Gillian Benjamin, Not-for-Profit Associate Partner at Haines Watts discusses why now is the perfect time to review your charity's governance.
I cannot emphasise enough that good governance underpins a charity’s success. Not only does it ensure that your organisation is complying with regulations, but it also defines the system which will lead your charity towards its overarching purpose and goals. We all endured the challenges of 2020 and whilst we ready ourselves for more uncertainty, recent announcements from the Government offer green shoots of recovery towards ‘normality’. This said, 2021 will undoubtedly be a year of change, meaning that now is the perfect time to refresh your governance in order to give your charity an edge of resilience to the year ahead. I’ve outlined three crucial points when reviewing your governance for the year ahead.
The updated code of governance
The Charity Governance Code is a useful and practical tool for trustees which draws upon seven key principles which help to develop a high standard of governance. Even though you’re not legally obliged to abide by the code, following it can help to set the foundations for excellent leadership in your organisation. The code was updated at the end of 2020 after a consultation which received over 800 responses. The refresh focused on Principle 3: Integrity and Principle 6: Diversity, which is now called Equality, Diversity and Inclusion (EDI).
So what are the changes?
Principle 3: Inclusion – there are two main changes within this principle; the first being the refresh of the upholding of the charity’s values, with consideration of ethical principles in mind. Secondly, new ‘best practices’ have been added, to highlight how everyone who is in contact with the organisation has the right to be safe.
Principle 6: Equality, Diversity and Inclusion (EDI) – this principle has seen the most change and not just in respect of its name. The code itself is a four stage approach putting EDI at the heart of good governance. To ensure the maximum delivery of public benefit EDI must at the very least be demonstrated by your board to allow for ‘more informed and robust decision making’.
Trustee training
Your trustees play a crucial role in the direction of your charity. With a lot of charities fast approaching a new financial year, now is the perfect time to make sure all of your trustees are up to speed with roles and responsibilities.
The Charity Commission have put together five minute guides for trustees, a quick refresh of the basics, which could have a huge effect on your governance going forward.
Look at your reserves
The focus on charity reserves was soon brought into focus when fundraising events ground to a halt at the beginning of the pandemic last year. As a result, we saw several charities use their reserves as a buoyancy aid to see them through. With the demand for services dramatically increasing though, and a concurrent anxiety over finances, now is the perfect time to review your reserves.
Setting out a clear policy for the year ahead will help to build trust and place you in a more resilient position. Although there’s no one rule to suit everyone, current commitments, risks and future needs should be taken into consideration when deciding on the appropriate amount to hold for the year ahead. And if you are considering dipping into your reserves as a support measure, make sure you and your trustees take both your short and longterm objectives into consideration. Taking the next steps… Whilst things are still changing on a daily basis, ensuring your charity’s governance is fit for purpose has never been more important. It will help to serve your beneficiaries well and ensure you are still able to achieve your overarching goals, even in these uncertain and changing times. Whether it’s training your trustees or reviewing your reserves, you don’t have to struggle with the ins and outs of governance alone – we’re on hand to help. Get in touch to find out more about how we can support you and your charity.
