Charity Governance Code a good step forward but should have gone further on impact

The Charity Governance Code was published today. Patrick Murray, Head of Policy and External Affairs at NPC, gives the following statement in response to the Code:

‘Boards must play a central role in supporting and driving charities to deliver the greatest possible impact that they can for the causes and beneficiaries they exist to serve. Much of the debate around governance has focused on preventing “catastrophic collapses” such as Kids Company. But important as this is we also know from our work with charities over the last 15 years that the issue of coasting boards can be a real problem in holding the sector back from having a greater impact. That’s why NPC broadly welcomes the new Governance Code published today.

‘Whilst we are pleased to see some of our recommendations around putting the impact at the centre of what boards consider taken up, there are some areas where we think the Code could go further still. In particular, NPC believes that encouraging boards to report on impact annually will help focus the minds of trustees on the ultimate public benefit of what their organisation achieves. It’s also important for boards not just to assess and understand impact, but to take appropriate action on the basis of the findings.

‘And while we are pleased to see the section on risk include a reference to the opportunities a charity faces, as we suggested, it needs to be more explicit about the types of risk boards need to balance. This would help trustees understand the dangers of missing out strategic risks by focusing too conservatively on other risk areas, such as financial or operational.

‘One area NPC wholeheartedly supports is the linking of board effectiveness to diversity. We found in our recent Charities taking charge report that there was a real lack of understanding in the sector of why diversity matters, and how more diverse boards can help charities deliver a greater impact. This led to leaders not prioritising diversifying boards enough. There is more work that is needed to raise awareness but the Code is a good step forward.

‘Finally it is positive that the Code has been split out for larger and smaller charities. This reflects the diversity in the sector, and enables larger charities to go even further.

‘If it is adopted by boards it will undoubtedly raise the bar in governance, and help support charities make the impact everyone wants them to. The challenge now is to ensure trustees do enact it, something that will be helped by the fact that the Charity Commission has endorsed it.’

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