The release of the new Charities SORP was swiftly followed by the release of the new Charity Governance Code.
Whilst compliance with the Code, which sets out universal principles of governance for charities, is not a regulatory requirement, it is a practical tool for trustees and when followed helps encourage discussion about standards, behaviours and processes which cultivate good governance.
The revised Code underwent public consultation in 2024 and is considered by many in the sector to represent an evolution not a fundamental revolution.
Features of the new code compared to the previous iteration are detailed below:
- The 2020 version of the Code for small charities was made up of seven principles which built on the assumption that a charity is meeting its legal and regularity responsibilities as a ‘foundation’. The 2025 version has removed this assumption by adding the ‘Foundation’ as an eighth principle. A subtle but important change, the formalisation of this principle makes some of the basic expectations of trustees – such as knowing their legal role, continuous learning, putting the charity’s interests first – more explicit.
- The former ‘Decision making, risk and control’ principle has been split in two: ‘Decision making’ and ‘Managing resources and risks’. This arguably requires trustees to have more focused conversations in these areas.
- ‘Equity’ replaces ‘Equality’ in the EDI principle, reflecting the evolution in understanding of these principles in recent years.
- Greater emphasis has been put on trustee behaviours (for example: curiosity, continuous learning, openness, confidentiality, recognising conflict) and culture, as part of the new ‘Ethics and culture’ principle which replaces the former ‘Integrity’ principle.
It is this greater emphasis on trustee behaviours, noted above, which is demonstrable in the structural presentation of the new Code. Previously each principle was defined and given context through a rationale before relevant key outcomes and recommended practice were detailed.
The new code has adopted a different structure:
- Whilst every principle is still defined, readers are given examples of when “you known it’s working”, striking a somewhat more encouraging tone.
- Each principle has now includes a series of behaviours, which are often extended specifically for charities with staff.
- Once the behaviours of a given principle are set out, a list of policy, processes and practice are detailed, again often extended for large charities (though the Code’s definition of ‘large’ is not explicitly included)
- Finally, each principle includes a list of ‘suggested evidence and assurance’.
The ICAEW argues that the increased focus on board-level behaviours in the new Code recognises the challenges presented the financial pressures being felt by many charities and an environment increasingly characterise by polarised opinions.
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