The sector’s code of good governance is no longer fit for purpose for large and complex charities and ought to be updated by its authors, according to CFG trustee and former Charity Commission policy chief Rosie Chapman.
Speaking at the CFG Large Charities Conference today, Chapman said that the existing code of governance lacks rigour and fails to assure funders and commissioners.
“If the current code of governance that applies to charities was updated for large and more complex charities, it could play a really important role in enhancing transparency and accountability,” she said.
“The existing code of governance doesn’t give assurance to funders and commissioners or put you in good stead with your competition – your private and public sector peers.”
Chapman and a colleague also wrote an article outlining their views on the efficacy of the code in this month's Charity Finance magazine.
Chapman told the conference a new code should provide clearer principles about what transparency and accountability mean for large charities – in particular with regards to beneficiaries and stakeholders and the way in which they hold the charity to account.
She also argued that charities need to be more transparent about their role in the marketplace.
“There are very few examples of large charities talking about partnerships and brokering with their smaller charity peers in the sector. It’s much more about competition than examples of collaborative work. It is also difficult to find examples of charities’ policies in relation to how they treat their supply chains – whether they have any ethical considerations that they apply to purchasing decisions,” she said.
According to Chapman, there is a cross-sector trend towards greater transparency but an updated code would encourage charities to be clearer about how money is spent and why.
“In the arts and museum world there has been a huge shift from holding on to information to making it freely available to people. That’s a trend that larger charities would do well to follow,” she said.
Article in Charity Finance magazine
The article by Chapman and fellow consultant Radojka Miljevic in this month's Charity Finance suggested improvements to the code.
They suggested that a new code should encourage and support boards of large, professional charities, to “anticipate, project, hypothesise and bring an authentic degree of externality and independence to executive thinking”. A trustee who fails to do this brings “questionable value” to their role, they wrote.
The code was first developed by Acevo, NCVO, ICSA and WCVA in 2005 as a benchmark for what good governance should look like for voluntary and community organisations. A simplified version was devised for organisations with low income and no staff, but apart from that exception, the same code still applies to all charities, no matter what their size.
Chapman and Miljevic argue that that universality now seems anachronistic. “It positions the code like an entry-level introduction to governance, setting out some basic tenets, as though it is there to inform rather than raise the bar higher."
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Additional reporting by Tania Mason