Charity Commission checks compliance with governance regulatory alert

James Sinclair Taylor, Consultant in the Russell-Cooke Solicitors, charity law and not for profit team.
James Sinclair Taylor
3 min Read

As part of a new proactive stance, the Commission is reaching out to check that charities are complying with the Commission’s regulatory alerts.  This is currently focused on the governance requirements raised in the June 2020 Commission regulatory alert on governance and transparency.  The focus of the Commission will be on larger charities but it is possible that the Commission could also extend this to smaller charities.

The Commission’s approach appears to be to supply the charity with an initial questionnaire for completion, along with copies of the charity’s range of policies. The Commission will check the response and documents received for compliance issues, before setting up a meeting with the charity to discuss any issues that have been identified. We summarise some of the key areas in which the Commission is likely to focus, below.

The Commission will evaluate whether the charity has got a well-documented and effective process for selecting and inducting trustees.  They also want to know what has been done to train and update trustees. It is clear that they will be expecting to see evidence of trustee training which typically involves external, as well as internal, input. 

The Commission will also be exploring the charity’s committee structure. It is hard to see what line they will take in this area, given the very differing approaches that charities have to the use of committees.  However, as a baseline they will be looking to see appropriately drafted terms of reference for each committee. 

Good communication between trustees and the executive is key to any charity with an executive team. We expect the Commission to consider the quality of the charity’s communication in this regard as part of their evaluation. While there will be few charities that don’t have good communication at board level, communication beyond that is often weak.

An area which the Commission is going to be evaluating carefully is the quality of the charity’s policies.  Many charities have got a fairly full range of policies covering key areas such as safeguarding, risk management, complaints etc.  However it is not uncommon for such policies to have been left un-reviewed for some time and therefore not be fully reflective of the Charity Commission’s increasingly directive requirements as to what should be included.

Finally, and perhaps a little more surprisingly, the Commission is expecting to see terms of reference for a governance sub-committee. Such committees are not a universal feature of charities and it seems to us that as long as governance is being adequately addressed, governance or nominations sub-committees are not always essential.  What is perhaps more essential is evidence of compliance with key elements of the Charity Code of Governance, in particular external governance reviews.  The sector has been relatively slow to comply with the requirement in the Code for an independent governance review for charities with over £1m of turnover. Our work in this area has convinced us that such independent reviews can make a real contribution to the development of best practice in governance.

Briefings Charities James Sinclair Taylor Russell-Cooke charity law charities e update charity commission checks governance regulatory alert