Decoding the Charity Governance Code

The Charity Governance Code for England and Wales was last updated in July 2017. It sets the seven principles and recommended practice for good Governance. It demands accountability by those who are responsible for the effective running of a charity and provides a crucial reference point for charities to follow to keep themselves well-managed and future proofed. The Scottish Code of Charity Governance was issued in November 2018 and while this should be separately considered, many of our findings are relevant to Scottish charities too.

To understand what impact the Governance Code has had on the sector, RSM analysed 85 charities of various sizes and activity areas to see how the Code is being applied and what the common failings are. Some of our key findings were:

  • of the 85 charities analysed, approximately 44 per cent acknowledged the Code within their annual reports;
  • average governance ratings for charities which stated their alignment to the Code was nearly 10 per cent higher then those that did not acknowledge its adoption; and
  • 31 per cent of charities, by our scoring methodology, demonstrated excellent Governance.

One of the key questions then becomes if Charities who state their compliance of the Code and strive to hit the aspirational standards that the Code includes, why are only 44 per cent of Charities acknowledging the Code in their annual reports? 

There is much work to do for charities to improve their Governance standards, across each of the seven principles of the Code. 

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Organisational purpose
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Leadership
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Board effectiveness
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Decision-making, risk and control 
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Openness and accountability
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Integrity
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Diversity

While there were many excellent examples of compliance with most of the seven principles, there were several areas that require attention across the sector. Improvement is needed most noticeably with diversity, as we found:

  • of our sample, only 19 charities provided diversity statements;
  • 22 per cent adhered to guidance relating to these statements; and
  • 55 per cent showed no clear evidence of its consideration at all.

In a sector that has experienced high-profile scandals in recent years, charities must be striving to achieve the best possible Governance standards, to continue enjoying the trust of their funders and the general public alike.

Download the report to see the full results of our research into Governance standards in the charity sector, learn what the common failings which need to be avoided are and ultimately, how to improve your charity’s governance.

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