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What is the Governance Code and what does the new code mean for charities?

08 May 2015 by Guest

An issue dear to the heart of ICSA is the need for proper oversight and governance in all areas, either commercial or voluntary. We are hoping that the new Companies Act 2014 is going to help tighten up laxities in the commercial sector but what of the so called community, voluntary and charitable (CVC) organisations?

A new Governance Code for the CVC sector in Ireland

Attempts are being made to introduce a new Governance Code for the CVC sector in Ireland with the intention of giving the sector a standard definition of good practice in governance and to inform the sector of these higher standards that will be required by both funders and regulators.

Its adoption may be sporadic

But is this code providing comfort to the public or is the public even aware of such a new code? We think not, and if it’s not generally known about then its adoption is likely to be very sporadic. There are very strong reasons for the introduction of this new code. We are all aware of a number of very high profile governance cases that rocked the CVC sector in the last two years – something that undermined public confidence in very important charitable organisations. These scandals hugely damaged vital fund raising, especially for charities – and those they support – who rely mostly, if not wholly, on public donations.

Clarity for charity

The code is straightforward and is meant to bring openness and clarity to the organisations that the code covers. It is hoped that it will reassure current funders that their money is being managed by well-run organisations with good governance. It would bring increased transparency to the sector so that everyone would know exactly how any particular organisation is being run. Moreover, as well as trying to avoid bad risks, a key aim is to try to reduce administration costs so that more of the funds are spent on the causes they are supporting.

Adoption is key

The first step for a CVC organisation is to declare that they are supporters of the code. Then, of course, having adopted it they must be seen to apply it, by way of the 'comply or explain' method. That means organisations will need to make it publicly known how they have complied with the code and if not, they will have to explain where, and why, they have not. But the first and most important issue is to see the code is adopted. After that, the public must be made aware of it so that the court of public opinion will enforce its voluntary adoption, it is hoped. Good governance is in all our interest. Seeing it in action is the challenge.