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Good Governance Code for Northern Ireland Charities

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Charities_Governance_Compliance_copy.jpgThe Developing Governance Group (DGG) is made up of a number of charity organisations in Northern Ireland with the common goal of improving governance practice in the voluntary and community sector.

The DGG launched the ‘Code of Good Governance’ in 2008 following consultation with the voluntary and community sector. While the Code is not mandatory, it has been widely accepted as the set of standards for governance in the sector in Northern Ireland.

A revised Code of Governance was consulted on in early 2014 and with funding ultimately secured the new Code was launched on 29 January 2016.

The Good Governance Code

The Good Governance Code is a best practice document which sets the standards for all governing committees and boards in the voluntary community sector in Northern Ireland. The UK Charity Commission chairman suggests that ‘Good Governance demonstrates a willingness and ability to act in the best interests of the organisation, ensuring the operation of effective, open and ethical processes which adhere to the law and stand up to scrutiny.’

The Code has been revised into five overarching principles; the principles of leadership and effectiveness from the original Code have now been included as integral elements of each principle rather than as separate principles. The principles are broad and generic so that organisations of any size or type can use the Code. We will now look at each of the principles in turn.

Related: Update To The UK Corporate Governance Code 2014

Principle 1 : Role and Responsibilities

An effective board will provide good governance and leadership by understanding its role and responsibilities. The first principle advises that the members of boards are equally responsible in law for board actions and decisions. In this regard they are also collectively responsible and accountable for ensuring the organisation is performing well in terms of:

  • Setting and safeguarding the vision, values and reputation of the organisation;
  • The rules set out in the organisation’s governing document;
  • Their legal duties;
  • The stewardship of assets;
  • The organisation’s operating environment and structure;
  • Overseeing the work of the organisation

Related: The Company Secretary: Building Trust Through Governance - Overview

 

Principle 2: Appropriate Policies and Procedures

An effective board will provide good governance and leadership by working well both as individuals and as a team. The second principle suggests that the board should have a range of appropriate policies and procedures, knowledge, attitudes and behaviours to enable both individuals and the board to work effectively. The board should also plan for its own development by:
  • Finding and recruiting new board members to meet the changing needs of the organisation in relation to skills, experience and diversity;
  • Providing appropriate inductions for new board members;
  • Providing all board members with opportunities for training and development according to their needs;
  • Periodically reviewing both individual and team performance.

Related: Update To The UK Corporate Governance Code 2014

Principle 3: Delivery of Organisational Purpose

An effective board will provide good governance and leadership by ensuring delivery of organisational purpose. The third principle notes a board is ultimately responsible for directing the activity of the organisation and delivering its stated purpose. To do this a board should:
  • Ensure the organisational purpose remains relevant and valid;
  • Provide public benefit;
  • Develop and agree a long-term strategy;
  • Develop operational plans and budgets and monitor spending against them;
  • Evaluate results and then amend plans and budgets as appropriate;
  • Maintain a positive working relationship with volunteers and staff.

Related: Corporate Governance & Risk Management – Latest Developments

 

Principle 4: Exercising Appropriate Control

An effective board will provide good governance and leadership by exercising appropriate control.

The fourth principle recommends that the board as the accountable body should maintain and regularly review the organisation’s system of internal controls, performance, and policies and procedures to ensure that:

  • The organisation understands and adheres to all legal and regulatory requirements;
  • The organisation has appropriate and up to date internal financial and management controls;
  • It identifies and reviews on a regular basis the major risks to which the organisation is exposed and has systems to manage those risks;
  • Delegation to committees, staff and volunteers is effective and that the delegated authority is appropriately supervised;
  • Proper arrangements are in place for the recruitment, supervision, support, appraisal and remuneration of all staff;
  • Volunteers are managed and supported.

Related: 7 Key Features Of Good Board Reporting [Information Governance]

 

Principle 5: Behaving With Integrity

An effective board will provide good governance and leadership by behaving with integrity and by being open and accountable.

The fifth principle notes the board should be open, responsive and accountable, acting at all times with integrity, and in the interest of the organisation and its beneficiaries. In doing this the board should:

  • Act according to a high set of ethical standards;
  • Identify, understand and manage conflicts of interest and loyalty;
  • Maintain independent decision making;
  • Ensure open communication by informing and consulting people about the organisation and its work;
  • Listen and respond to the views of beneficiaries, service users, funders and supporters with an interest in the organisations work;
  • Handle complaints constructively, impartially and efficiently;
  • Consider organisation responsibilities to the wider community, society and the environment;
  • Consider organisational responsibility in promoting equality and good relations.

The five guiding principles are extensive and far-reaching and when applied appropriately by Northern Ireland charities should form the basis of sound governance within the organisation.

The Charity Commission hopes that with continued efforts to develop the governance frameworks within charitable organisations, Northern Ireland can potentially lead the way for good governance in the UK.

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