Legal and governance training and consultancy
for the voluntary sector
UPDATED INFORMATION FOR CHAPTER 15:
VOLUNTARY SECTOR LEGAL HANDBOOK
This page contains information that has appeared on Sandy Adirondack's legal update website for voluntary organisations at www.sandy-a.co.uk/legal.htm. For current updates, including potential changes that are in the pipeline, see the legal update website.
The information here covers the law applicable to England and Wales. It may not apply in Northern Ireland and/or Scotland. These news items are not a full or definitive statement of the law and are not intended as a substitute for professional legal advice. No responsibility for loss occasioned as a result of any person acting or refraining from acting can be taken by the author.
The items below formerly appeared on the legal update website for voluntary organisations and are archived here. The content may be out of date and links may not work. For current updates to the chapter, see the legal update website for voluntary organisations at www.sandy-a.co.uk/legalstatus.htm.
A round-up of recent governance-related resources from the Charity Commission for England and Wales, the Office of the Scottish Charity Regulator, the Charity Commission for Northern Ireland, and other sources. For earlier publications, go to archived pages; for a publication specifically for chairpersons see above, and for resources specifically for company directors see below.
The resources listed here apply to all charities, whether incorporated or unincorporated and regardless of whether registered with the Charity Commission, other charity regulator or no regulator. Most of their content applies to non-charities as well, even some of the legal duties where they are not specific to charities.
The various publications on duties of charity trustees and on good governance for charities are all broadly similar. But there are differences between charity law in England and Wales, Scotland and Northern Ireland, so when looking at legal duties it's important to use guidance for the relevant country.
Charity governance, finance and resilience: 15 questions trustees should ask
In my review of governance resources in August 2015, I mentioned that the Charity Commission's excellent Big Board Talk: The economic downturn: 15 questions trustees need to ask, published in 2009, had been revised in 2012 and renamed Big Board Talk: Charity trustee meetings: 15 questions you should ask.
As of 29 January 2016 it's been repurposed again, this time as Charity governance, finance and resilience: 15 questions trustees should ask. Along with two podcasts, it is on Gov.uk via tinyurl.com/o6veu2b.
The 15 questions, each with several subsidiary questions, are grouped under strategy, financial health, governance, and making best use of resources. Not all questions are relevant for every charity, but all need to be considered in order to ascertain whether they apply.
I complained in 2015 that the document itself, on Gov.uk, does not include the introduction setting out the context for the checklist and how it can be used. This information is on the separate page which has the link to the actual document. This is still the case.
CC3 and CC3a
The essential trustee What you need to know, what you need to do (CC3), revised in July 2015 is the Charity Commission's overview of trustees' duties under charity law. It is on Gov.uk via tinyurl.com/ln9q9dh and is, in my view, one of the most important documents for new or potential trustees, or existing trustees who may not be aware of how their duties under charity law have changed over time (or may never have known what those duties were, and quite possibly still don't).
CC3a, Charity trustee: What's involved, summarises the key points in CC3. CC3a is on Gov.uk at tinyurl.com/oqfjwuf.
My reviews of CC3 and CC3a in August 2015 are at www.sandy-a.co.uk/vslh/15govbodyduties.htm#governanceresources-trustees.
Duties of charity trustees
Bates Wells Braithwaite solicitors have a 36-page pocket-sized Duties of charity trustees which can be downloaded via tinyurl.com/outgo6t.
There's a two-page summary of the duties on pp.14-15 of the BWB winter 2015/16 Real estate update, at tinyurl.com/z2dagk6.
The Office of the Scottish Charity Regulator consulted from 28 September to 18 December 2015 on a draft of its revised Guidance for charity trustees. The new edition was expected to be published in spring 2016.
The previous version of the guidance was published in September 2010. The underlying principles of the proposed new version have not changed, but it sets out in a more straightforward way what charity trustees must consider, in order to ensure they meet legal requirements and their charity is well run, and to avoid some of the common problems that can arise.
The 2010 guidance is on the OSCR website via tinyurl.com/hv89zr7. The proposed revision is (as of 8 February 2016) no longer on the website, presumably because it is being revised in light of the consultation.
Codes of good governance
The Development Governance Group in Northern Ireland launched its revised Code of good governance for the voluntary and community sector on 29 January 2016. The original code was published in 2008. The revised code can be downloaded via tinyurl.com/h43w54k.
For England and Wales, Good governance: A code for the voluntary and community sector, first published in 2005, was updated in 2010. It sets out six key principles for a good board. The full code, a summary code, and a code for smaller organisations can be downloaded at www.governancecode.org.
The code of good governance steering group for England and Wales consulted in 2015 on whether there is a need for a separate code for large charities, with additional guidance or material.
The good trustee guide
The good trustee guide, originally published by the National Council for Voluntary Organisations in the early 1990s and now in its sixth edition, provides comprehensive information about the role of trustees, and guidance on developing an effective trustee board. Written by Anne Moynihan and launched in September 2015, the 256-page volume is ideal as a detailed introduction for new trustees or as a refresher for long-serving trustees.
It costs £21 for NCVO members and £30 for non-members, with discounts for five or more copies. It can be ordered via tinyurl.com/hh5xxex.
The publication is sponsored by Cazenove Charities, and a 15-page summary can be downloaded free of charge from their website via tinyurl.com/zme9aqz.
Trusteeship in small charities: Practical tips
Trusteeship in small charities: Practical tips and advice summarises advice and ideas from speakers and participants at a seminar exploring the role of trustees in small charities on 23 November 2015. The event was organised by NPC (New Philanthropy Capital) and the Clothworkers' Company.
"Small charity" is not defined in the report, but the Small Charities Coalition uses £1 million as its cut-off point.
The report notes that good governance can make or break a charity, particularly in small organisations which may be resource poor or less resilient than larger charities.
It can be downloaded free of charge on the NPC website via tinyurl.com/ju3yskg.
More practical tips
Russell-Cooke Solicitors produced a three-page briefing, A new focus on charity governance, in October 2015, looking at the importance of understanding the charity's governing document, ensuring delegation to staff is clear, keeping appropriate records and minutes of meetings, and assessing operational risks.
The briefing is on the Russell-Cooke website via tinyurl.com/h67wftb.
Wired to govern
Developments in digital technology have the potential to transform how boards operate, meet, communicate and add value to the work of the organisation they lead. Wired to govern: A trustee's handbook for the digital revolution, by Tesse Akpeki, Lindsay Driscoll and Tess Woodcraft, was published in September 2015 and looks the the opportunities for organisations, the threats from digital technologies and how to deal with them, and the potential of e-governance, including board portals and virtual meetings. It benchmarks the ideas in Wired to govern against the Good governance code, and includes a template for a social media policy and checklists for digital governance.
Wired to govern is published by Onboard and Bates Wells Braithwaite, and can be downloaded from the BWB website via tinyurl.com/gsvkwmx.
And if you are really serious about governance...
If you are really serious about governance, ICSA (the Governance Institute) launched in November 2015 a new certificate in charity law and governance, covering charity law; structures and legal forms; compliance and regulation; governance; sources of income; and stewardship of funds and assets.
Intended for trustees and charity leaders, the qualification will take approximately 9-12 months or 300 hours of study to complete. Full details are on the ICSA website at www.icsa.org.uk/cclg.
A round-up of recent governance-related resources from the Charity Commission for England and Wales, the Charity Commission for Northern Ireland, and governance advisors. For earlier publications, go to archived pages; for a publication specifically for chairpersons see above, and for resources specifically for company directors see below.
The charity resources apply to all charities, whether incorporated or unincorporated and regardless of whether registered with the Charity Commission or other regulator. Most of their content applies to non-charities as well, even some of the legal duties.
Bring back the old Charity Commission website!
Legal firm Withers launched on 25 July 2015 a 38 Degrees campaign, calling on the Charity Commission and the Government Digital Service (responsible for Gov.uk) to reinstate the old Charity Commission website. PLEASE SIGN IT, at tinyurl.com/0j7853v!
In a previous article on governance resources I ranted about the difficulty of finding anything, even if you know what you are looking for, since the Commission's website was moved to Gov.uk in September 2014 (www.gov.uk/government/organisations/charity-commission, although you can still, at least for the time being, get to it via www.charitycommission.gov.uk). I noted that I, and everyone else I know, now finds it easier to use Google to find documents on the Commission’s website than to locate anything through the Gov.uk search facility.
The 38 Degrees campaign says, "Despite only being a live site for a matter of months, the new website has already attracted almost universal criticism from users as not only having less information on it than previously but also being difficult to navigate. All those involved in the management and administration of charities require a simple and effective service, and we believe that the best solution is to reinstate, and then to maintain and update, the old Charity Commission website."
The Commission's previous website wasn't 100% faultless, but it was a whole lot better than what we have (or more accurately, don't have) on Gov.uk. Please sign the 38 Degrees campaign at tinyurl.com/0j7853v. You only have to give your name, email address and postcode.
The Commission's operational guidance (OG), intended for Commission staff but also widely used by charity lawyers and by charity staff who know about it and need a detailed understanding of the Commission’s procedures, did not migrate to Gov.uk and can still be found at ogs.charitycommission.gov.uk.
The new website of the Office of the Scottish Charity Regulator (OSCR) launched in November 2014, and the updated website of the Charity Commission for Northern Ireland, launched in October 2014, have not elicited howls of disapproval.
The essential trustee (CC3)
Following a consultation from November 2014 to February 2015, the new version of The essential trustee What you need to know, what you need to do (CC3) was published on 10 July 2015 and is on Gov.uk via tinyurl.com/ln9q9dh. This is the Charity Commission's guide to trustees' duties under charity law, and good practice arising from those duties.
In my view CC3 is one of the most important documents for new or potential trustees, or existing trustees who may not be aware of how their duties under charity law have changed over time (or may never have known what those duties were, and quite possibly still don't). In my view every charity, regardless of its size and regardless of whether it is registered with the Charity Commission, should:
CC3 identifies six key charity law duties of trustees, and sets out the legal requirements and essential good practice that flow from each. The key duties are to:
During the consultation on the draft, there was considerable concern about the word 'should'. In previous guidance, the Commission had differentiated between what trustees must do (legal requirements) and what the Commission thought they should do (minimum good practice standards that are not legal requirements). The November 2014 draft said the Commission could treat failure to comply with its specified good practice, or explain why not, as evidence of misconduct or mismanagement, and the introduction to the consultation said the Commission is likely to treat it in this way. This was seen as evidence of "regulatory creep", with the Commission setting out requirements that would in effect be treated as if they were legal requirements, even though they are not.
In the final version should is defined as "good practice that the Commission expects trustees to follow and apply to their charity". It adds, "Following the good practice specified in this guidance will help you to run your charity effectively, avoid difficulties, and comply with your legal duties. ... In some cases you won't be able to comply with your legal duties if you don't follow the good practice. When the Commission looks into cases of potential breach of trust or duty or other misconduct or mismanagement, it may take account of evidence that trustees have exposed the charity, its assets or its beneficiaries to harm or undue risk by not following good practice."
In my daily work as a governance consultant with voluntary organisations and in articles in voluntary sector and mainstream media I see far too much evidence that many governing body members and relevant staff are not really aware of their legal duties and good practice, or see them as optional extras that don't really apply to them.
As Russell-Cooke solicitors say in their article about CC3 at tinyurl.com/p7mnngt, understanding these duties and good practice "is especially relevant in the current climate, with increasing criticism of fundraising practices amongst some charities, and the increasingly tough and interventionist approach adopted by the Charity Commission towards charities that are not complying with their duties."
At the very least, trustees will now need to be aware of the good practice, and if things go wrong may have to explain why they did not comply with it.
The news release announcing publication of the new CC3 is at tinyurl.com/naoyzqr. CC3 itself is on Gov.uk via tinyurl.com/ln9q9dh in HTML and in English and Welsh PDFs (each 39 pages).
See below for the CC3a summary version, and the Being a trustee Easy Read version. The Commission may be able to provide these documents or CC3 in different formats; contact firstname.lastname@example.org.
Charity trustee: What's involved (CC3a)
As well as the new version of CC3 [see above], the Charity Commission has issued a new version of CC3a, entitled Charity trustee: What's involved. This is a summary of the key points in CC3, and on my computer prints out at seven pages.
While absolutely not intended as a substitute for CC3 which all charity trustees should read in full CC3a is very useful as an introduction for people considering becoming trustees. It makes clear that trusteeship is a serious responsibility (not "just attending a couple of meetings a year", as it is still too often presented when trying to cajole someone into becoming a trustee), but is not so daunting that it will put them off.
It is also a useful aide memoire for existing trustees, and procedures could be put in place to send them the document or a link to it to every couple of years, or whenever the trustees are facing major decisions.
CC3a is in HTML on Gov.uk at tinyurl.com/oqfjwuf.
Being a trustee
Being a trustee is an Easy Read summary of the key points in CC3, prepared in association with Mencap and intended for trustees with a learning disability. It may also be useful for people whose knowledge of English is limited. It is 16 pages (PDF) and is on Gov.uk via tinyurl.com/ln9q9dh.
Charity trustee meetings: 15 questions you should ask
While I'm at it I'll promote what I consider the second most essential Commission publication, Big Board Talk: Charity trustee meetings: 15 questions you should ask. Initially published in 2009 as Big Board Talk: The economic downturn: 15 questions trustees need to ask, it was revised and renamed in 2012 and is just as relevant now that there is (so the government tells us) an upturn rather than a downturn.
The 15 questions, each with several subsidiary questions, are grouped under strategy opportunities and risks; financial health; governance; and making best use of resources. Not all questions are relevant for every charity, but all need to be considered in order to ascertain whether they apply.
Personally, I think the new title, Charity trustee meetings, is inappropriate and misleading. While some of the questions will be considered in the context of trustee meetings, many are much broader and will be considered as part of strategic planning reviews, financial reviews, board assessment, etc. I'd much prefer the title to be broader, such as Charity sustainability: 15 questions you should ask.
I also really dislike the fact that the document itself, as on Gov.uk, does not include the introduction setting out the context for the checklist and how it can be used. This information is on the separate page which has the link to the actual document.
Despite these gripes it's a very useful set of questions, available along with two podcasts on Gov.uk via tinyurl.com/o6veu2b.
Charity Commission for Northern Ireland
The Charity Commission for Northern Ireland's EG042 Monitoring and compliance guidance: Getting it right, published on 5 August 2015, is an accessible guide to legal duties and best practice, most of which is just as applicable to charities (and non-charities) in any nation.
The main sections in the 37-page PDF are on complying with legal duties and best practice, how non-compliance is identified, and possible outcomes of non-compliance.
An appendix includes a very useful 11-point compliance checklist:
Governing with intent
Published by Onboard Governance Development on 6 July 2015, Governing with intent: An inquiry into trustee board effectiveness brings together responses from more than 300 charity trustees, chief executives and senior staff.
The analysis looks at the performance of the board, the relationship between the board and the chief executive, and how boards are using new technologies.
The recommendations include:
6 ways charities can encourage good governance
If all these substantial documents are too much for you, the Guardian voluntary sector network had a short article on 8 April 2015, "Six ways charities can encourage good governance". It summarises these as:
A round-up of governance-related resources:
Charity Commission consultation on CC3
The Charity Commission is consulting until 17 February 2015 on an updated draft of its guide to trustee duties, The essential trustee (CC3).
The new draft follows recent Commission guidance on decision making and conflicts of interest, reflects other changes such as the introduction of charitable incorporated organisations (CIOs), and is designed to work better as online guidance.
One of my big complaints about previous versions of guidance was that they did not differentiate between what trustees must do (legal requirements) and what the Commission thinks they should do (minimum good practice standards that are not legal requirements). The Commission changed all their guidance several years ago to clarify this a very welcome change.
However, the new draft goes even further, stating that the Commission expects trustees to comply with specified good practice unless they can justify not doing so, for example by complying in a different way. The Commission could, the draft says, treat failure to comply with its specified good practice, or explain why not, as evidence of misconduct or mismanagement.
The Commission says this is "a case of trustees understanding that 'should' means 'really should' not 'maybe', if you feel like it". But it may well be that this extension goes too far. The Commission now appears to be using 'should' not just as good practice, but as creating requirements that will in effect be treated as if they were legal requirements, even though they are not.
Other changes to the draft much less potentially controversial include links to other guidance to avoid repetition, highlighting what can go wrong and how to avoid it, and emphasising that the guidance is for all trustees of charities based in England and Wales, not just trustees of charities registered with the Charity Commission.
The Commission's press release on the consultation is at tinyurl.com/oq2pxxp.
The consultation documents are at tinyurl.com/ky7nw7c. They include the draft CC3 in English (31 pages) and Welsh (32 pages), a two-page summary of what has and has not changed in the new draft, and a short list of suggested questions.
In my view CC3 is one of the most important documents for new or potential trustees, or existing trustees who may not be aware of how their duties have changed over time (or may never have known what those duties were, and quite possibly still don't). I really encourage everyone interested in effective trusteeship to have a look at the draft and send any comments to the Commission.
Charity Commission for Northern Ireland
The Charity Commission for Northern Ireland's Running a charity, published in November 2013, is a 43-page overview of duties and responsibilities of trustees of Northern Ireland charities. It can be accessed via tinyurl.com/p3nbnod
Charity Commission, OSCR and CCNI websites
The Charity Commission website has moved to Gov.uk at www.gov.uk/government/organisations/charity-commission, although you can still, at least for the time being, get to it via www.charitycommission.gov.uk.
The move is a disaster for finding anything even if you know exactly what you are looking for, which I usually do but many people using the website might not. In common with all of the Gov.uk website, there’s no search facility specifically for the Commission section only for the Gov.uk website as a whole. So if, for example, you search for trustee duties, you get 283 results, of which the vast majority have nothing to do with charity trustees. You also discover that the path for many of the charity-related links, for example “Manage a conflict of interest in your charity”, seems to be Citizenship > Charities honours > Running charity. Personally, I find it quite distasteful that info about trustee duties comes under charity honours.
Similarly, if you search for setting up a charity, you discover that “Set up a charity”, “How to register your charity (CC21b)” and “Claim gift aid online” are all on the Citizenship > Charities honours path. And very bizarrely, under the search for setting up a charity, the very first item is “Pay the Dartford crossing charge”! (Although at least this is not on the Charities honours path.)
A speaker at a recent Charity Law Association meeting said she now finds it easier to use Google to find documents on the Commission’s website than to locate anything through the Gov.uk search facility, and I agree. You may want to try this or a similar search engine.
Third Sector reported on 4 December 2014 that the Commission’s operational guidance (OG), intended for Commission staff but also widely used by charity lawyers and by charity staff who know about it and need a detailed understanding of the Commission’s procedures, did not migrate to Gov.uk. It can be found at ogs.charitycommission.gov.uk. The Third Sector article can be accessed via tinyurl.com/mr37w29.
Elsewhere, the Office of the Scottish Charity Regulator (OSCR) launched a new website on 19 November 2014, aiming to make the site "easier to use, easier to understand, and easier to find what you're looking for". It failed at the first hurdle because I couldn't find a press release announcing the new site, but perhaps they never had press releases on the old site either. (I can't remember.) The website remains at www.oscr.org.uk.
And in Northern Ireland the Charity Commission for NI launched an updated website on 1 October 2014. It remains at www.charitycommissionni.org.uk, and the press release announcing the change is at tinyurl.com/of47pey.
Realising the potential of governance.
Published by the ACEVO governance commission on 10 June 2014, Realising the potential of governance makes a number of recommendations for charities on appraisal and accountability, understanding roles and responsibilities, and board management. It also includes additional recommendations for the Charity Commission, funders and commissioners, and the government.
The recommendations for charities are:
Ethical standards in public life
Lord Nolan set out in 1995 seven principles of public life, enshrining the basic ethical standards for anyone elected or appointed to national or local public office, and everyone appointed to work in the civil service, local government, the police, the courts and probation services, non-departmental public bodies, and health, education, social and care services. Significantly, it was confirmed in 2013 that the principles also apply to all those in the voluntary or commercial sectors that deliver public services.
The seven principles are selflessness, integrity, objectivity, accountability, openness, honesty and leadership. These are explained in The 7 principles of public life, at tinyurl.com/ndckpsd, on the Committee for Standards in Public Life website.
Two recent publications from the Committee for Standards in Public Life may be of interest to governing body members of charities and other organisations which provide services for or on behalf of public sector bodies. Ethical standards for providers of public services, published on 17 June 2014, makes three recommendations to ensure high ethical standards are embedded in contract commissioning and provision, alongside other contract management reviews and value for money reports. The report and background research can be accessed via tinyurl.com/pddbhnw.
Ethics in practice: Promoting ethical standards in public life, published on 14 July 2014, looks at the importance of induction in embedding ethical standards. This report is at tinyurl.com/jw9w87r.
Sport and Recreation Alliance code of good governance
The Sport and Recreation Alliance's voluntary code of good governance for sport and recreation bodies is based on seven principles: integrity; defining and evaluating the role of the board; delivery of vision, mission and purpose; objectivity; standards, systems and control; accountability and transparency; and understanding and engaging with the sporting landscape. Originally issued 2011, a refreshed version was published in November 2014 and can be downloaded via tinyurl.com/k3757uu.
Bates Wells & Braithwaite summary of trustee duties
BWB solicitors have a useful two-page summary of charity trustee duties, published in October 2014 and available via tinyurl.com/nl3abjf. Their more detailed 36-page guide is at tinyurl.com/ph9o63z.
New Philanthropy Capital briefing on trusteeship
Following a conference for charity trustees run by NPC and the Clothworkers' Company in December 2013, NPC published in January 2014 an interesting nine-page briefing on the nature of trusteeship. Back to basics can be accessed via tinyurl.com/qxwzq7p.
Community Impact Bucks briefings
Some of Community Impact Bucks' range of briefings, especially those on constitutions, are suitable only for very small organisations, but most are good introductions for governing body members and staff in organisations of any size. Topics include minute taking, employing staff, quality assurance, data protection, lone workers, contracts and completing a tender, business planning and much more. All can be accessed via tinyurl.com/qy88ram.
Trustee liability and insurance
The Insurance Working Group, established by Lord Hodgson following his 2012 review of charity law and the director general of the Association of British Insurers, published a Trustee liability guide on 14 May 2014. This summarises, in chart form, the potential personal liabilities associated with becoming a charity trustee, divided into liabilities to third parties; breach of trust or trustees'/directors' duties; insolvency of an incorporated charity; health and safety; serving as a trustee while disqualified; wrongdoing under civil law (tort); criminal liability; and liabilities of a company director or committee member of a community benefit society (industrial and provident society).
For each type of liability there are six headings: risk/liability; examples; examples of preventative actions; whether incorporation will protect the trustees from personal liability; whether the liability can be covered by insurance; and further reading.
It may not be for the faint-hearted, but on the other hand it may reassure them that things aren't as bad as they fear. Really, it is absolutely essential reading for all trustees. My one complaint is that the coloured background on the charts six of the briefing's 10 pages makes them very difficult to read when printed in black and white.
Trustee liability guide is a free download from Community Matters via tinyurl.com/n4d76rm or the Association of British Insurers via tinyurl.com/mklwk9a.
The third edition of The ICSA Charities Handbook by Kirsty Semple, published in June 2014, covers charity structures and legal frameworks, charity law and regulation, legal forms and structures, setting up a charity, charity compliance, charity governance, the charity's business, and charity assets. While nowhere near as comprehensive as the inimitable Russell-Cooke Voluntary Sector Legal Handbook, it is at least up to date on legal issues (unlike VSLH which is now five years old), and includes checklists, best practice guidance, timetables, and sample documents. It costs £59.95 in paperback or as downloadable PDF.
Charity Checklists by Cecile Goddard, published in July 2014, "provides a clear A-Z guide for anyone responsible for routine charity secretarial and compliance tasks (£24.95 in paperback). Unfortunately the ICSA website does not include a list of contents, so I don't know what it covers.
Two other ICSA publications are How to Run a Charity by Cecile Goddard, published in April 2013 (£29.95 as a paperback or e-book), and the third edition of The ICSA Charity Trustee's Guide by Chris Priestley, published in April 2012 (£24.95 as a paperback or e-book).
Information about these and other ICSA charity-related publications is at tinyurl.com/lwmpeqq. The page also has a link to publications about company law and company secretarial duties, but these are primarily about companies limited by shares rather than by guarantee.
The second edition of Charity Governance, by Con Alexander and the charities team at law firm Veale Wasbrough Vizards, covers the legal and regulatory of charity governance. Published by Jordan Publishing in March 2014, it costs £76.50 as an e-book or e-PDF, or £85 hardback. Details are at tinyurl.com/ovwx59y.
Third Sector magazine called it "that rare thing an accessible legal tome". As editor and a co-author of The Russell-Cooke Voluntary Sector Legal Handbook (VSLH), I feel I must point out that there is at least one other accessible legal tome on the market. Charity Governance is nowhere near as comprehensive as VSLH, but unlike VSLH it is available as electronically as well as in print, and is more up to date on legal matters than VSLH, which is now five years old.
For resources specifically for chairs and vice chairs of charities and other not for profit organisations, see Resources for charity chairs, above, and for resources for company directors, see Governance resources for company directors, below.
HODGSON RECOMMENDATIONS ON GOVERNANCE AND TRUSTEESHIP
Although many resources for members of governing bodies are intended specifically for charity trustees, nearly all are applicable to governing bodies regardless of non-charitable governing bodies as well. All the resources below are free of charge as downloads. Governance codes
Good governance: A code for the voluntary and community sector, originally published in 2005, was issued in three revised and much clearer versions in October 2010: the full code, a summary of the full code, and a code for smaller organisations without paid staff. Now the code steering group (Association of Chief Executives of Voluntary Organisations, Institute of Chartered Secretaries and Administrators, National Council for Voluntary Organisations, Small Charities Coalition and Wales Council for Voluntary Action, supported by the Charity Commission) is carrying out a survey until 23 April 2013, to find out whether more organisations are using the code, whether the new versions are more helpful than the original code and how they could be improved. The survey can be accessed from a banner across the top of the code website at www.governancecode.org.
After years of ambivalence about the original good governance code because of its jargon (even I didn't understand what some of it meant, and I've been training management committees/boards for 30 years) I'm delighted that the new one is in plain English and I'm comfortable recommending it. If your organisation has been using the code, please take a few minutes to complete the short survey. And if your organisation has not been using it, now is a good time to at least have a quick look at it and use the survey to give your initial impressions question 14 is specifically for organisations that have not used the code yet.
The revised code follows the same basic principles as the original, emphasising the importance of understanding why good governance matters, but is intended to be easier to understand and applicable to a wider range of organisations. The code says that boards should provide good governance and leadership by following six "high level principles": understanding their role, ensuring delivery of organisational purpose, being effective as individuals and as a team, exercising effective control, behaving with integrity, and being open and accountable. Each principle is followed by a few bullet points illustrating what it means in practice, with supplementary material providing more detail.
The full code (26 pages), summary (16 pages, but in very big print and with lots of white space), and the small organisations version can be downloaded at www.governancecode.org, along with a jargon buster and a toolkit for small organisations. Paper versions of the code are not available.
The second edition of Good governance: A code for the third sector in Wales, published in April 2012, is available at the Wales Council for Voluntary Action website via tinyurl.com/a5jvj8v.
WCVA has also published a governance health check, available via tinyurl.com/b6qqtru. This self-assessment tool can help boards comply with code principles, and help them demonstrate good governance to regulators, funders, beneficiaries and stakeholders. I prefer the WCVA health check to the toolkit on the governancecode.org website. Both cover the same basic material, but the WCVA health check helpfully phrases it as questions with yes/no answers (or space for a different answer) instead of the fairly complex scoring system used by the governance code toolkit; it is a Word document so is easier to use than the code toolkit, which is in PDF; and it provides lists of documents or actions that can be used as evidence for the replies.
Other code-related resources that may be useful include:
It's your decision: Guidance on decision making for charity trustees, published by the Charity Commission in draft form on 4 February 2013, is a new publication intended to help trustees gain confidence in their decision making and judgement. While stressing that it is up to trustees to determine what is in the charity's best interests, it also emphasises that in making their decisions and assessing the risk related to them trustees must act within their powers, act in good faith and only in the interests of the charity, adequately inform themselves, take into account all relevant factors, disregard any irrelevant factors, manage conflicts of interest, and make decisions that are within the range of decisions a reasonable trustee body would make. The guidance also suggests what trustees should do if they cannot agree, and explains when trustees need to ask the Commission for advice and under what circumstances the Commission might get involved.
The Commission sought feedback on the content, style and approach of the guidance until 30 March 2013. The draft can be accessed via tinyurl.com/owkyuwl.
Specimen board meeting etiquette for not for profit organisations, published by ICSA (Institute of Chartered Secretaries and Administrators) in February 2012, is a useful five-page document setting out good practice for meetings. Its sections are before the meeting, during the meeting, focussing on the agenda, contributing to the discussion, the unitary board, accountability, and after the meeting. It can be accessed via tinyurl.com/a4q68jz. Operating in the current economic climate
In my view, one of the Charity Commission's most useful resources was Big Board Talk: The economic downturn: 15 questions trustees need to ask, published in 2009 and intended for boards that didn't want, or didn't know how, to face the reality of recession and cuts. This has been revised and was re-issued in December 2012 as Big Board Talk: 15 questions trustees need to ask. As with the earlier edition, it reflects a good practice approach in reviewing how an organisation operates, and is particularly relevant in a changing and uncertain economic climate.
Eight of the 15 questions relate to financial health (Are we financially strong enough to sustain our operations? Do we know what impact the economic climate is having on our donors and support for our charity? Do we have any reserves? Have we reviewed our banking arrangements and, where relevant, our investments? Have we reviewed our contractual commitments, for example office leases, rental agreements, equipment hire? Have we reviewed any contracts to deliver public services? If we have a pension scheme, have we reviewed it recently? How can we make best use of any permanent endowment investments we hold?).
The remainder are grouped under strategy (What effect is the current economic climate having on our charity and its activities?), governance (Are we an effective trustee body? Do we have adequate safeguards in place to prevent fraud?), and making best use of resources (Are we making the best use of the financial benefits we have as a charity? Are we making the best use of our staff and volunteers? Have we considered collaborating with other charities? Are we making the best use we can of our property?).
Each question is followed by further questions and relevant publications.
Big Board Talk is on the Charity Commission website via tinyurl.com/qbas9xc [link updated 25/5/13 for Charity Commission's new website] . The Commission "strongly advises" boards of all charities to use this checklist as an agenda item at a board meeting, awayday discussion or planning meeting and so do I. And not only charities, but non-charities as well. Trustee recruitment and induction
The Charity Commission's CC30, Finding new trustees: What charities need to know, was updated in September 2012 to reflect changes in criminal record checks (now disclosure and barring service checks). Covering legal and good practice issues in finding potential trustees, vetting potential trustees and making the appointment, it is at www.charity-commission.gov.uk/publications/cc30.aspx.
Trustee recruitment for small organisations is an online toolkit developed by the National Council for Voluntary Organisations (NCVO) with NAVCA (National Association for Voluntary and Community Action), Community Matters and the Community Sector Coalition. Its six sections cover readiness to recruit, identifying who the organisation is looking for, attracting new trustees, selection and appointment of new trustees, how to welcome new trustees, and what happens next. It can be accessed on the NCVO website via tinyurl.com/36q9aqt. Trustees' administrative duties
The Charity Commission's trustee handbook, published in November 2012. is intended as an induction handbook for new trustees, and as a resource for trustees who have just become a charity's main administrative contact (and those who are handing over administrative responsibility). But it will also be useful as a delayed induction resource for existing trustees, and for staff who support the board.
It includes a checklist of key documents, information on Charity Commission online services, guidance on charity accounting and reporting, suggested timeline and actions for charities with income over £25,000, guidance on finding new trustees, and frequently asked questions. It can be accessed via tinyurl.com/b5cxpyh. Councillors and people in similar positions as charity trustees
Local authority councillors and people from other public sector bodies who are charity trustees have often seen their role as promoting that body's views and doing everything they can to ensure the charity's activities fit in with that body's priorities especially when, under the charity's governing document, the trustee has actually been appointed by the public sector body.
Only gradually are such trustees coming to realise that their position is no different from that of any other charity trustee. When acting as a trustee they must act solely in the best interest of the charity and its beneficiaries, and not in the interest of the local authority or any other body that appoints them or with which they are involved; they must be aware of and declare conflicts of interest; and the board as a whole must ensure these conflicts of interest are properly managed.
Both the Office of the Scottish Charity Regulator (OSCR) and the Charity Commission for Northern Ireland (CCNI) have recently published guidance on the role of local authority councillors (and by extension, others in a similar position) as charity trustees. Although charity law is slightly different in Scotland and Northern Ireland than in England and Wales, the basic principles are the same.
OSCR's Being a charity trustee: A good governance checklist for elected members was published in May 2012 and can be accessed via tinyurl.com/byermzm. The CCNI's Councillors' guide: A guide to a councillor's role as charity trustee, produced in association with the Northern Ireland Local Government Association, was published in October 2012 and is at tinyurl.com/bnmujwc.
For charities in England and Wales, the main guidance on councillors as trustees remains the Charity Commission's RR7, The independence of charities from the state, published in 2001 and available at www.charity-commission.gov.uk/media/95209/rr7text.pdf. Local authorities as charity trustees
A local authority is often a sole trustee of a charity, for example when land or a building is left to a local authority under a will to be used for charitable purposes such as a museum or recreation ground. Over time the authority may forget that it holds the property in trust for charitable purposes, and may come to use it for non-charitable purposes or seek to sell it.
An example is Highbury Hall in Birmingham, which is owned by Highbury, a charitable trust of which Birmingham City Council is sole trustee. The mansion and grounds were left to the city by the family of a Victorian politician, to be used for general charitable purposes for the benefit of the citizens of Birmingham, but in recent years the building has been used primarily for local authority offices and other local authority business. After threats of legal action by local community groups and representatives, the council and local groups are now looking at alternative approaches to managing and using the site.
To help local authorities avoid such situations, the Charity Commission and Local Government Association published a short Councillors' guide to a council's role as a charity trustee in March 2012. The guide says that a number of councils have encountered problems with their role as a sole trustee, usually because councils, accustomed to exercising wide discretion in the way they manage their assets, may not have fully recognised and complied with the restrictions on the use of charitable assets; or because conflicts arise between uses that would be popular with the public and the restrictions imposed by the terms of the charity; and/or where assets were left to the council many years ago, the precise terms of the charity, or even the fact that it is a charity, may have been forgotten or overlooked.
The councillors' guide is on the Charity Commission website at tinyurl.com/cmmokel, with more detailed Commission guidance at tinyurl.com/cscs93b. General resources
The Guardian's Voluntary Sector Network at www.guardian.co.uk/voluntary-sector-network has several "hubs", including on trustees and on governance and management, which may be of interest to trustees. Other hubs cover communications, community action, finance, fundraising, impact and effectiveness, and policy and politics.
Although many resources for members of governing bodies are intended specifically for charity trustees, they are nearly all applicable to all governing bodies regardless of whether they are or are not charities. All the resources below are free of charge as downloads, and some are also free as hard copies. Governance codes
Good governance: A code for the voluntary and community sector, originally published in 2005, was issued in a revised and much clearer version in October 2010. The revised code follows the same basic principles as the original code but is intended to be easier to understand and applicable to a wider range of organisations, emphasising the importance of understanding why good governance matters. The code says that boards should provide good governance and leadership by following six "high level principles": understanding their role, ensuring delivery of organisational purpose, being effective as individuals and as a team, exercising effective control, behaving with integrity, and being open and accountable. Each principle is followed by a few bullet points illustrating what it means in practice, with supplementary material providing more detail.
After years of ambivalence about the code because of its jargon (even I didn't understand what some of it meant, and I've been training management committees/boards for 30 years) I'm delighted that the new one is in plain English and I'm comfortable recommending it.
The full code (26 pages), a summary (16 pages, but in very big print and with lots of white space), and a version specifically for small, unstaffed organisations can be downloaded at www.governancecode.org. Paper versions are not available.
To complement the new edition of the code, the Institute of Chartered Secretaries and Administrators issued in January 2011 a revised version of its Matters reserved for the board of trustees, setting out a long list of responsibilities which must be carried out by the board as a whole rather than being delegated to officers or other individual board members, or to the chief executive or other staff. ICSA guidance note 110110 can be downloaded via tinyurl.com/3lksb9e.
Governance codes for other sectors have also been in the news. The Financial Reporting Council issued a revised UK corporate governance code in June 2010, for listed companies (those whose shares are traded on a stock exchange). This was followed, in November 2010, by Corporate governance guidance and principles for unlisted companies in the UK, published by the Institute of Directors and the European Confederation of Directors' Associations (ecoDa) for companies limited by shares that are not listed on a stock exchange. The IoD/ecoDa guidance sets out nine principles of good governance for all unlisted companies, and five additional principles for large or more complex companies. It emphasises that the principles must be adapted dynamically as companies grow and change. It can be downloaded from the ecoDa website via tinyurl.com/3lksb9e. For specific types of organisation or trustee
The Charity Commission has brought together on one website a range of resources for small charities, which can be accessed via tinyurl.com/65yabe3. "Small" is not defined, because it varies depending on the situation: under £5,000 for not having to register with the Charity Commission and being able to use the Commission's model constitution for very small charities (see small charities constitution), no more than £10,000 for being able to use simplified provisions for amending the governing document of an unincorporated charity; no more than £25,000 for not having to send annual accounts and report to the Commission unless explicitly asked to do so.
Updated guidance for charities working internationally was published by the Charity Commission on 7 April 2011, in a series of seven linked briefings:
In Scotland, the Office of the Scottish Charity Regulator issued new guidance on control and independence in Scottish charities, to help charities identify potential risks and take appropriate action. Issued on 16 March 2011, Who's in charge: Control and independence in Scottish charities can be accessed via tinyurl.com/7tj48q7. Key issues identified by OSCR and illustrated by real case studies are links to central and local government; a charity and a separate body being run by the same people; a charity which is largely funded by another body; and where there is ambiguity about who is in charge of a charity. Although based on duties in Scottish charity legislation, the same principles apply in England and Wales.
The Charity Commission's CC25, Managing charity assets and resources: An overview for trustees is a useful summary of key points for trustees (as well as staff and others) to consider in relation to financial management, investment, risk management, internal financial controls, reserves, fundraising, staff and volunteers, insurance, financial difficulties, buying and selling land, trustee expenses and payments, and trading. An updated version was published on 16 March 2011 and is at www.charitycommission.gov.uk/Publications/cc25.aspx.
The Commission completed publication in June 2011 of its four-part Protecting charities from harm, a compliance toolkit setting out the law and good practice in relation to a range of risks. All four chapters are available via tinyurl.com/6t8mlgs.
Chapter 1, on charities and terrorism, was published in November 2009. Chapter 2, on due diligence, monitoring and verification of end use of charity funds, was published in January 2011 and is intended to help trustees ensure that they carry out appropriate checks (due diligence) on individuals and organisations that give money to, receive money from or work closely with their charity, and that they carry out proper monitoring and evaluation on the end use of funds given to partner organisations and beneficiaries.
Chapter 3, published in April 2011, covers fraud and financial crime, provides practical advice on identifying and tacking fraud and financial crime. The final chapter, published in June 2011, is on holding, moving and receiving funds safely in the UK and internationally. It covers banking, exchanging currencies, and alternative financial systems which may need to be used especially when transferring funds internationally.
In my view, one of the most useful resources the Charity Commission has produced is intended for boards that don't want, or don't know how, to face the reality of recession and cuts. The economic downturn: 15 questions trustees need to ask is at tinyurl.com/y9quw32. It was sent to all registered charities in June 2009, but many trustees and managers are still unaware of it and have not considered the questions it poses, which may be even more important in the current cuts environment than they were when the leaflet was first issued.
There's a raft of new and recent resources to help members of governing bodies. Although some of these are intended specifically for charity trustees, they are nearly all applicable to all governing bodies regardless of whether they are or are not charities. All are free of charge as downloads, and most are also free as hard copies from the relevant organisation.
For specific types of organisation or trustee
Being a trustee, an Easy Read version of the Charity Commission's CC3 The essential trustee, was produced in partnership with Mencap for charity trustees who have a learning disability. It was published on 5 March 2010 and is available from the Commission or via www.charitycommission.gov.uk/library/guidance/cc3_easy.pdf (PDF only).
Governing for children: A beginner's guide to governance in the children, young people and families' voluntary sector is intended for small organisations in these sectors. It includes a section on involving children and young people in governance. From Children England (formerly the National Council of Voluntary Childcare Organisations) via tinyurl.com/d69lm3.
Faith in good governance, from the Charity Commission's faith and social cohesion unit, includes legal information, good practice and case studies specifically for charities established with a religious purpose whose main focus is religious worship and related activities. It is at tinyurl.com/y8bxye4.
Councillors' guide to a council's role as charity trustee, jointly published by the Local Government Association and the Charity Commission, summarises the responsibilities of a local authority where it is a corporate charity trustee (so it doesn't, for example, try to sell property held for charitable purposes, as my local authority and a number of other local authorities have tried to do or in some cases have actually done). The guide is at www.charity-commission.gov.uk/Library/council.pdf.
For all organisations
The Charity Commission has published parts 2 and 3 of its compliance toolkit, Protecting charities from harm, setting out the law and good practice in relation to a range of risks. The first module, on charities and terrorism, was published in November 2009 and is available via tinyurl.com/y9ebxt7. The second module, on due diligence, monitoring and verification of end use of charity funds, was published on 8 January 2011 and can be accessed via tinyurl.com/3ajtawo. This module is intended to help trustees ensure that they carry out appropriate checks (due diligence) on individuals and organisations that give money to, receive money from or work closely with their charity, and that they carry out propr monitoring and evaluation on the end use of funds given to partner organisations and beneficiaries.
The third module, published on 6 April 2011, covers fraud and financial crime, provides practical advice on identifying and tacking fraud and financial crime. It can be accessed via http://tinyurl.com/64g7bx6. The final module will be on holding, transferring and receiving funds safely in the international context. In my view, one of the most useful resources the Charity Commission has produced is intended for boards that don't want, or don't know how, to face the reality of recession and cuts. The economic downturn: 15 questions trustees need to ask is at tinyurl.com/y9quw32. It was sent to all registered charities in June 2009, but many trustees and managers are still unaware of it, and have not considered the questions it poses.
CC3 The essential trustee and CC10 Hallmarks of an effective charity were updated in February 2010 to include a new good practice recommendation for all charities on environmental responsibility and sustainability see section H4 in the revised CC3 via www.charitycommission.gov.uk/publications/cc3.aspx, and hallmark 3 in the revised CC10 at www.charitycommission.gov.uk/publications/cc10.aspx.
I recommend that CC3 and CC10 are given to all charity trustees when they are elected or appointed to the governing body, or (better) at the point they agree to let their name go forward for election or appointment. At the moment, I think it is also good practice to give them The economic downturn (see item above).
Good governance: A code for the voluntary and community sector, originally published in 2005, is being revised. The revised code follows the same basic principles as the original code but is intended to be easier to understand and applicable to a wider range of organisations. There are six "high level principles": that boards should provide good governance and leadership by (1) understanding their role, (2) ensuring delivery of organisational purpose, (3) being effective as individuals and a team, (4) exercising control, (5) behaving with integrity, and (6) being open and accountable. A bullet-point summary of what each principle involves is on the NCVO website at tinyurl.com/3abvm7s.
The National Council for Voluntary Organisations has launched a trustee and governance information centre on its website, with a range of briefings divided (rather confusingly, in some cases) into trustees, governance, boards and CEOs. The briefings can be accessed via www.ncvo-vol.org.uk/governanceandleadership.
Codes of conduct for trustees includes case studies and sample codes of conduct, which are intended to help governing body members work well together, avoid board problems and deal with them when they arise. From Charity Trustee Networks at www.trusteenet.org.uk/resources/2099.
Conflicts in your charity explains when the Charity Commission will and will not get involved in a dispute within a charity, and what the trustees can do on their own or with a mediator or other external assistance. Via tinyurl.com/yb2zotz.
Just how bad can bad governance get and just how much trouble can governing body members get themselves and their organisation into? Pretty bad, and a lot. Charities back on track: Themes and lessons from the Charity Commission's compliance work includes case studies from 2007-08 and 2008-09 illustrating how things can go wrong, and step by step advice to avoid these problems. From the Commission at tinyurl.com/yb6vo6o.
Balancing risk: A guide for trustees and management in charities and social enterprises on making major decisions involving risk, produced by Triodos Bank and Sayer Vincent auditors, provides a useful introduction to risk management in general, and in particular managing financial risk. Free via tinyurl.com/ydog9kg. Unfortunately some of the tables have dark backgrounds and small print, and don't print out very well especially in black and white.
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