Code of Governance

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Good

GovernanceA Code for theVoluntary andCommunity Sector

Second edition:October 2010


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Produced by the Code Steering Groupon behalf of:

Association of Chief Executives of VoluntaryOrganisationsCharity Trustee NetworksInstitute of Chartered Secretariesand AdministratorsNational Council for Voluntary Organisations

With thanks to the Charity Commission

The Governance Code Steering Groupwould like to offer their thanks to all those thatkindly contributed to the development of thissecond edition

© The Code Founding Group


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Good

GovernanceA Code for theVoluntary andCommunity Sector

Second edition:October 2010


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Foreword

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Dame Suzi LeatherChair, Charity Commission

Charities and other voluntary andcommunity organisations play a vital rolein our lives and they command enormouspublic trust and confidence. This is

reflected in the generosity with whichpeople in Britain give their time andmoney to charities they support.

Trustees and board members thereforecarry an important responsibility tomanage their organisations and deliver ontheir objectives in a way that enhancesthat public trust and support.


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Like the first edition, this code is draftedby the sector, for the sector. It thereforecarries genuine authority andauthenticity. This is reflected by the large

number of charities and other voluntaryorganisations that welcomed and adoptedthe first edition. Given the size, range anddiversity of the sector, that is a greatachievement.

I am confident that this edition will reachan even wider audience, not least becauseit is more accessible to smaller, volunteer-

run organisations and to less experiencedboards. I commend the authors for theiruse of clear, jargon-free language and theintuitive way in which they summarisethe key principles of good governance.

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The central importance of goodgovernance to all sectors of the economyis now clearer than ever. The crisis whichbeset our financial system has

highlighted how dangerous a tick-boxapproach can be. Truly good governancehas to be lived. Each and every trusteeand board member needs to embrace itsvalues, and apply them to the particularneeds and circumstances of theirorganisation.

This is why I’m delighted to support

the second edition of Good Governance:a Code for the Voluntary and Communitysector, which focuses on the keyprinciples that trustees and boardmembers should follow and providesclear information about what thoseprinciples imply in practice.


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Development

of the Code ofGovernance Governance is high on the agendain all sectors – public, private andvoluntary. As voluntary andcommunity organisations driven byaltruistic values and working forpublic benefit, we are increasingly

expected to demonstrate how wellwe are governed. Good governanceis a vital part of how voluntary andcommunity organisations operateand are held accountable.

Other sectors have developed codesover the past decade, including thoseprepared by the National HousingFederation, Co-operatives UK andHEFCE. In the public sector, the GoodGovernance Standard for Public

Services was introduced in 2004. Andthe private sector has its UK CorporateGovernance Code, which builds on thework of the Cadbury, Greenbury andHiggs inquiries and continues to bedeveloped in light of recentgovernance failures.

The original Good Governance: a Codefor the Voluntary and Communitysector (the Code) arose from directlyexpressed needs in the sector.These came from organisationswhich wanted guidance to clarify the

main principles of governance andto help them in decision making,accountability and the work oftheir boards. In response to thesedemands, a group of voluntary sectorinfrastructure associations, with theCharity Commission, came togetherand decided to work towardsdeveloping the Code. Vitally, the Codewas developed by and for voluntaryand community organisations.

The first Code was published in2005 as a living document, with acommitment to update it as a resultof feedback from those organisationsthat engaged with it. The GovernanceHub acted as guardian of the Code

and developed a number of activitiesto raise awareness of, promote andsupport the principles of the Codeand its implementation by thesector. A major contribution bythe Governance Hub was thecommissioning of research into theCode and recommendations for itsongoing development.

There has also been new governancethinking arising out of the economic

downturn; proportionate governanceand behavioural governance. This hasled the original code founders toconsult on, and publish, a secondedition of the Code incorporating newthinking and comments from sectorusers. As before, feedback iswelcomed as to how the Code is beingused and how it could be improved.

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Usingthe CodeThe principles of good governancehave been designed to be valid forthe entire voluntary and communitysector. All board members will needto have access to more detailedguidance on their legal duties.

Charity trustees will also needto refer to Charity Commissionguidance on charity law andregulation.

The good governance characteristicsincluded in this document enableorganisations to assess whether theyare following sound practice. Giventhe diversity of the sector, the goodgovernance characteristics may notbe applicable to every organisation.

They are for guidance and for use ina way that encourages appropriateflexibility – but we anticipate thatthe ‘apply or explain’ principle will beadopted. If one good governancecharacteristic appears not to be validin a particular setting; then analternative may be sought, butorganisations should be prepared togive reasons for that decision.

Other generic principles, for exampleNolan (see Principle 5), applicableto virtually all organisations, arerecognised as expected goodpractice and are complementaryto these principles.

Specific types of organisations maywant to develop this Code and amendit to suit their structure and activities.We welcome this, but urge thatmodified codes are validated by peerreview to ensure they reflect goodpractice for that type of organisation.

This Code recognises that allorganisations should (and frequentlymust) follow principles and practicesthat fully recognise diversity in all its

forms including age, gender, faith,race, sexual orientation, disability,experience and thinking. Suchprinciples do not feature separately;they are an integral part of goodpractice throughout any communityor voluntary sector organisation.

This version of the Code includesreferences to employees and theirroles in relation to governance. Theprinciples have a universal application

but we will develop a separate versionin consultation with organisationsthat have no paid staff.

TERMINOLOGY:In the Code we have usedthe term “the board” tomean the organisation’s

governing body. In yourorganisation it may becalled the board (or boardof directors or board ofgovernors), the trustees,the managementcommittee or some othername. It is the body withoverall responsibility forgoverning theorganisation, overseeingand controlling itsmanagement.


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IntroductionGood governance is essential for thesuccess of any organisation and isnow more important than ever. Boardmembers play a vital role in serving

their causes and communities. Theybring passion and commitment aswell as skills and experience to theorganisations they lead.

Boards set the long term vision andprotect the reputation and values oftheir organisations. To make a differencea board needs to have proper procedures

and policies in place but it also needsto work well as a team and have goodrelationships within the organisation.The purpose of these principles is toassist board members to providestrong leadership, enhance theirdecision making and demonstratetheir accountability This will in turnassist the people and causes theirorganisations were set up to benefit.

Lindsay DriscollIndependent Chair,Governance Code Steering Group

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The principles set out good practicebut these are closely linked with theresponsibilities of charity trustees andother legal requirements that may be

imposed on board members. Undereach principle we have highlighted theareas of law which we consider to bethe most relevant.

The six high level principles are designedto be universal and applicable to allvoluntary and community organisations.It is the practice and procedures which

will vary according to the type and sizeof the organisation. To support theprinciples we have included goodgovernance characteristics and set outwhy we consider the principles to beessential for good governance.

Underlying each principle is theadditional principle of equality – thatof ensuring equality, diversity andequality of treatment for all sections

of the community. We believe thatthis is fundamental and an essentialelement of all six principles.

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The Principles – a summaryPrinciple 1

An effective board will provide good governance and leadership byunderstanding their role.

Members of the board willunderstand their role andresponsibilities collectivelyand individually in relation to:

• their legal duties• their stewardship of assets • the provisions of the governing

document• the external environment• the total structure of the

organisation

and in terms of

• setting and safeguarding thevision, values and reputationof the organisation

• overseeing the work of theorganisation

• managing and supporting staffand volunteers, where applicable.

Principle 2

An effective board will provide good governance and leadershipby ensuring delivery of

organisational purpose.The board will ensure that theorganisation delivers its statedpurposes or aims by:

• ensuring organisational purposesremain relevant and valid

• developing and agreeing along term strategy

• agreeing operational plansand budgets

• monitoring progress and spending

against plan and budget• evaluating results, assessingoutcomes and impact

• reviewing and/or amending theplan and budget as appropriate.

Principle 3

An effective board will provide good governance and leadershipby working effectively both as

individuals and as a team.The board will have a rangeof appropriate policies andprocedures, knowledge, attitudesand behaviours to enable bothindividuals and the board to workeffectively. These will include:

• nding and recruiting new boardmembers to meet the organisation’schanging needs in relation to skills,experience and diversity

• providing suitable inductionfor new board members• providing all board members

with opportunities for trainingand development accordingto their needs

• periodically reviewing theirperformance both as individualsand as a team.

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Principle 4

An effective board will provide good governance and leadership byexercising effective control.

As the accountable body,the board will ensure that:

• the organisation understandsand complies with all legal andregulatory requirements thatapply to it

• the organisation continuesto have good internal financialand management controls

• it regularly identies and reviews themajor risks to which the organisation

is exposed and has systems tomanage those risks• delegation to committees, staff and

volunteers (as applicable) workseffectively and the use of delegatedauthority is properly supervised.

Principle 5

An effective board will provide good governance and leadership bybehaving with integrity.

The board will:• safeguard and promote the

organisation’s reputation• act according to high ethical

standards• identify, understand and manage

conflicts of interest and loyalty• maintain independence

of decision making• deliver impact that best meets

the needs of beneficiaries.

Principle 6

An effective board will provide good governance and leadership by beingopen and accountable.

The board will lead the organisationin being open and accountable,both internally and externally.This will include:• open communications, informing

people about the organisation andits work

• appropriate consultation onsignificant changes to theorganisation’s services or policies

• listening and responding to theviews of supporters, funders,

beneficiaries, service users andothers with an interest in theorganisation’s work

• handling complaints constructively,impartially and effectively

• considering the organisation’sresponsibilities to the widercommunity, e.g. its environmentalimpact.

An effective board willprovide good governanceand leadership by:

1. understanding their role2. ensuring delivery of

organisational purpose3. working effectively both

as individuals and a team4. exercising effective control5. behaving with integrity6. being open and accountable.

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Principle 1Why?

Board members have a duty to actwithin the legal and regulatoryframeworks that apply to them andthe organisation. A fullunderstanding of their role andresponsibilities, the purpose andstructure of the organisation itselfand the external environment willhelp them to fulfil their legal dutiesand to lead and govern theorganisation effectively.

The board should consider how it willset the culture of the organisation.They should lead by example,ensuring that individuals representingthe organisation in any capacity do soin a way that positively reflects itsvalues. The ethos and culture of theorganisation should underpin thedelivery of its activities or servicesand the achievement of its objects.

Supporting materialFor charity trustees,this must include:

• accepting ultimate responsibility forthe way the organisation is directedand run in meeting its purposes

• being alert to those matters thatcannot be delegated to individualboard members or others

• acting at all times in the bestinterests of the organisation and its

beneficiaries (see also Principle 5)• ensuring the solvency and nancial

strength of the organisation

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An effective board will provide good governance and leadership byunderstanding their role

Members of the board will understandtheir role and responsibilitiescollectively and individually inrelation to:

• their legal duties• their stewardship of assets

• the provisions of the governingdocument• the external environment• the total structure of the organisation

and in terms of:

• setting and safeguarding the vision,values and reputation of theorganisation

• overseeing the work of theorganisation

• managing and supporting staffand volunteers, where applicable.

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• safeguarding the organisation’sassets and using them only in

furtherance of its purposes• taking a considered, proportionateand balanced approach to riskmanagement

• acting reasonably in their decisionmaking and leadership of theorganisation

• recognising and respecting that allboard members are equallyresponsible in law for the board’sdecisions

• complying with all relevant

legislation and regulationapplicable to the organisation andthe activities it undertakes andmaking appropriate publicstatements to confirm that this isthe case (see also Principle 4)

• ensuring that all board membersare properly appointed and are notdisqualified from so acting(see also Principle 3).

Other important things toconsider include:

1. ensuring that the organisationprovides every board member withall relevant information, including:

• appropriate induction and training • copies of key documents such as

the governing document andfinancial information

• a generic role description forboard members and furtherdescriptions for any specific rolesor functions (e.g. chair, treasurer,

secretary) • guidance produced by regulators

and other organisations • handbook of other helpful

information, including acode of conduct

2. understanding and ensuringindependence of board decision

making and action (regardless ofhow individual board memberswere appointed) and putting theneeds of beneficiaries ahead ofany other interests (see alsoPrinciple 5)

3. establishing and periodicallyreviewing statements setting outthe vision, mission and values ofthe organisation. Ensuring thatthese statements are developed inconsultation with the organisation’s

stakeholders, that they accuratelyreflect the objects in theorganisation’s governingdocument, and are effectivelycommunicated and easilyunderstood outside theorganisation

4. ensuring that all board membersunderstand their relationship with,and responsibilities towards (asapplicable):

• beneciaries or service users • staff, particularly senior staff • members • volunteers • committees, working groups

and advisory groups • central ofce, branches,

and local or regional offices • subsidiary trading companies • other organisations with which the

organisation formally collaborates

5. being clear about what matters arestrategic and what matters are

operational in relation to boardoversight of the organisation.Avoiding inappropriate involvementin operational matters but takingresponsibility for challenging andholding to account seniormanagers (e.g. the chief executive,senior management team) or otherpersons, organisations or agenciesto whom they have delegatedimplementation of their strategicdecisions

6. where the organisation has a chiefexecutive, following proper andformal arrangements for the chiefexecutive’s appointment,supervision, support, appraisal andremuneration. Being clear whichboard members are responsible forday to day communication with,and supervision of, the chiefexecutive. Ensuring that therelationship between the boardand the chief executive retains an

appropriate balance of support,scrutiny and challenge

7. where board members also act asvolunteers or employees, beingclear about the capacity in whichthey are acting at any given time

8. ensuring that individual boardmembers do not act on behalf ofthe board without authority

9. strategically reviewing all aspects

of the organisation’s work andfunctioning to ensure its overalleffectiveness.

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Principle 2

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Why?

The organisation’s aims or purposesare its reason for existing; it shouldaim to secure the optimum means of

fulfilling them. To do otherwise wouldbe failing its beneficiaries, fundersand supporters. If board members arecommitted to the organisation’spurpose, this should drive them toaim to do better for the organisation’sbeneficiaries or service users. Theboard should always bear this inmind, and make decisions in the bestinterests of the people or cause itaims to help. The board must alsoensure that the organisation remains

focussed on delivering its purposesand avoids “mission drift”.

An effective board will provide good governance and leadership byensuring delivery of organisationalpurpose.

The board will ensure that theorganisation delivers its statedpurposes or aims by:

• ensuring organisational purposesremain relevant and valid

• developing and agreeing along term strategy

• agreeing operational plans andbudgets

• monitoring progress and spendingagainst plan and budget

• evaluating results, assessingoutcomes and impact

• reviewing and/or amending theplan and budget as appropriate.


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2Supporting material

This must include:

• ensuring that all activities,services and functions, particularly

new ones, match the statedobjects of the organisation asdefined primarily in thegoverning document

• for registered charities, havingregard to the Charity Commission’sguidance on public benefit andreporting on the organisation’spublic benefit in the statutoryAnnual Report.

Other important things

to consider include:1. identifying and considering the

range of data and information fromboth internal and external sourcesto help meet the needs ofbeneficiaries in line with theorganisation’s stated purposes

2. setting short, medium and longterm goals and ensuring thatorganisation-wide strategiesare in place to monitor and

implement these

3. ensuring that the organisation’sstakeholders are supportiveof, and committed to, achievingthese goals

4. aligning management reports of

organisational activities to theappropriate powers and objects inthe governing document

5. assessing service provision againstrelevant comparators (e.g. similarorganisations, suitable qualitystandards), undertaking periodicreviews of services, and seekingstakeholder feedback whereappropriate

6. providing board members with

timely and regular managementaccounts, ensuring that all boardmembers are in a position to readand understand them, in order tomake informed decisions

7. the board and senior managementteam (where applicable) remainingalert to external and environmentalfactors that could result in theboard having to consider whether –

• the needs of beneciaries arebeing met by the state, or theorganisational purpose has beenachieved in some other way, andtherefore the organisation can bewound up or the purposeschanged

• the purposes could be betterachieved through collaboration, orwhere appropriate, merging withone or more other organisation(s)with similar objectives

• different ways of working may berequired to meet the opportunitiesand challenges presented bydevelopments within the field ofoperation, including the risk ofmissing opportunities

8. having systems in place to measureoutcomes, assess impact andenable the board to ensure theorganisation delivers its purposeand identify:

• successes that the organisationcan celebrate

• areas for improvement • new opportunities.


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Principle 3

163

Why?

To work in the best interests of theorganisation and its beneficiaries, theboard needs to recruit individuals who:

• together have a mixture ofknowledge, skills and experiencethat is relevant to the organisation’scircumstances and needs

• have the requisite characteristicsand skills to work as a committed,effective and supportive team,whilst retaining independence of

thought and the maturity and abilityto challenge constructively• embody diversity in its widest sense,

strengthening decision making bybringing a broad rangeof backgrounds and perspectives.

An effective board will provide good governance and leadershipby working effectively both asindividuals and as a team.

The board will have a range ofappropriate policies and procedures,knowledge, attitudes and behavioursto enable both individuals and theboard to work effectively. These willinclude:

• nding and recruiting new boardmembers to meet the organisation’schanging needs in relation to skills,experience and diversity

• providing suitable induction for newboard members

• providing all board members withopportunities for training and

development according to their needs• periodically reviewing their

performance both as individualsand as a team.


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Supporting material

This must include:• complying with any qualications

and all requirements in thegoverning document concerningwho/how many may be appointedas board members, terms of officeand manner of appointment

• complying with any requirementsin the governing documentconcerning board meetings

• ensuring that board membersare, and remain, eligible to actand that appropriate checks havebeen carried out (this may includeminimum age, statutorydisqualification, and CRB checkswhere applicable; and requiring newboard members to sign a declarationof eligibility and willingness to act).

Other important things toconsider include:

1. ensuring that the board meetsoften enough to be effective, that

board members are well-preparedand committed to attending andcontributing constructively, andthat meetings have a well-structured agenda and goodchairmanship

2. adhering to a code of conductwhich sets out expected standardsof behaviour and the consequencesof inappropriate behaviour,ensuring that any potential

sanctions are in line with thegoverning document

3. maintaining a strategy for boardrenewal that will meet theorganisation’s changing needs.This will cover maximum terms ofoffice and succession planning,particularly for the chair and otherkey positions/skills

4. ensuring that beneficiaries andother stakeholders can contribute

appropriately and meaningfully todecision making

5. ensuring that the board:

• collectively provides a mixture ofskills, experience, qualities andknowledge appropriate to theorganisation and its beneficiaries’needs, using skills audit and otherrelevant tools as appropriate

• takes an active and intelligentapproach towards diversity,

understanding the term in itswidest sense, avoiding tokenismand using board diversity tosupport its effectiveness

• is big enough to provide the skillsand experience needed, but notso large that decision makingbecomes unwieldy

• invests sufcient time indeveloping positive workingrelationships amongst themselvesand (where applicable) between

the board and senior staff,particularly the chief executive• acts quickly and positively to deal

with any relationship strains orbreakdowns, using externalfacilitation or mediation whereappropriate

6. (where it is permitted by thegoverning document), using arange of ways to recruit boardmembers (such as advertising)to encourage diversity; including

formal recruitment proceduresand making appointments basedon merit, objectively measuredagainst the agreed skills auditand role description

7. using provisions in the governingdocument for appointing board

members effectively andintelligently, so that (whereapplicable) elections by membersand nominations by externalbodies are informed by the skillsneeds identified by the board, andany power of co-option is used tofill key gaps in board skills

8. where staff are permitted tobecome board members by thegoverning document or other legalpower, ensuring that:

• staff are only appointed as boardmembers where this can beshown to be in the interestsof the charity

• conicts of interest are identiedand properly managed

• there is clarity about individuals’roles as staff members andboard members

9. setting aside time to reflect onperformance and functioning of

the board and its committees asteams, and identifying and dealingwith any areas for improvement

10. supporting board members intheir training and development,and to facilitate this, periodicallyreviewing the performance anddevelopment needs of each boardmember.


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Principle 4

184

Why?

The board are ultimately responsiblefor the decisions and actions of theorganisation. Board members needto be assured that everyone acting inthe organisation’s name is complyingwith the board’s directions and therequirements of law or regulation.Boards should provide direction,leadership and oversight withoutinappropriate involvement inoperational matters. Delegationneeds to be effectively supervised

and monitored.

An effective board will provide good governance and leadershipby exercising effective control.

As the accountable body, theboard will ensure that:

• the organisation understandsand complies with all legal andregulatory requirements thatapply to it

• the organisation continues tohave good internal financial andmanagement controls

• it regularly identies and reviewsthe major risks to which theorganisation is exposed and hassystems tomanage those risks

• delegation to committees, staff

and volunteers (as applicable) workseffectively and the use of delegatedauthority is properly supervised.


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Supporting material

This must include:• ensuring, through appropriate

policies, procedures and reportingmechanisms, that the organisationunderstands and complies with alllegal and regulatory requirementswhich apply to the organisation,including where applicable:

– charity law and the requirementsof charity regulators in anycountry where it operates

– trust law – company law and the

requirements of CompaniesHouse and other regulators(e.g. CIC regulator)

– industrial and providentsociety law 1

– employment law – health and safety regulations – data protection legislation – equality legislation – legislation applying to particular

activities, such as fundraising,protection of children orvulnerable adults, provision ofhealth or care services, provisionof financial advice, housing andtenancy law

• complying with relevant provisionsin the governing document andrelevant law concerning the exerciseof powers of delegation by the board

• acting prudently to protect thereputation, assets and property of

the organisation• ensuring that the organisation’sassets and property are used only todeliver its stated objects and aims.

Other important thingsto consider include:

1. regularly reviewing the range andimpact of risks the organisationfaces, including the risk of missedopportunities and the potential ofsmall risks to snowball into higher

impact risks. Considering theimpact of each identified risk onbeneficiaries or service users, staffand volunteers, long term plansand income generation, andputting in place strategies tomanage those risks. This willinclude having and regularlyreviewing a risk register andappropriate risk policy outlining theboard’s appetite for risk and how itwill manage and limit the impact of

identified risks2. maintaining and regularly

reviewing the systems of financialcontrols, internal controls,performance reporting, policiesand procedures, with the boardperiodically taking steps to assureitself of their effectiveness andrelevance to the activities theorganisation undertakes and therisks it faces

3. recognising and maximising thevalue of diversity within the board

as a means of identifying andmanaging risks, especially as a wayof challenging institutionalassumptions and thinking

4. having clear written terms ofreference for committees of theboard, advisory groups and panels,and for all delegated authority,which provide sufficient delegatedauthority and clear boundaries toallow officers, committees, staff,volunteers, consultants and agents

to discharge their duty effectivelyand which are regularly reviewedand updated

5. periodically reviewing theorganisation’s committee, advisorygroup and panel structure to ensurethat it continues to meet theorganisation’s governance needs

6. allowing the proper exercise ofdelegated authority by the chiefexecutive and/or other staff and

volunteers without inappropriateinterference, whilst beingsufficiently involved and engagedto properly supervise, hold toaccount and retain ultimateresponsibility for decisions andactions taken, through appropriatesystems of monitoring andreporting back

7. taking appropriate professionaladvice where necessary before

making important decisions,especially those involvingmaterial risk.

1To be known as Co-operative and CommunityBenefit Society Law in the future


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Principle 5

205

Why?

The board, both individually andcollectively, have ultimateresponsibility for the organisation’sfunds and assets, including itsreputation. They take the lead insetting and championing the valuesand ethos of the organisation (seePrinciple 1). It is vital, therefore, thatthey maintain the respect ofbeneficiaries, other stakeholders andthe public at large, by behaving withintegrity both when acting as trustees

and more generally. To behaveotherwise risks bringing the charityand its work into disrepute.

An effective board will provide good governance and leadershipby behaving with integrity.

The board will:

• safeguard and promote theorganisation’s reputation

• act according to high ethicalstandards

• identify, understand and manage

conflicts of interest and loyalty• maintain independenceof decision making

• deliver impact that best meetsthe needs of beneficiaries.


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Supporting material

This must include:• having in place and scrupulously

following governing documentprovisions, policies and proceduresfor identifying, declaring andmanaging conflicts of interest andconflicts of loyalty. Where boardmembers have a material conflict ofinterest, managing this may include:

– not voting on, or participating in,discussion of a matter

– not being counted towards thequorum

– withdrawing from that part of themeeting at which a matter isdiscussed

• if the organisation is a company,ensuring that it complies withcompany law on the managementof conflicts of interest and conflictsof loyalty

• ensuring that the organisationcomplies with the requirements of

‘whistleblowing’ legislation• managing relations and boundaries

between the organisation and anysubsidiary companies, especiallywhere individuals act as boardmembers for both entities

• always taking decisions in the bestinterests of the organisation and itsbeneficiaries, ensuring that

– the decision is within the board’spowers

– the board is acting in good faith– the board has adequately

informed itself and is basing itsdecision on a range of data andinformation that provides soundunderstanding of all relevantfactors

– the board is not allowing itself tobe swayed by irrelevant factors

– the decision is within the range ofreasonable options open to theboard and can be justified as such

to stakeholders and regulators

• complying with laws against bribery,including implementing policies

and clear guidelines concerninghospitality or gifts, the declarationand recording of offers of gifts orhospitality, and in whatcircumstances such offers maybe accepted or must be refused.

• complying with any statutory orregulatory requirements concerningreporting or disclosure of payments,expenses or other benefits thatboard members receive from theorganisation


1. ensuring that the organisation’svalues and ethos are enshrined inits policies and practices

2. including standards of ethicalbehaviour, for example the NolanPrinciples,2 in the code of conductfor board members (see Principle 3)

3. fostering a working environment

that supports constructivechallenge and welcomes differentpoints of view

4. maintaining a register of interestsand declaring an interest even if theboard member is unsure of itsrelevance and potential impact

5. being open and honest in allmatters presented to the boardwhere a personal or businessrelationship may be perceived to

impact adversely on (or simplyinfluence) the work of the board orthe organisation

6. where possible, seeking to diversifyincome streams to help ensure that

no single funder can exerciseundue influence over the actionsand decisions of the board

7. where board members or othersact as spokespersons for theorganisation, ensuring that theirpersonal views are never confusedwith, or represented as being, thoseof the organisation

8. Board members and otherrepresentatives of the organisation

should never accept gifts orhospitality where this could beperceived as being likely toinfluence their decisions

9. ensuring that any statementmade on behalf of the organisationis consistent with its mission,vision and values

10. where board members arenominated or appointed by otherbodies, being clear that the

responsibility as a board memberof this organisation is to act andmake decisions in the interestsof this organisations and itsbeneficiaries, and not as adelegate or representativeof the appointing body

11. ensuring that all board membersunderstand and accept the needto be transparent and honest in alldealings with or on behalf of theorganisation, to avoid any public

perception of improper conduct.This will include the establishmentof an expenses policy andprocedures to claim legitimateexpenses incurred(see also Principle 6)

12. having in place appropriatepolicies and procedures forwhistleblowing, includingsafeguards to protect individualswho whistleblow.

2 The Seven Nolan Principles of PublicLife are: selflessness, integrity, objectivity,accountability, openness, honestyand leadership


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Why?

Making accountability real, through

genuine and open two-waycommunication that celebratessuccesses and demonstrateswillingness to learn from mistakes,helps to build trust and confidencewith stakeholders and to demonstratelegitimacy when representing them.

An effective board will provide good governance and leadership by beingopen and accountable.

The board will lead the organisationin being open and accountable,both internally and externally.This will include:

• open communications, informingpeople about the organisationand its work

• appropriate consultation onsignificant changes to theorganisation’s services or policies

• listening and responding to theviews of supporters, funders,beneficiaries, service users andothers with an interest in theorganisation’s work

• handling complaints constructively,impartially and effectively

• considering the organisation’sresponsibilities to the widercommunity, e.g. its environmentalimpact.

Principle 6


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Supporting material

This must include:

• fully complying with any legalrequirements to produce annual

reports and accounts. These shouldpresent a balanced and accurateassessment of the organisation’sperformance

• holding an annual meeting formembers or other stakeholders ifrequired by the organisation’sgoverning document

• complying with equality legislation• complying with any applicable legal

or regulatory requirementsconcerning membership records.


1. identifying those with a legitimateinterest in the organisation’s work(users or beneficiaries, staff,volunteers, members, and otherstakeholders) and ensuring thatthere is a strategy for regular andeffective communication withthem about the organisation’sachievements and work, including

the board’s role and theorganisation’s objects and values

2. ensuring that these people have theopportunity to hold the board toaccount and know how to do thisappropriately, and that their viewsinform the organisation’s planning,decision making and strategicreviews

3. demonstrating that theorganisation learns from mistakesand errors and how that learning isused to improve organisationalperformance and internal decisionmaking. This could be by havingclear and effective complaintsprocedures, implementing themconstructively and using theprocess as a valuable source of

management information

4. ensuring that the organisationupholds principles of equality anddiversity in every sphere of activity,going beyond the legal minimumwhere appropriate. Information andmeetings should be accessible to allsections of the community e.g. byusing plain language, offeringcommunications in formats suchas audio and Braille and inlanguages commonly spoken inthe communities served

5. in organisations where boardmembers are appointed by a widemembership, ensuring that theorganisation:

• has clear policies on who is and is

not eligible for membership of theorganisation

• has clear and accurate andup-to-date membership records

• keeps members informed aboutthe organisation’s work

• actively seeks, values and takesinto account the views ofmembers on key issues

• encourages members toparticipate in the governance ofthe organisation, clearly informing

them about the responsibilities ofboard membership

6. recognising and acting on broaderorganisational responsibilitytowards communities, widersociety and the environment, in sofar as this does not divert theorganisation from achieving itsobjects.

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Association of Chief Executives ofVoluntary Organisations (ACEVO)

ACEVO connects, develops and representsthe third sector’s leaders which include chief

executives, chairs, trustees, directors and

senior managers.

1 New Oxford StreetLondon, WC1A 1NU

T: +44 (0) 20 7280 4960F: +44 (0) 20 7280 4989

E: [email protected]

W: http://www.acevo.org.uk

3 Albion PlaceLeeds, LS1 6JL

T: +44 (0) 113 243 2333F: +44 (0) 207 280 4989

Charity Commission

The Charity Commission for England andWales is established by law as the regulator

and registrar of charities in England andWales. It aims to provide the best possible

regulation of these charities in order toincrease charities’ efficiency and

effectiveness and public confidence and

trust in them.

Charity Commission DirectPO Box 1227, Liverpool

L69 3UGT: 0845 3000 218

F: 0151 7031 555

E: [email protected]: http://www.charity-commission.gov.uk

Charity Trustee Networks (CTN)

CTN’s vision is of positive, effective trustees

governing voluntary and community sectororganisations. It works to achieve this by:

• Increasing trustees’ access to information,guidance and support through networks, a

website, signposting and services• Developing understanding and awareness

of trusteeship and governance.

2nd Floor

The Guildford InstituteWard Street, Guildford

GU1 4LHT: 01483 230280

W: http://www.trusteenet.org.uk

Institute of Chartered Secretariesand Administrators (ICSA)

ICSA is the international qualifying andmembership body for the Chartered

Secretary profession and the world’s leadingauthority on corporate governance.

16 Park CrescentLondon

W1B 1AHT: (+44) 020 7580 4741

F: (+44) 020 7323 1132E: [email protected]

W: http://www.icsa.org.uk

National Council for VoluntaryOrganisations (NCVO)

NCVO is the largest umbrella body givingvoice and support to civil society in England.

NCVO’s Governance and Leadership team

champions, supports and enables good

governance and effective leadership in civilsociety organisations. They provideinformation and support, high quality

publications, consultancy and a range oftraining and events.

Regent’s Wharf8 All Saints Street

LondonN1 9RL

T: 020 7713 6161F: 020 7713 6300

E: [email protected]: http://www.ncvo-vol.org.uk

Founding groupcontacts

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Useful contactsbassac (British Association ofSettlements and Social Action

Centres)Organise training and events, highlight

funding opportunities, and offer tailoredsupport to members. With members they

drive social change by raising local issues ata regional and national level.

33 Corsham StreetLondon

N1 6DRT: 020 7336 9442

F: 0845 241 0376E: [email protected]

W: http://www.bassac.org.uk

Black Training and Enterprise Group(BTEG)

The Black Training and Enterprise Group

(BTEG) is a national organisation providing avoice to government for black and minority

ethnic service providers.

2nd Floor, Lancaster House31-33 Islington High Street

London

N1 9LHT: 020 7843 6110


W: http://www.bteg.co.uk

Centre for Effective DisputeResolution (CEDR)

The Centre for Effective Dispute Resolutionis an independent non-prot organisation

with a public mission and supported bymultinational business, law firms and public

sector organisations.

International Dispute Resolution Centre

70 Fleet StreetLondon

EC4Y 1EUT: +44 (0)20 7536 6000

F: +44 (0)20 7536 6001E: [email protected]

W: http://www.cedr.co.uk

Charities Aid Foundation (CAF)

The Charities Aid Foundation is a registered

charity that works to create greater value forcharities and social enterprise. We do this by

transforming the way donations are madeand the way charitable funds are managed.

25 Kings Hill Avenue

Kings HillWest Malling

Kent ME19 4TAT: 03000 123 000

F: 03000 123 001

E: [email protected]: http://www.cafonline.org

Charities Evaluation ServicesCharities Evaluation Services is the UK’s

leading provider of support and advice on

quality and evaluation systems for thevoluntary sector.

4 Coldbath Square

London EC1R 5HLT: 020 7713 5722


W: http://www.ces-vol.org.uk

Charity Commissionfor Northern Ireland

The Charities Act (Northern Ireland) 2008

created a new body: the Charity Commissionfor Northern Ireland which will have

Commissioners and staff. It will establish acompulsory charity register of all charities

operating in Northern Ireland. It will providea charity test of who is and who isn’t a

charity.

W: http://www.dsdni.gov.uk

Charity Finance Directors’Group (CFDG)

The Charity Finance Directors’ Group is amembership organisation set up in 1987 and

specialises in helping charities to managetheir accounting, taxation, audit and other

finance related functions.

3rd Floor

Downstream Building1 London Bridge

LondonSE1 9BG

T: +44 (0)845 345 3192F: +44 (0)845 345 3193

E: [email protected]: http://www.cfdg.org.uk/cfdg

Companies House

The main functions of Companies House are

to incorporate and dissolve limitedcompanies examine and store company

information delivered under the CompaniesAct and related legislation and make this

information available to the public.

Crown WayMaindy

CardiffCF14 3UZ

T: +44 (0)303 1234 500

F: 029 20380900E: [email protected]

W: http://www.companieshouse.gov.uk

Community Matters

Community Matters is the nationwide

federation for community associations andsimilar organisations across the UK.

Originally established as the NationalFederation of Community Associations in

1945, it has played a key role in promotingand supporting action by ordinary people in

response to social, educational andrecreational needs in their neighbourhoods

and communities.

12-20 Baron Street

LondonN1 9LL

T: 020 7837 7887F: 020 7278 9253

E: [email protected]: www.communitymatters.org.uk

Directory of Social Change (DSC)

Directory of Social Change is an independent

charity with a vision of an independentvoluntary sector at the heart of social

change. It provides essential information

and training to the voluntary sector toenable charities to achieve their mission

and runs courses and publishes charity andvoluntary sector books on fundraising,

management, organisational and personaldevelopment, communication, finance

and law.

24 Stephenson Way

London, NW1 2DP,T: 020 7391 4800


W: www.dsc.org.uk

Federation HouseHope Street, Liverpool, L1 9BW

T: 0151 708 0117


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Ethnic Minority Foundation (EMF)

The Ethnic Minority Foundation is a national

registered charity created to improve thelives of Britain’s minority ethnic

communities and bring about social change.It aims to eradicate poverty, injustice and

prejudice wherever they exist and promoteinstead prosperity, fairness and

understanding.

Forbes House9 Artillery Lane

London E1 7LP

T: 020 7426 8950F: 020 7426 8429

E: [email protected]: www.ethnicminorityfund.org.uk

Institute of Fundraising

The Institute of Fundraising is theprofessional membership body for UK

fundraising. Its mission is to supportfundraisers, through leadership,

representation, standards-setting andeducation, and it champions and promotes

fundraising as a career choice.

Park Place

12 Lawn LaneLondon

SW8 1UDT: 020 7840 1000

F: 020 7840 1001W: www.institute-of-fundraising.org.uk

Institute of Fundraising Scotland

22/1A Calton Road

EdinburghEH8 8DP

T: 0131 557 2100

Institute of Fundraising Cymru1st Floor, 21 Cathedral Road

Cardiff

CF11 9HA

T: 0292 034 0062

National Association of Councils forVoluntary Action (NACVA)

NAVCA is the national voice of local thirdsector infrastructure in England. It aims to

ensure communities are well served by thelocal third sector by supporting members

and their work with over 160,000 localgroups and organisations.

The Tower, 2 Furnival SquareSheffield, S1 4QL

T: 0114 278 6636F: 0114 278 7004

E: [email protected]: http://www.navca.org.uk

The Office of the ScottishCharity Regulator (OSCR)

OSCR is the independent regulator andregistrar for Scottish charities. It regulates

over 23,500 Scottish charities including

community groups, religious charities,schools, universities, grant giving charities

and major care providers.

2nd Floor, Quadrant House9 Riverside Drive, Dundee

DD1 4NYT: 01382 220446

E: [email protected]: http://www.oscr.org.uk

Public Concern at Work (PcaW)

Public Concern at Work is the independentauthority on public interest whistleblowing.

Suite 301, 16 Baldwins GardensLondon, EC1N 7RJ

T: 020 7404 6609F: 020 7404 6576

E: [email protected]: http://www.pcaw.co.uk

Skills – Third Sector

Skills - Third Sector is a sector-led,

independent charity which helps ensure thethird sector has the skills and learning it

needs to do the best possible job.

Centre Court, Atlas WaySheffield, S4 7QQ

T: 0845 450 3860E: [email protected]

W: http://www.skills-thirdsector.org.uk

Volunteering England

Volunteering England works to support and

increase the quality, quantity, impact and

accessibility of volunteering throughoutEngland.

Regents Wharf

8 All Saints StreetLondon N1 9RL

United KingdomT: +44 (0)845 305 6979

F: +44 (0) 20 7520 8910E: [email protected]

W: www.volunteering.org.uk

The Work Foundation

The Work Foundation is the leadingindependent authority on work and its

future. It aims to improve the quality ofworking life and the effectiveness of

organisations by equipping leaders,

policymakers and opinion-formers withevidence, advice, new thinking and

networks.

W: www.theworkfoundation.com

Useful contacts continued


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Aboutthe CodeThe Code Steering Group providesstewardship for the Code. It is madeup of representative of the originalfounders, the Association of Chief

Executive Officers (ACEVO), CharityTrustee Networks (CTN), the Instituteof Chartered Secretaries andAdministrators (ICSA), the NationalCouncil for Voluntary Organisations(NCVO) with support from the CharityCommission and an independent chair.


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a n E v e s D e s

i g n 0 1 2 2 5 4 6 5 5 4 6

ACEVO

1 New Oxford Street

London WC1A 1NU

Charity Registration: 1114591

CTN

2nd Floor

The Guildford Institute

Ward Street

Guildford GU1 4LHCharity Registration: 1110979

ICSA

16 Park Crescent

London W1B 1AH

NCVO

Regent’s Wharf

8 All Saints Street

London N1 9RL

Charity Registration: 22592

Code of Governance

Documents

Transcript of Code of Governance