Charities Governance Code

The Charities Governance Code (the “Code”) was introduced in November 2018 and outlines the minimum standards required to effectively manage, govern, and control a charity. Charity trustees are responsible for compliance with the Code.

The Code

The Code consists of six principles of governance and sets out the 32 core standards that all charities must meet (“Core Standards”) unless a particular standard does not apply to a particular charity. There are an additional 17 standards that reflect best practice for charities classified as “complex” under the Code (“Additional Standards”). The Code does not define a “complex” charity and the trustees of each charitable organisation are best placed to make that decision. Consideration should be given to factors such as; level of charitable income, number of employees, complexity of operation and funding structures in determining if a charity is “complex”.

The Code operates on a “comply or explain” basis, meaning that charities must comply with each standard and provide evidence of compliance, or else explain why they have not done so. 

As of 2021, charities registered with the Charities Regulator (the “Regulator”) are required to submit a declaration declaring compliance with the Code as part of their Annual Return.

Charities must discuss and agree at board meetings how they intend on meeting the standards of the Code and document their decisions in the minutes. It is important that charities should go further, and continually review their policies and procedures to make any necessary improvements in line with the Code and any legal, regulatory and / or ethical standards. Charities should also ensure to maintain accurate records of all decisions and actions they take to evidence compliance with the Code.

While compliance with the Code requires a significant amount of dedicated time and effort, it is a key governance requirement.

The Six Principles

1. Advancing charitable purpose - Under the Charities Act 2009, a charity must promote at least one charitable purpose and must provide a public benefit.
2. Behaving with integrity - Trustees have a duty to act in the best interest of the charity and ensure that the ethics of the organisation are upheld. Trustees must be independent and not act in their own personal interest of the interest of other individuals.
3. Leading people - Trustees are responsible for providing leadership to volunteers, employees, and contractors.
4. Exercising control - All charitable organisations must comply with relevant legal and regulatory requirements.
5. Working effectively - Trustees must have the necessary skill to undertake the job. They must work together as an effective team, particularly in terms of board meetings since this is where charity trustees exercise their collective authority.
6. Being accountable and transparent - Charitable organisations ought to put in place requisite systems and procedures to ensure it governs in an accountable, transparent and effect manner to comply with the Code

Reporting compliance

Charities must complete the Compliance Record Form each year which records compliance with the standards of the Code and the actions that the charity has taken to meet each standard, along with the evidence that backs up this compliance.

Although the form is not submitted to the Regulator, compliance with the Code ought to be declared in the charity’s Annual Report which is submitted to the Regulator.  

Next steps

The Code outlines clear standards that all charities must comply with. It is recommended that each charitable organisation appoint an individual responsible for overall compliance with the Code. It may also be helpful to set up a working group to review the Charity’s existing systems and procedures and determine what, if any improvements are needed to comply with the Code. Compliance reviews should be completed on a consistent basis so necessary steps are taken in sufficient time.

Cian Clinch | Partner | Lead Contact for Charities Institute Ireland