Registered charities are required to report on their compliance with the Charities Governance Code (“the Code”) to the Charities Regulator for the first time during 2021.
Charities are required to declare their compliance status as at the date they file their Annual Report, which is 10 months after the financial year-end of the charity. This gives charities the opportunity to complete the process of implementing the Charities Governance Code right up to the date of filing their Annual Report in 2021.
Many charities have a financial year-end of 31 December so they must file its first report by 31st October 2021.
Challenges with Complying
The Charities Regulator acknowledged in its information note Charities Governance Code –Reporting on Compliance in 2021 the challenges facing charities due to Covid-19:
“the Charities Regulator wishes to assure registered charities that it will adopt a balanced and proportionate response in relation to any charity which is not in full compliance with the Code in 2021, with an emphasis on understanding common reasons for noncompliance in order to provide charities with further guidance on meeting the standards set out in the Code in the first instance.
The Charities Regulator recognises that for some registered charities, particularly smaller charities that are run entirely by volunteers, achieving full compliance with the Code may be an incremental process. The current public health crisis has meant that no matter what particular challenge a charity is facing, its charity trustees are having to make serious decisions. With this in mind, we would like to take the opportunity to remind charity trustees that if they are meeting regularly to discuss key issues affecting their charities and are recording all decisions in writing by way of meeting minutes, then their charities are already meeting a significant number of the standards set out in the Code.”
What Is The Code?
- 2019 was a year of learning and preparation for charities to assist them in getting used to the Code
- 2020 was the first year that charities were expected to comply with the Code.
- 2021 is the first year that charities will report on their compliance with the Code
The Code is made up of :-
- 6 Principles which all charities should apply;
- 32 Core Standards that all charities are expected to meet when putting the principles into action; and
- 17 Additional Standards that reflect best practice for charities with high levels of income and/or complex organisational and funding structures and/or a significant number of employees.
The 6 principles are:-
- Advancing its charitable purpose
- Behaving with integrity
- Leading people
- Exercising control
- Working Effectively
- Being accountable and transparent
How to Comply
It also contains some helpful questions and answers charities and their trustees may have including “Where Do I Start”.
The Code sets out 10 steps to report compliance:-
- Step 1
- Step 2
- Decide if your charity is more complex for the purpose of the Code.
- Step 3
- For each standard, decide what action or actions you will take to meet that standard in your charity.
- Step 4
- State each action next to the relevant standard in the Compliance Record Form.
- Step 5
- If any of the standards do not apply to your charity, explain why next to that standard in the Compliance Record Form.
- Step 6
- Decide what evidence you can provide for the action or actions that you are taking to meet each standard that applies to your charity.
- Step 7
- State the evidence you can provide next to the relevant action in the Compliance Record Form.
- Step 8
- Review the Compliance Record Form and agree it is accurate at a board meeting.
- Step 9
- Declare your charity’s compliance (or provide your charity’s reason for not complying) with the Code when submitting your annual report to the Charities Regulator.
- Step 10
- Having considered the standards, actions and evidence (Steps 3 to 7) again, complete a fresh Compliance Record Form at a board meeting every year before reporting on compliance to the Charities Regulator.
Note: The content of this article is provided for information purposes only and does not constitute legal or other advice.