Good Governance:Code for theVoluntary andCommunity SectorSummary

Good Governance:Code for theVoluntary andCommunity SectorSummary

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Introducing the codeThis leaflet is the summary of Good Governance: a Code for Voluntary and Community Organisations. It is intended to help and support Board members inthe important and rewarding work that they carry out.

The Code was produced by a group of voluntarysector support organisations: Charity TrusteeNetworks, the Association of Chief Executives ofVoluntary Organisations, the Institute of CharteredSecretaries and Administrators and the NationalCouncil for Voluntary Organisations, along with theCharity Commission. It is being promoted andimplemented by the Governance Hub. The Hub is a partnership of voluntary and community sectorassociations, working to improve the quality ofgovernance of voluntary and communityorganisations in England.

The Code sets out best practice. It is not mandatorybut organisations that comply with the Code areinvited to state this in their Annual Report and otherrelevant published material, and pledge their supportfor the Code by signing up to the Hub’s onlinecharter. Smaller organisations with limited resourcesand with few or no staff are invited to focus onthe principles set out in the Code, and to statetheir compliance with the principles ratherthan the detail of the Code.

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This booklet sets out the seven main principles thatunderpin the Code, together with the mostimportant supporting principles.

Underlying each of these is the additional principleof equality – that of ensuring equity, diversity andequality of treatment for all sections of the community.We see this as fundamental to the work of allvoluntary and community sector organisations;rather than creating a separate ‘Equality’ section, the principle has been applied throughout the Code.

Trustee StandardsThe National Occupational Standards for Trustees andManagement Committee Members were launched in2006. Developed as a standard for individual trusteesand approved by the Qualifications and CurriculumAuthority, the Trustee Standards explain the skills andknowledge that trustees need to develop their work.

The Code has a much broader role: to set out theprinciples and practices of good governance in anorganisation as a whole. The Code and Standardsmay be used for different things; the Standards areuseful for individual trustee development and the

Code is useful for putting in place a governancereview for your organisation. To find out more about the NOS, or download the text, go towww.ukworkforcehub.org.uk.

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The futureBoth the Code and the Trustee Standards are beingpromoted and developed by the Governance Hub.Toolkits have been produced to help organisationsuse the resources to assess, learn about and developtheir governance; these cost £15 each from the Hub,or can be downloaded free from the website.Trainers are using the toolkits in 40 workshops takingplace across the country to introduce the Code andStandards to trustees, staff and external advisers.Nine regional Code Champions have been recruitedto promote the principles of good governance.

A range of organisations are piloting the Code andtheir learning and experiences will inform a reviewof the Code in early 2007. Organisations using theCode or Standards are encouraged to share theirstory with the Hub by submitting a case study online.

If you would like to find out more, please contact

The Governance Hub: Email governance.hub@ncvo-vol.org.ukWebsite www.governancehub.org.ukHelpdesk 0800 652 4886

Copies of the full Code can be ordered from the Hub or downloaded from the website.

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Principle 1:Board leadership Every organisation should be led and controlled byan effective Board of trustees which collectivelyensures delivery of its objects, sets its strategicdirection and upholds its values. The supportingprinciples are:

The role of the Board: Trustees have and mustaccept ultimate responsibility for directing the affairsof their organisation, ensuring it is solvent, well-run,and delivering the outcomes for which it has beenset up.

Strategic direction: Trustees should focus on thestrategic direction of their organisation, and avoidbecoming involved in day to day operational decisionsand matters (except in the case of small organisationswith few or no staff). Where trustees do need tobecome involved in operational matters, they shouldseparate their strategic and operational roles.

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Principle 2:The Board in control The trustees as a Board should collectively beresponsible and accountable for ensuring andmonitoring that the organisation is performing well,is solvent, and complies with all its obligations. The supporting principles are:

Compliance: The Board must ensure that theorganisation complies with its own governingdocument, relevant laws, and the requirements ofany regulatory bodies.

Internal controls: The Board should maintain and regularly review the organisation’s system ofinternal controls, performance reporting, policies and procedures.

Prudence: The Board must act prudently toprotect the assets and property of the organisation,and ensure that they are used to deliver theorganisation’s objectives.

Managing risk: The Board must regularly reviewthe risks to which the organisation is subject, andtake action to mitigate risks identified.

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Equality and diversity: The Board should ensurethat it upholds and applies the principles of equalityand diversity, and that the organisation is fair and opento all sections of the community in all of its activities.

Principle 3:The high performance BoardThe Board should have clear responsibilities andfunctions, and should compose and organise itself todischarge them effectively. The supporting principles are:

Trustee duties and responsibilities: Trusteesshould understand their duties and responsibilitiesand should have a statement defining them.

The effective Board: The Board should organiseits work to ensure that it makes the most effectiveuse of the time, skills and knowledge of trustees.

Information and advice: Trustees should ensurethat they receive the advice and information theyneed in order to make good decisions.

Skills and experience: The trustees should havethe diverse range of skills, experience and knowledge

needed to run the organisation effectively.

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Development and support:Trustees should ensurethat they receive the necessary induction, training andongoing support needed to discharge their duties.

The chief executive: The Board should makeproper arrangements for the supervision, support,appraisal and remuneration of its chief executive.

Principle 4: Board review and renewal The Board should periodically review its own andthe organisation’s effectiveness, and take anynecessary steps to ensure that both continue towork well. The supporting principles are:

Performance appraisal: The Board shouldregularly review and assess its own performance,that of individual trustees, and of sub-committees,standing groups and other bodies.

Renewal and recruitment: The Board shouldhave a strategy for its own renewal. Recruitment ofnew trustees should be open, and focused oncreating a diverse and effective Board.

Review: The Board should periodically carryout strategic reviews of all aspects of theorganisation’s work, and use the results toinform positive change and innovation.

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Principle 5:Board delegationThe Board should set out the functions of sub-committees, officers, the chief executive, otherstaff and agents in clear delegated authorities, andshould monitor their performance. The supportingprinciples are:

Clarity of roles: The Board should define the rolesand responsibilities of the chair and other honoraryofficers, in writing.

Effective delegation: The Board should ensurethat staff, volunteers and agents have sufficientdelegated authority to discharge their duties. All delegated authorities must have clear limitsrelating to budgetary and other matters.

Terms of reference: The Board should set clearterms of reference for subcommittees, standinggroups, advisory panels, etc.

Monitoring: All delegated authorities must besubject to regular monitoring by the Board.

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Principle 6: Board and trustee integrity The Board and individual trustees should actaccording to high ethical standards, and ensure that conflicts of interest are properly dealt with. The supporting principles are:

No personal benefit: Trustees must not benefitfrom their position beyond what is allowed by thelaw and is in the interests of the organisation.

Dealing with conflicts of interest: Trusteesshould identify and promptly declare any actual orpotential conflicts of interest affecting them.

Probity: There should be clear guidelines forreceipt of gifts or hospitality by trustees.

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Principle 7: Board openness The Board should be open, responsive andaccountable to its users, beneficiaries, members,partners and others with an interest in its work. The supporting principles are:

Communication and consultation:Each organisation should identify those with alegitimate interest in its work (stakeholders), andensure that there is a strategy for regular andeffective communication with them about theorganisation’s achievements and work.

Openness and accountability: The Board shouldbe open and accountable to stakeholders about itsown work, and the governance of the organisation.

Stakeholder involvement: The Board shouldencourage and enable the engagement of keystakeholders, such as users and beneficiaries, in theorganisation’s planning and decision-making.

For more information or to see the full Code, go to www.governancehub.org.uk on behalf of

The National Hub of Expertise in Governance, a Home Office ChangeUp Initiative.

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ISBN 0 7199 1686 0

Governance Hub c/o NCVORegent's Wharf, 8 All Saints Street, London N1 9RL

Telephone: 020 7520 2514Fax: 020 7278 0211Helpline: 0800 652 4886 (9am-6pm Mon-Fri)Web: www.governancehub.org.ukEmail: governance.hub@ncvo-vol.org.uk

Charity Number NCVO 225922

The Governance Hub is a programme to improve the quality of thegovernance of voluntary and community organisations in England. It is anindependent partnership of seven organisations who provide support tothe voluntary and community sector – acevo, BTEG, Charity TrusteeNetworks, Volunteering England, NCVO, bassac and NACVS. The Hub ispart of the Home Office ChangeUp strategy to strengthen the voluntaryand community sector and is receiving funding from the ActiveCommunities Unit for two years.

The Governance Hub aims to:

• Promote trusteeship and get people from more diverse backgrounds involved

• Provide resources and services for trustees, boards and advisors who work with them

• Develop local support to increase knowledge and skills relating to governance and boards

• Work through partnerships at every level