officers.

‘Evidence’ provides a checklist for the board to evaluate its own performance, or for consultants like me to start an external evaluation.

Key challenges

Now to the challenges. Based on more than 25 years’ experience of working with boards, I think there are three areas where the typical board will need to put in some extra work to meet this version of the Code.

1. Organisational purpose

This principle calls for the board to have a theory of how the charity’s activities lead to change. This is in line with the new Charities SORP 2026 which states that from next year financial accounts should provide a picture of what the charity has done (its outputs); what it has achieved (its outcomes); and what difference it has made (its impact).

This is a hallelujah moment for me personally, as I have been talking about impact measurement since the 1990s, but it has caused eye rolling and hand wringing in parts of the sector. Public objections tend to focus on two rhetorical questions, essentially, “How can we put a value on a child’s smile?” and “Who will pay us to do this extra work?” My counter question is: how can we hold our heads up if we don’t try to measure the one thing we claim to care about most: aren’t we ashamed that we bring vastly more rigour to counting our pennies than to understanding what we achieve?

Regardless of your position in this debate, the Code and the SORP have spoken. For many charities, and therefore many boards, there is work to be done in understanding and documenting impact. If you don’t have a theory of change and an approach to measuring impact, I advise you to book training or consultancy now. These changes to the SORP and the Code will cause a stampede later in the year and demand will surely outstrip supply.

2. Leadership

This principle calls for the board to define and agree values that align with the charity’s purpose. Under this principle and the Ethics and Culture principle it is expected that the charity will have explicit values. In my experience a lot of charities don’t. Of the ones that do, too many have values that were crafted by staff without real input from trustees. Put on the spot, trustees have no idea what they are.

Stated values often exhibit problems of ambition. Some are too timid: honesty is important, but you probably shouldn’t claim it as an organisational value. Unless perhaps you sell used cars and have a no-quibble return policy. As a rule, organisational values shouldn’t be ones commonly taught by parents or guardians.

Stated values can also be over ambitious. All organisations have a distinctive culture: some behaviours are rewarded, others are punished. If managers in your charity reward conformity and silence individual voices, you might struggle to be inventive as an organisation. It is a good idea to explore the organisation’s implicit lived values and use them as the basis for explicit values. If you are not entirely comfortable with the lived values you can build in a realistic amount of stretch in the desired direction.

3. Equity, Diversity and Inclusion

Under this principle the board must commit to understanding how inequality of resources, opportunity and power affects the charity, its work, users and the board itself. Now, I think that boards generally have good intentions in this area, but there is a structural challenge.

When you look at the Code for the first time, you might be forgiven for thinking this is a lot of work! Indeed, speaking from experience of both, I think that being a charity trustee is a more complicated job than being a charity CEO. On top of that, trustees are generally not paid, and the few that are paid receive modest compensation. The section of the population who can afford to do all this work for nothing are disproportionately older, wealthier, white, and male (like me).

In 2017 the Charity Commission published a report called ‘Taken on Trust’, based on a large weighted randomised survey of the trustees on its register. The survey showed that across all trustees, 64% were male and 92% were white. The average age was over 60. Despite the fact that 51% were already retired, 75% had household income over the national median.

These numbers may have changed a bit since 2017, as boards have worked to diversify their membership, but my impression is that they are still broadly accurate. If that is the case, the average trustee has no direct experience of being disadvantaged by poverty, the colour of their skin, or their gender. This tends to limit boards’ understanding of EDI issues.

Consequently, before they try to develop a clear, agreed and effective approach to supporting EDI throughout the organisation many boards will need to build their own capacity in this area. The starting point should be a realistic assessment of the board’s current knowledge and understanding, followed up by appropriate training and development.

If your board needs to address all three of these areas – impact, values and EDI – you  may take comfort from the fact that many other charities are in the same position. It may also help to keep your eyes on the prize. High performing boards really do make a huge difference to beneficiaries – part of that impact you will be measuring.

Happy reading!

Further resources

• Read more about the Charity Governance Code.

• Charity sector risk assessment, Sarah Loader, Consultant, Campbell Tickell

Find out more about Campbell Tickell’s’ services for non-profit and charity sector clients.

For any enquiries on this subject, please feel free to contact our governance team: governance@campbelltickell.com.