Last year was an important landmark for registered charities in Ireland. It was the first year they reported on their level of compliance with the Charities Governance Code, a mechanism developed in consultation with stakeholders to help build public trust and confidence in individual Irish charities and the sector as a whole.
Today, there are almost 11,500 registered charities in Ireland providing a range of services and supports in communities across the country. The Charities Governance Code (the Code) sets the minimum standards that the boards of these charities should ensure their charity meets in order to effectively manage and control their organisations. As we reported in our recently published Annual Report, at the end of December 2021, almost seven in ten charities who submitted an annual report to the Charities Regulator declared themselves to be in full compliance with the Charities Governance Code.
J.K. Rowling once wrote that “Fear of a name increases fear of the thing itself.” And it is fair to say that the mere mention of a “Governance Code” instils fear in many – no matter the sector of business or society to which it relates. Fortunately, the charity sector’s response to the Charities Governance Code has been positive overall and we have been greatly encouraged by the level of engagement since it was launched.
Public trust and confidence are the bedrock of Ireland’s charity sector. The success of the Code in enhancing levels of public trust and confidence very much depends on the extent to which the Code is embraced by charity trustees - those volunteers who sit on the boards of charities (or committees in the case of associations) - and is embedded in what they do on a day-to-day basis.
The Code helps charity trustees fulfil their duty of acting in the best interests of the charity. Its benefits extend beyond setting standards. As a charity’s compliance status with the Charities Governance Code is included in the public Register of Charities, it also provides important evidence of good governance to those interested in supporting the charity, whether through giving time, money or goods.
Donors – from members of the public to businesses choosing a beneficiary for a fund-raising initiative - rely heavily on the reputation of charities and the wider sector when choosing which charity to support. Research undertaken by Amárach on behalf of the Charities Regulator highlights the strong link between greater transparency and accountability by charities and public trust in the sector.
Additionally, from our ongoing engagement with charity trustees it is becoming apparent that a charity’s compliance with the Charities Governance Code can be an important asset in recruiting new trustees.
One of the challenges for those working to embed good governance practices is the fact that there is no end point, as good governance itself requires reflection and review. What is fit for purpose at a point in time may not be fit for purpose at a future point in time. An example is the significant changes to working practices and service delivery, which had to be undertaken by many charities as a result of the pandemic.
Similarly, a substantial change in a charity’s fortunes will necessitate a review of existing policies and procedures. For example, a large donation might move a locally focused volunteer-only charity into an entirely new sphere, potentially requiring significant changes to internal financial controls, service development and delivery, and possibly requiring the employment of staff. If a charity has never had paid staff, this can be a significant change for charity trustees to ensure it is done right.
But if charity trustees have a strong governance framework in place their capacity to continually adapt and maintain good governance is substantially increased. Depending on the size and complexity of organisations, from time to time, external expertise on governance matters may be needed. However, we are keenly aware that not everyone has the luxury of external experts and professional advice. Over half of Irish charities have an annual income of less than €250,000, according to information supplied in annual returns for 2020. For this reason, we have developed an extensive range of guidance, templates, samples and other written and audio-visual materials, which are available on the Governance Code area of our website for everyone to use.
I am concluding with an ask - talk about governance. Whether you are an existing or potential charity trustee, or someone who supports a charity through donating time, money or goods, everyone can play a part in ensuring the narrative regarding the Charities Governance Code is one of good governance being part and parcel of what’s required to ensure charities continue to have a positive impact on society in Ireland.