Changes to the Charity Governance Code in 2025

A revised version of the Charity Governance Code is scheduled for publication in early 2025. The fundamental principles are expected to remain consistent with the existing Code, with enhancements to address emerging challenges in the sector.

Here, Partner and charity law specialist Graeme Hughes explores the existing Code and expected changes in 2025.

Seven core principles under the Charity Governance Code

The Charity Governance Code serves as a practical framework to help charities and their trustees achieve high standards of governance and has become a key tool for charity trustees since its revamp in 2017. The Code is built upon the following seven core principles:

1. Organisational purpose — Trustees are responsible for clearly defining and articulating the charity's aims, ensuring that all activities align with its mission and deliver public benefit. This clarity helps in maintaining focus and measuring the impact of the charity's work.
2. Leadership — An effective board provides strategic direction, upholds the charity's values and fosters a positive culture. Trustees should collectively embody leadership that inspires confidence and trust among stakeholders.
3. Integrity — Trustees must act ethically and safeguard the charity's reputation and assets. This involves managing conflicts of interest, ensuring transparency and promoting a culture of integrity throughout the organisation.
4. Decision-making, risk and control — The board should implement robust decision-making processes, manage risks effectively and maintain strong internal controls. This ensures that resources are used wisely and the charity remains accountable.
5. Board effectiveness — Regular evaluations of the board's performance — along with appropriate recruitment and development practices — ensure that trustees have the necessary skills and diversity to govern effectively.
6. Equality, Diversity and Inclusion (EDI) — The board should champion EDI, understanding its importance in delivering the charity's purposes and ensuring that diverse perspectives are represented in decision-making.
7. Openness and accountability — Transparency with stakeholders — including beneficiaries, donors and the public — is crucial. The board should be open about the charity's work, performance and decision-making processes to foster trust and accountability.

These principles are designed to encourage continuous improvement in governance practices. Charities are expected to apply them proportionately, considering their size, activities and complexity. The Code is not legally binding but is endorsed by the Charity Commission as a standard of good governance practice to which all charities should aspire. 

Anticipated changes to the Charity Governance Code in 2025

The steering group has recommended that charities shouldn’t delay any governance reviews pending the new publication of the Code in 2025. While specific details of the revisions have not been fully disclosed, it’s anticipated that the updated Code will place a stronger emphasis on:

1. Digital governance — recognising the increasing importance of digital tools and platforms, the new Code may provide guidance on digital strategy, cybersecurity and data protection to ensure that charities effectively leverage technology while safeguarding stakeholder information.
2. Environmental responsibility — in response to growing environmental concerns, the revised Code might encourage charities to adopt sustainable practices and consider their environmental impact as part of their governance responsibilities.
3. Enhanced stakeholder engagement — building on the principle of openness and accountability, there may be a greater focus on engaging with a broader range of stakeholders — including service users, volunteers and the wider community — to inform decision-making and strategy.

Whatever the changes, they will ensure that the Charity Governance Code remains relevant and responsive to the evolving landscape in which charities operate, promoting resilience, adaptability and continued public trust in the sector.

Talk to us

If you have any questions as to how your charity should be preparing for the updated Charity Governance Code, our specialist charities, not-for-profits and social enterprises team is recognised by The Legal 500 as a leading team of experts with a national reputation for providing accurate, pragmatic and commercially focused advice.

Talk to us by giving us a call, sending us an email or completing our contact form below.