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Posted by Sarah Brown on 10 Feb '22

Good charity governance - the highly tuned mechanisms that help you fulfil your purpose

What is good charity governance? I struggle to define governance, and many other people are the same. It puts people off from thinking about it or what would make governance good. But the news this week about The Captain Tom Foundation and Kids Company and their governance issues highlights its importance

Obviously, governance links to the requirements of your legal structure. I like to think of a legal structure as the vehicle you need to get you to your destination, to your vision. Your vehicle of choice will depend on your values, resources and how you want to travel, fast, slow, seeing the scenery, saving the environment, etc. If I want to get from Doncaster to Edinburgh, I could walk, cycle, drive(electric, petrol, diesel), go by bus or train, fly or even get a boat. So when I advise people on choosing a legal structure, charity, social enterprise, CIC, CIO, company, shares, I first focus on the journey and destination as this will dictate the vehicle.

So going back to governance for me, governance is how the vehicle moves and good governance makes it move in a highly tuned way.

The standard definition is "the activity of governing a country or controlling a company or an organisation". I don't think this really captures what makes good governance

Using the analogy of a car, I think this is like comparing governance to the steering wheel, while I believe that governance is the whole mechanism, i.e. what drives the organisation is not just the steering. You may be pointed in the right direction, but you will get nowhere without an engine, transmission, and wheels.

Good Governance

Any car will be more economical and go better/faster if it is well maintained and the Charity Governance Code, which is relatively recent and updated at the end of 2020, provides a mechanics manual. However, like a manual for a car, it can still look a bit daunting. They have different versions of the tool for large and small charities. But even the version for small charities, which I have worked through with a charity over the last year, is quite challenging when you first see it.

A steering group developed the Code with the help of over 200 charities, individuals and related organisations. The Code is not a legal or regulatory requirement. It draws upon the Charity Commission's guidance but is fundamentally different. Instead, the Code sets the principles and recommended practices for good governance. They specifically wanted it to be aspirational, and I would say, challenging. It is not intended to be just an MOT test but a full service.

The Charity Governance Code says

"Good governance is fundamental to a charity's success. It enables and supports a charity's compliance with the law and relevant regulations. It also promotes a culture in which everything works towards fulfilling the charity's vision."

The Code is built on seven principles illustrated below.

Four key Learnings from implementing the Code

Working with a small charity run totally by volunteers, I learnt:

  1. It takes time - To have real value, the whole board needs the time to digest and consider critical areas - this is not done in an away day
  2. It may highlight fundamental changes - the charity I was working with identified that it would make sense to move from a company limited by guarantee with charitable status to a CIO
  3. The work on the Code can have real practical benefits - the charity now has written down systems for many tasks so any of the volunteers can undertake them
  4. It doesn't end - like a car a charity and its board needs continuous 'servicing' and regular 'MOTs', it is always work in progress but the Code helps to give it some structure

If you want to learn more or discuss if it would help with issues your charity faces please give me a ring on 01709 810080 or book a time to chat on our website

Could you save time and money by changing to a CIO?

Trustee Support

The buck stops with trustees - 3 ways to avoid disaster

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