As we reflect on the learnings from Charity Trustees’ Week 2024, it is clear that the implementation of the Charities (Amendment) Act, 2024 may require a change in mindset of some charity trustees as they re-evaluate their understanding of and approach to ‘good governance.’

The Challenge

Given the volume of legal and regulatory requirements which can apply to an individual charity and the voluntary nature of the charity trustee role, it is not surprising that some trustees may find the thoughts of implementing further governance requirements under the Charities (Amendment) Act 2024 daunting.

Out of fear that their charity may not strictly comply with each and every requirement, many trustees have adopted either a tick-the-box approach to compliance or have developed an aversion to risk, potentially restricting the flexibility of the charity to adapt to the needs of its beneficiaries or to find innovative ways of furthering its purpose.

The Opportunity

“Good governance involves putting in place systems and processes to ensure that your charity achieves its charitable objectives with integrity and is managed in an effective, efficient, accountable and transparent way.”

Charities Governance Code

Good governance is underpinned by the ethical values of integrity, accountability and transparency. How trustees ensure that the decisions they take are in the interests of beneficiaries and that there are open, honest and effective channels of communication with key stakeholders, should therefore be used as the key measures of success in the implementation of a robust governance and control environment.

With this in mind, good governance should not be viewed as an administrative or compliance burden by trustees but as the framework which allows them to effectively perform their role and a means to demonstrate to others the trustworthiness and credibility of the charity.

Fundamentals of Good Governance

Good governance cannot be evidenced by a checklist or a once-off gap analysis exercise, it should be incorporated into every aspect of your charity’s operation and management. We see the following as the fundamentals of a good governance and control environment for any charity:

Strong and Effective Leadership

A charity should be led by individuals who collectively possess the requisite skills and capabilities to support the achievement of the charity’s purpose and objectives, and who fully understand their role and responsibilities.

Emphasis on Continuous Improvement

Perfect should not be the enemy of good, especially when financial and human resources are limited. Good governance should be demonstrated through a process of iterative improvements which carefully balance the current needs of beneficiaries with the long-term success of the charity as an organisation.

Transparency

Not every decision will lead to the outcome expected and not all initiatives will succeed. By being transparent on how decisions are made, even if things don’t go to plan, there is less likelihood of public misconceptions around the intentions of the charity or the erosion of trust.

Documentation

To ensure there is an awareness and understanding of who does what within the charity, as well as clarity and consistency in the processes followed, the trustees should ensure that suitable policies and procedures are put in place. In addition, minutes should be taken of all meetings of the trustees to evidence the oversight and management of the charity’s operations.

What’s Next?

Charity trustees can expect further guidance from the Charities Regulatory Authority over the coming months on the practical next steps to implementing the Charities (Amendment) Act 2024.

How can we help?

We are delighted to announce the launch of the Arthur Cox Charities Governance Health Check and Toolkit, as part of the wider Arthur Cox’s Practical Diagnostics Series.

Whether you require hands-on support with the review, enhancement and/or implementation of your governance, risk and compliance arrangements or you are looking for concise, practical, and easy to read guides and checklists to help you comply with your requirements, Arthur Cox is here to help.

Our Charities Governance Health Check and Toolkit offerings have been designed by Arthur Cox’s inhouse Charity Law experts and Consulting specialists to provide a high quality, cost-effective solution to quickly and effectively identify areas for improvement and enhancement within your Charity.

To find out more about both the Charities Governance Health Check and Toolkit, visit our brochure.

If you would like to discuss any of the services mentioned above, please do not hesitate to contact your usual Arthur Cox contact(s), or any member of the Governance and Consulting Services or Charity Law Group to discuss how we can help you.