Charities will not face regulatory action for failing to apply new governance code, says Sarah Atkinson

But the director of policy and communications at the Charity Commission says the regulator will use the document to determine the overall health of the organisation

Sarah Atkinson
Sarah Atkinson

The Charity Commission will not take regulatory action against charities that fail to apply the new sector governance code, but will use it to determine the overall health of the organisation, according to Sarah Atkinson, director of policy and communications at the Charity Commission.

Speaking at the law firm Bates Wells Braithwaite’s annual charity and social enterprise tea party yesterday, Atkinson said that because the Charity Governance Code was voluntary, it would not form the basis for regulatory action, and said the commission was keen to avoid "regulatory creep".

The Charity Governance Code, which was revised earlier this year, recommends a number of policies including larger charities submitting to an external reviews every three years.

Atkinson told the conference that charities would not be subject to regulatory action solely because they were not applying the code, or because they had not heard of it. 

"But we will think you are a stronger charity better equipped to face the challenges that you have if you are familiar with and applying the code," she said. 

She said the commission would refer to the code when considering any sector-wider recommendations as part of a statutory inquiry.

"What we will take regulatory action on is our guidance set out in trustee duties," she said.

Atkinson also said that she hoped the release of the code was "very much the start of what needs to be a process to socialise the code and create a movement around good governance".

The code also recommends that charities review whether to retain trustees that have served nine years or more in the role, and Atkinson said it was important that decisions to keep trustees in place were taken in the best interests of the charity.

"It is important that when people want to stay for a long time, it is because the charity needs them, not because they need the charity," she said.

"It can’t be about you – there has to be other ways you can continue to support and love that organisation. It has to be that the charity has particular need of something you can continue to bring, and continue to bring afresh."

Philip Kirkpatrick, co-head of the charities and social enterprise team at BWB, said that it was important to balance "the need for continuity and knowledge, and the need for innovation and new ideas, and of course allowing for diversity" when deciding whether to extend trustees’ term of office past nine years.

He also said that there was a risk that the code "becomes a stick to beat people with rather than what the code team wanted it to be, which is an aspirational thing to pull people up".

Also speaking at the conference, Rosie Chapman, chair of the Charity Governance Code Steering Group, which oversaw the redevelopment of the new code, said that she thought the latest version was realistic, but said that some charities already meeting other organisations’ governance codes, such as housing associations or sports charities, "might as well continue to meet their codes" to ensure funding remains in place.

Baroness Pitkeathley, chair of the House of Lords Select Committee on Charities, said that despite the pressures on modern trustees, the sector should be cautious about overemphasising the difficulties ahead of the benefits of trusteeship.

"I think we pile more and more responsibility onto trustees, and perhaps we should be cautious about emphasising all the possible negatives that there are in the responsibilities from being a trustee," she said.

"I personally have had huge joy from being a trustee – I have learnt things, I have developed skills and I have had terrific experiences. I think we should always remember that when we think about the extras we are giving to trustees."

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