Charity Commission Governance Framework

(February 2008)

Introduction
Aims
The Commission’s Vision, Mission and Values
Legal Context and Current Constitution
Role of the Board
Status and Independence
Accountability
Role of the Chair
Role of the Chief Executive
Principles of Good Governance
Board Meetings
Relationship between the Board and Executive

Appendices

Introduction

As the regulator of charities in England and Wales, the Charity Commission (“the Commission”) aims to maximise its effectiveness and impact, whilst fulfilling its statutory objectives, general functions and duties.

The Charity Commission is a body corporate with a non-executive Board consisting of the Members of the Commission which is responsible for its governance, and a Chief Executive responsible for its management.

The Chair of the Commission and the Chief Executive were appointed in August 2006 and October 2004 respectively prior to the passing of the Charities Act 2006 which brought in the corporate Commission.

There are currently nine Members of the Commission including the Chair.

This governance framework seeks to be comprehensive and to ensure that the Charity Commission operates according to the highest standards. It was approved by the Board on 27 February 2007 and will be updated on an ongoing basis, and formally reviewed in 2010.

Aims

The Commission’s governance framework seeks to:

clarify the complementary roles and responsibilities of the Board and the Executive team;
maximise the value to the Commission of the skills, knowledge and experience of its members; and
ensure that the Members of the Commission operate in accordance with best practice and in a way that commands the confidence of the Commission’s stakeholders.

1. Charity Commission Vision, Mission and Values

vision, mission, values graphic

1.1. The Chairty Commission's Vision is charity working at the heart of society for public benefit.

1.2. The Commission is the independent regulator for charitable activity in England and Wales

ensuring legal compliance
enhancing accountability
encouraging effectiveness and impact
promoting the public interest in charity

to promote the public's trust and confidence.

1.3. Values

Effective
Expert
Fair
Independent
Innovative
Responsive

1.4. The Commission is vested with legal powers relating to:

the registration of charities;
giving advice and conferring regulatory consents e.g. making schemes and orders; and
taking action where there is or may be mismanagement e.g. powers to institute inquiries, removing or suspending trustees, appointing interim managers, protecting charity property and/or other assets.

1.5. As a modern regulator, the Commission applies the five principles approved by the Better Regulation Task Force; its work will be transparent, accountable, consistent, proportionate, and targeted.

2. Legal Context and Current Constitution

2.1. The Commission currently operates under Schedule 1A of the Charities Act 1993. (See Appendix I: Schedule 1A, Charities Act 1993).

2.2. The new Commission will have a maximum of nine Members, including the Chair. Members must collectively have knowledge and experience of the law relating to charities, charity accounts and the financing of charities; and the operation and regulation of charities of different sizes and descriptions. At least two Members will continue to have appropriate legal qualifications, and at least one will have to have knowledge of the Welsh context and be appointed following consultation with the National Assembly for Wales.

2.3. The Chair will be a Member of the Commission and will be appointed by the Board.

This reflects the Board decision that 'At least two of these members will be Board members, one of whom should take the position of Chair of the Committee' and is in line with Treasury guidance.

3. The Board

3.1. The Board is the Members of the Commission acting collectively. The Board is responsible for:

ensuring the Commission effectively fulfils its statutory objectives, general functions and duties and appropriately exercises the legal powers vested in it, under the Charities Act 1993, the Charities Act 2006 and other legislation;
determining the overall strategic direction of the Commission and ensuring the availability of resources;
monitoring the performance of the Chief Executive and his team and holding them to account for the exercise of powers and delivery against plans and budgets;
promoting and protecting the Commission’s position, values, integrity, image and reputation; and
ensuring high standards of governance that command the confidence of the Commission’s stakeholders.

3.2. In ensuring high standards of governance, the Board may establish Committees and Task Forces and will approve policies and procedures within which the Commission, Members of the Commission, Directors and staff will operate. These will include:

Principles of Good Governance for Members of the Commission (incorporating policy on Registration and Declaration of Interests - see Appendix III);
a statement on the Relationship between the Board and the Executive team (incorporating Levels of Delegated Authority - see Appendix V);
a Complaints Policy (see Appendix IV); and
Standing Orders for Board Meetings.

3.3. Members of the Commission are appointed through an open recruitment process (in accordance with public appointments procedures), for their generic governance competencies, and for their specialist knowledge, skills and experience, relevant to the Commission’s activities and the context within which it operates.

3.4. The Board currently comprises the Chair and eight other Members. Current Members are as follows:

Chair:

Dame Suzi Leather

Members of the Commission:

Simon Jones
Irene Khan
John Knight
Sharmila Nebhrajani
Andrew Purkis
Theo Sowa
Simon Wethered
John Wood

(See Appendix II: Members of the Commission and Executive Team Biographies).

4. Status and Independence

4.1. The Commission is a non-Ministerial Government Department. It is part of the Civil Service. The Commission is independent of Ministerial influence and independent from the sector it regulates. It has a number of quasi-judicial functions where it uses powers similar to those of the High Court.

4.2. The Commission is, by law, independent from Ministerial influence or control over its day-to-day operations and decision-making. The Charities Act 1993 section 1A (1)(4), underlines this by stating that:” In the exercise of its functions, the Commission shall not be subject to the direction or control of any Minister of the Crown or other Government Department.”

4.3 The Commission is required to report on its performance to Parliament annually.

4.4. The Minister for the Third Sector is the person statutorily tasked with appointing the Chair and Members of the Commission.

4.5. Although the Members of the Commission are there to be receptive and responsive to the views of all with valid interests, the Members are required to act in the public interest, not to represent particular sectors or constituencies. Members of the Commission will therefore arrive at their own decisions without fear or favour.

4.6. Provisions for the registration and declaration of interests and withdrawal from meetings are intended to prevent Members of the Commission from being influenced, or appearing to be influenced, by their private interests in the exercise of their collective public duties as Members of the Charity Commission.

See Appendix III: Registration and Declaration of Interests.

5. Accountability

5.1. The Commission is a corporate body and its legal powers are exercised by the corporate body. Members of the Commission are collectively accountable. The title of Charity Commissioner no longer exists in statute. The members of the corporate Commission will be known as Members of the Commission.

5.3. The Commission is held accountable:

to Parliament through:
- the Commission’s annual report which is laid before Parliament by the appropriate minister;
- annual auditing of the Commission’s accounts by the National Audit Office (NAO);
- periodic reports by the NAO on the economy, efficiency and effectiveness with which the Commission uses its resources;
- periodic examinations by the House of Commons’ Public Accounts Committee (PAC). The Chief Executive acts as the Accounting Officer appointed by HM Treasury;
- review of handling of complaints by the Parliamentary Ombudsman; and
to the High Court for the decisions made by the Commission in exercising its legal powers. The High Court may overturn the Commission’s decisions.

5.4. In addition, the Commission demonstrates its accountability to its stakeholders by:

publishing of its Service Delivery agreement with HM Treasury showing how the Commission will meet its targets and improve its performance;
consulting with its stakeholders before introducing major new policies or operational practices;
conducting its Board meetings in public where possible, and publishing information regarding the operation of the Board, minutes of meetings and reports;
holding an annual public meeting to review performance;
publishing of Inquiry Reports and Commission decisions
having an internal review process that allows the Commission’s decisions to be challenged without having to go the High Court and gives reasons for decisions to people or charities affected by them, unless there are compelling reasons of financial or personal confidentiality for not doing so; and
having a complaints process that includes independent review (Appendix IV: Complaints Policy).

6. Role of the Chair

The Chair is responsible for leading the Board in:

directing the Commission’s strategic development, policies and plans;
developing the Commission’s key relationships with Government, sector bodies and other major stakeholders;
ensuring the Commission:
- effectively fulfils its statutory objectives, general functions and duties and appropriately exercises its legal powers;
- realises the Board’s strategies and plans for the future, including its contribution to legislative reform; and
- delivers its services in line with targets and performance indicators agreed with the Board and HM Treasury;
in partnership with the Chief Executive, communicating the Commission’s plans and achievements to stakeholders, including charities and their users, the Government, the public and Commission staff;
ensuring that the Members of the Commission operate in accordance with governance best practice and Nolan principles of standards in public life;
advising the Office of the Third Sector on the appointment of Members of the Commission and ensuring their effective induction and support;
establishing, monitoring and reviewing governance structures, systems and processes;
ensuring compliance and maximising effectiveness at both individual and Board level; and
directing, supporting and managing the Chief Executive including agreeing objectives and undertaking an annual appraisal, following consultation with other Members of the Commission.

7. Role of the Chief Executive

7.1. The Chief Executive is the Commission’s chief officer and has delegated authority for the day-to-day management of the Commission.

7.2. The Chief Executive is responsible for leading the Executive team and staff in:

fulfilling the Commission’s statutory objectives, general functions and duties and exercising its legal powers;
developing plans, programmes and policies for Board approval;
realising the Board’s strategies and plans for the future, including its contribution to legislative reform;
delivering the Commission’s services in line with targets and performance indicators agreed with the Board and HM Treasury;
acting as the Commission’s Accounting Officer, reporting to the Public Accounts Committee on the Commission’s use of public funds and with personal accountability and responsibility for the Commission’s:
- propriety and regularity;
- prudent and economical administration;
- avoidance of waste and extravagance;
- efficient and effective use of available resources; and
- the organisation, staffing and management of the Commission;
in partnership with the Chair:
- developing the Commission’s relationships with key stakeholders; and
- communicating the Commission’s plans and achievements to stakeholders, including charities and their users, the Government, the public and Commission staff;
ensuring that the Executive team:
- acts within the levels of authority delegated by the Board, escalating any high risk and /or high impact issues for the timely attention and consideration of the Board (See Appendix V: Levels of Delegated Authority);
- maintains an effective interface with the Members of the Commission (See Section 10: Relationship between the Board and the Executive);
- provides accurate and timely information to enable the Board to fulfil its governance responsibilities effectively; and
- supports the Members of the Commission in fulfilling their role and responsibilities as set out in this governance framework.

7.3. The Chief Executive leads the Executive team.

The Executive Team is as follows:

Chief Executive:

Andrew Hind

Executive Directors:

Nick Allaway (Charity Information & Corporate Services);
Rosie Chapman (Policy and Effectiveness) ;
Kenneth Dibble (Legal and Compliance); and
David Locke (Charity Services).

(See Appendix II: Members of the Commission and Executive Team Biographies).

8. Principles of Good Governance

Members of the Commission observe the following principles in fulfilling their role.

8.1. Collective accountability

8.1.1. The Board acts collectively in making decisions. Members of the Commission do not currently exercise any individual authority except:

where responsibilities are specifically delegated to individual Members; or,
in the case of the Chair, who exercises a degree of autonomy in taking urgent decisions, in consultation with the Chief Executive, where it is not practical to consult with Members, subject to keeping them informed.

8.1.2. In fulfilling its responsibilities, the Board pays particular attention to:

maximising the impact and effectiveness of the Commission;
identifying and managing risks and seizing opportunities;
listening and responding to stakeholders;
ensuring its independence;
ensuring prudent use of public funds; and
ensuring the Commission acts fairly, responsibly and ethically.

8.1.3. The Board seeks to debate issues based on appropriate, accurate and timely information and advice.

8.1.4. The Board seeks to achieve consensus on major decisions. However, where this is not possible, collective decisions will be based on a majority with the Chair holding a casting vote.

8.1.5. The Board delegates authority through the Chief Executive to the Executive team and staff, for the efficient and effective operation of the Commission and prudent use of public funds.

8.1.6. The Board has established clear levels of delegated authority within which:

some decisions are reserved to the Board;
the Chief Executive is empowered to make decisions and delegate authority within the Executive team and staff for the day to day operation of the Commission; and
the Chief Executive is required to escalate high risk and /or high impact issues for the timely attention and consideration of the Board.

(See Appendix V: Delegated Levels of Authority)

8.1.7. The Board has established operational guidance for the delegation of its powers to staff within the Commission designated as duly authorised members of staff (in accordance with current statute)(“authorised officers”). These powers are delegated by the Board through the Chief Executive to the Executive team and staff as outlined in 8.1.6.

8.1.8. The Board will approve policies for the efficient and effective management of the Commission’s funds and management and development of its staff.

8.1.9. The Board will establish, where necessary, Committees or Task Forces with clear terms of reference and membership to fulfil ongoing or time limited governance functions.

8.1.10. The Board will evaluate its own performance on an annual basis, examining its impact and effectiveness and any improvements required in its organisation or operation.

8.2. Individual accountability

Members of the Commission will:

act in good faith and in the best interests of the Commission;
abide by this code and observe the highest standards of propriety in fulfilling their collective responsibilities, upholding the seven principles of public life (see Annex A: Extract from Nolan Committee on Standards in Public Life);
give proper time and attention to their duties and development as Members of the Commission;
use their specialist skills, knowledge and experience to inform collective decisions;
uphold and promote collective corporate decisions;
abide by the statement on the Relationship between the Board and the Executive Team; and
participate in an annual appraisal of their own performance with the Chair, including identification of any personal development needs.

8.3. Personal benefit

Members of the Commission will not use their position or misuse information gained in this role for personal or private benefit.

8.4. Registration and Declaration of Interests

Members of the Commission will:

seek advice from the Chair and the Head of Governance (or in the case of the Chair, from the Chief Executive);
complete the Register of Interests on appointment and review it annually or earlier if any declarable interests arise;
declare an interest at the start of a Board meeting if they have a personal or business interest in an issue on the agenda; and
Withdraw from the meeting if required.

(See Appendix III: Registration and Declaration of Interests)

8.5. Gifts/hospitality

Members of the Commission will uphold the civil service code on gifts and hospitality and:

not accept gifts for either doing or not doing something;
not accept any gifts of cash;
may give or accept isolated, trivial or seasonal gifts, working lunches. i.e. offers of conventional hospitality, provided that they are considered reasonable in the circumstances and that they do not exceed a cash value of £50.00; and
all gifts and hospitality must be declared on the Commission’s hospitality register whether accepted or not.

8.6. Expenses

Members of the Commission are expected to seek reimbursement of reasonable expenses solely incurred in exercise of their duties, in accordance with Commission policy.

8.7. Confidentiality

Members of the Commission are required to maintain confidentiality on issues required by law to be kept confidential e.g. personnel issues relating to Commission employees, or where disclosure is not in the public interest.

8.8. Public speaking

8.8.1. Members of the Commission may be asked to undertake public speaking engagements on behalf of the Board by the Chair/Chief Executive. In so doing they will:

ensure that their comments are consistent with Commission strategy and policy; and
be open and responsive in their dealings with stakeholders.

8.8.2. In undertaking other public speaking engagements not associated with the Commission, Members of the Commission will clarify that they are speaking in a personal or private capacity and take care that their actions do not compromise or conflict with their role as Members of the Charity Commission.

8.9. Failure to Observe Principles of Good Governance

8.9.1. The Chair is responsible for bringing any breaches to the attention of individual Members of the Commission

8.9.2. Any Member of the Commission failing to adhere to these principles, or being unfit to perform their duties in line with these principles, may be judged as failing to carry out the duties of their office. Such failure may result in their removal from office.

Annex A

NOLAN COMMITTEE STANDARDS IN PUBLIC LIFE

The seven principles are:

Selflessness: holders of public office should take decisions solely in terms of the public interest. They should not do so in order to gain financial or other material benefits for themselves, their family, or other friends
Integrity: holders of public office should not place themselves under any financial or other obligation to outside individuals or organisations that might influence them in the performance of their official duties
Objectivity: in carrying out public business, including making public appointments, awarding contracts, or recommending individuals for rewards and benefits, holders of public office should make choices on merit
Accountability: holders of public office are accountable for their decisions and actions to the public and must submit themselves to whatever scrutiny is appropriate to their office
Openness: holders of public office should be as open as possible about all the decisions and actions that they take. They should give reasons for their decisions and restrict information only when the wider public interest clearly demands
Honesty: holders of public office have a duty to declare any private interests relating to their public duties and to take steps to resolve any conflicts arising in a way that protects the public interest
Leadership: holders of public office should promote and support these principles by leadership and example.

9. Board Meetings

9.1. Openness and Transparency

9.1.1. The Commission is committed to openness and accountability. It believes that one way in which this can be met is by making as many key decisions as possible in public. It does this in order to give the public confidence that the Commission is making robust decisions, based on the best available evidence and advice, and to ensure that the discussions of the Board are understood.

9.1.2. There is a valid public interest in the following being transparent and open to scrutiny:

the Commission’s determination of its strategy for carrying out its functions, including key points of policy and practice; and
the process by which those responsible for the Commission’s governance hold to account those with executive responsibility for implementing such strategic decisions and for delivering the Commission’s programme of work.

9.1.3. Further benefits of openness and transparency include:

enhancing transparency and accountability, which is consistent with the seven principles set out in the Commission’s booklet: "Charity Commission and Regulation";
the added legitimacy attaching to decisions formally taken in public; and
clarifying for internal and external stakeholders the Board’s role in providing strategic oversight in the Commission.

9.2. Board Meetings

9.2.1. The Commission will hold bi-monthly board meetings which are open to the general public. The Board will meet at other times in closed sessions to consider confidential issues, matters it is not in the public interest to discuss at an open board meeting and to undertake work preparatory to open board meetings.

9.2.2. The Board will seek to make all major decisions on interpretation of charity law, Commission policy and practice and any other substantive issues in public and to keep as much of its business on the public open part of its Board meeting agenda as possible. All Board papers will be available to the public and will be discussed in public unless the information is required by law to be confidential, or the public interest in the information being withheld outweighs the public interest in disclosure.

9.2.3. There will be occasions when some Commission business will not be transacted in public. When this is the case, the confidential items will be placed on a separate agenda and will be considered at a closed session to which members of the public will not be invited.

9.2.4. In deciding whether the public interest in disclosure outweighs the public interest in withholding information, the Commission will have regard to the following factors:

Will disclosure breach any obligation of the Commission to keep information confidential;
will the disclosure have an unfair impact on another person’s human rights;
will disclosure cause injustice to any individual or group of persons;
is non-disclosure necessary for the proper functioning of the public service? This will include decisions about staffing, finance and contractual matters; and
there is a presumption that transparency and openness are to prevail unless there is a clear public interest in the information not being disclosed. If the latter is the case, the reason for non-disclosure must be recorded and considered by the Board in private prior to discussion. If the Board does not agree with the reason for non-disclosure, the business will be held over to the next public session.

9.2.5. Following the Open Government Code of Practice and the Freedom of Information Act 2000, the types of business that will not be discussed at open meetings may include the following:

law enforcement and legal proceedings;
information supplied by, or relating to, bodies dealing with security matters;
personnel issues relating to individual Commission employees;
details of individual cases;
personal information;
information given in confidence;
information where disclosure is prohibited; and
information where disclosure is commercially sensitive.

9.3. Publication of minutes, agendas and papers
The Board holds regular meetings in public and publishes associated agendas, papers and minutes on its website.

9.4. Conduct of meetings
The conduct of meetings is determined by the Board. (See Appendix VI: Standing Orders for Board Meetings)

9.5. Establishment of Committees/Task Forces

9.5.1. The Board is supported by an Audit Committee and a Civil Service Pay Committee. (See Appendix VII: Audit and Civil Service Pay Committees).

9.5.2. The Board may wish to establish other Committees or Task Forces. However, prior to expansion of the Board, it may not be feasible to move to a structure that will be appropriate in the longer term. In the interim, the Board will determine transition arrangements that enable the Members of the Commission to address priority issues arising from the Commission’s strategy.

10. Relationship between Board and Executive

This section sets out the principles and behaviours underpinning the maintenance and development of an effective interface between the Board and the Executive Team.

10.1. The Board and the Executive team will work together in a way that:

demonstrates mutual respect;
draws on their respective skills, knowledge and perspectives;
ensures sharing of information about the Commission and the context in which it operates;
recognises the clear separation between governance and management roles and responsibilities;
enables an active and ongoing dialogue about the Commission’s current performance and future direction; and
identifies opportunities and risks, maximises performance and enables learning and development.

10.2. Members of the Commission will:

establish, monitor and review levels of delegated authority (See Appendix V; Levels of Delegated Authority);
approve a risk management strategy that ensures high risk and or high impact issues are identified and escalated to the Board;
support and empower the Executive Team to manage the Commission within these delegated levels of authority and in accordance with the agreed risk management strategy;
establish systems for monitoring performance and holding the Executive to account;
use their specialist skills, knowledge and experience to:
- proactively raise issues/themes for consideration by the Executive;
- act as a sounding board;
- offer constructive challenge and support;
- hold the Executive to account; and
- inform collective decision making;
establish formal and informal mechanisms to enable Members of the Commission to contribute their specialist skills, knowledge and expertise and provide support to the Executive;
establish systems for reviewing and developing the effectiveness of the Board and Members of the Commission; and
make collective decisions and stand by them.

10.3. The Executive Team will:

ensure that they possess or have access to all the skills and knowledge required to fulfil the Commission’s regulatory role, exercise its legal powers and ensure delivery against agreed plans;
manage the Commission within the agreed levels of delegated authority;
ensure Members of the Commission are provided with accurate and timely information to enable them to fulfill their governance responsibilities effectively;
present an analysis of key risks and management strategy on a regular basis for board approval. In addition will escalate high risk or high impact issues to them in accordance with the agreed risk management strategy. This will include issues/cases where there is potential:
- major investment;
- significant deviation from agreed strategy/plans;
- novelty or precedent setting e.g. an issue becoming a ‘test case’;
- significant degree of controversy/contentiousness or political sensitivity;
- damage to reputation e.g. adverse events, negative media interest;
- damage to key relationships e.g. issues raised by Office of the Third Sector, concerns raised by key constituencies; and
- personal impact on Members of the Commission;
proactively raise issues/themes that may need to be debated/considered for incorporation into future plans;
utilise formal and informal mechanisms to enable Members of the Commission to contribute their specialist skills, knowledge and expertise and provide support;
lead on developing plans, programmes and policies for Board approval;
seeking the input of Members of the Commission at an early stage in order to identify issues that will need to be addressed in gaining Board approval;
seeking a dialogue to understand Members of the Commission’s concerns/perspectives;
taking responsibility for making clear proposals/ recommendations; and
provide appropriate support to enable the activities of the Board and individual Members of the Commission to run smoothly.

10.4. Members of the Commission with a legal qualification (as required by the Charities Act 1993 as amended by the Charities Act 2006) will:

Use their specialist skills, knowledge and experience as set out in 10.2; and
play a lead role in the consideration of high risk or high impact legal issues. Members of the Commission with a legal qualification will not normally play a role in the day to day legal issues of the Commission.

10.5. The Chair will:

lead in ensuring that Members of the Commission comply with the Code of Conduct and this statement on the Relationship between the Board and the Executive team;
represent the collective view and decisions of the Board and act as a conduit between Members of the Commission and the Executive. The Chair will have the latitude to interpret and apply this in the course of carrying out this role;
work in partnership with the Chief Executive in leading the organisation’s relationships and communication with key stakeholders; and
exercise a degree of autonomy in taking urgent decisions, in consultation with the Chief Executive, where it is not practical to consult with Members of the Commission, subject to keeping them informed.

10.6. The Chief Executive will:

lead in ensuring the Executive Team comply with this statement on the Relationship between the Board and the Executive team;
act as a conduit between the Executive and the Board, primarily through the Chair; and
work in partnership with the Chair in leading the organisation’s relationships and communication with key stakeholders.

(r 02/08)

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