Implementing good governance
Clear principles for good governance allow society to hold the community, voluntary and charitable organisations to account.
Poor governance in the third sector has affected its public image over recent months. However, the best practice standards for how charities should be managed have been in place for the last two years and can be used by donors and other members of the public to hold them to account.
The governance code for community, voluntary and charitable organisations was developed within the sector and published in February 2012. It followed on from a similar code of good governance for development NGOs, formulated by the sectoral body Dóchas and the Corporate Governance Association of Ireland in 2009.
All organisations have a responsibility to provide and follow a code of good practice for running their organisations. Five principles are set out:
• leadership;
• exercising control within the organisation;
• transparency and accountability;
• effective working; and
• behaving with integrity.
Good leadership is achieved by agreeing the organisation’s vision, purpose and values and making sure that they remain relevant. A plan is established to make sure that the purpose is achieved and that staff, volunteers and any other representatives of the organisation are managed and held to account.
The control commitment involves identifying and complying with all relevant legal and regulatory requirements, making sure that appropriate internal financial and management controls are in place, identifying major risks facing the organisation, and deciding how to manage those risks.
On the third point, an organisation must identify its stakeholders – i.e. those who have a legitimate interest in its work – and make sure that there is regular and effective communication with them. This includes responding to stakeholders’ questions or views and encouraging and enabling people who benefit from the organisation to take part in its planning and decision-making processes.
An organisation works effectively when its governing body, individual board members, committees, staff and volunteers understand their roles, legal duties, and delegated responsibilities for decision-making. An effective board exercises collective responsibility and has suitable recruitment, development and retirement processes in place.
Integrity is defined as being honest, fair and independent, and understanding, declaring and managing conflicts of interest and conflicts of loyalties. The organisation’s reputation is protected and promoted in a way that respects these ethical guidelines.
The code comes in three separate versions, depending on the type of organisation, with the level of governance increasing with size.
Type A organisations are run by volunteers and do not employ staff. These should ensure that their purpose is in line with their written constitutions. Type B organisations usually employ a small number of staff although many may have a single staff member. Type C organisations have a large staff team and a board which focuses solely on governance and oversight.
The code is principles-based and voluntary, meaning that groups and organisations are expected to compare themselves to its standards on a “comply or explain” basis. Managers ideally measure the organisation against the principles and the required actions and make any changes needed to bring the organisation into line.
Compliance is overseen by a working group which draws members from eight organisations: Boardmatch Ireland; Business in the Community Ireland; the Carmichael Centre for Voluntary Groups; Clann Credo; the Irish Charities Tax Reform Group; the Disability Federation of Ireland; Volunteer Ireland; and the Wheel. A range of resources is available online at www.governancecode.ie along with a register of compliance. Eighty-eight organisations are currently compliant with the code and 485 organisations are in the “journey to adoption” stage.
