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Charity governance faces a big repair job

24 July 2017 by Simon Osborne

Charity governance faces a big repair job - read more

Charities need to up their game to restore public trust, says Simon Osborne of ICSA.

The revised Charity Code of Governance got me thinking how much change the UK charity sector has undergone since the last version was published in 2010.

The collapse of Kids Company; the bombardment of potentially vulnerable people like 92-year-old poppy seller Olive Cooke with requests for donations; and the energy scandal at Age UK led to changes in public attitudes about the way charities are run, particularly in terms of executive pay, fundraising techniques and commercial partnerships.

Charities can no longer overlook the amount of work they have to do to build and retain the public’s trust.

The Charities (Protection and Social Investment) Act 2016 and the establishment of the Fundraising Regulator were two ways in which regulatory changes tried to address public concerns.

The latest version of the Charity Code of Governance attempts to move the governance conversation away from pieces of paper – processes and policies – to people and behaviours.

Overall the governance move is away from mechanics to dynamics. The Code focuses as much on leadership, diversity and behavioural governance as it does on having the right mechanisms in place.

The new Code is aimed squarely at those charities with an income over £1 million and is more aspirational in its recommendations than previous versions.

There will also be a version for smaller charities, the principles being the same for both but recommended practice being different. This should help to reinforce the message that good governance is proportionate to each individual organisation and its size, complexity and stage of development.

Much has already been done to drive change in the sector and more initiatives are due to follow. The Charity Commission is due to consult ‘imminently’ on its proposal to charge a levy for its services.

Reports claim that those charities with an income over £100,000 could be charged between £75 and £1,750 a year for the Commission’s services. We will, of course, be responding to that consultation and seeking members’ views to inform our response.

“Change can be a good thing, but invariably it means that confusion over best practice can arise”

The Law Commission is also due to present its report and recommendations after its lengthy and detailed review of the technical aspects of charity law and regulation.

Given the heavy parliamentary workload being created by Brexit, it is doubtful much time will be available for a new charity bill, but charities should stay on top of potential issues within the sector regardless.

One area that charities need to be aware of concerns personal data of supporters. The Fundraising Regulator is keen for charities to improve the way in which they treat the personal data of supporters. This links into the General Data Protection Regulation, which comes into force next May.

Charities will need to up their game quickly if they are not to fall foul of the regulation and find themselves on the wrong side of an ICO finding. As the Charity Commission made absolutely clear after the Olive Cooke tragedy, fundraising is a board matter and trustees need to remember that.

Change can be a good thing, but invariably it means that confusion over best practice can arise. ICSA has a wealth of guidance to help support the charity sector. Our thirty-plus charity guidance notes are being updated to include relevant aspects of the Code. These will be phased over three tranches.

We have also recently published a new guidance note on trustee recruitment, which seeks to address the trouble charities experience in recruiting trustees, which was highlighted recently by charity Getting on Board’s report. New guidance is also being drafted on specimen strategic agendas for charities, specimen report cover for charity trustee meetings, and trustee standards.

Also on the horizon is a new concept for ICSA guidance notes – a single document that pulls together all relevant data pertaining to an organisation’s strategic goals, and the risks it faces that helps charities to build their own board assurance framework (BAF).

BAFs are widely used in the NHS and provide non-executive directors and trustees with triangulated information to support management assertions that the organisation is well run. A BAF is a structured approach for ensuring that boards get the right information, which is accurate and relevant, at the right time and with a level of assurance attributed to each source of data.

The BAF is more than just another tool to measure and manage risks; it should be viewed as a framework by which the board can triangulate the information it receives and be assured of the veracity of data presented to it.

Simon Osborne FCIS is CEO of ICSA: The Governance Institute

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