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The Charity Governance Code – Principle 1: Organisational Purpose

4th November 2021

The Charity Governance Code – Principle 1: Organisational Purpose

Over the coming weeks, Kirsty McEwen in our Charity and Not For Profit team will be taking an in-depth look at the core principles of the Charity Governance Code. Today Kirsty turns the spotlight on Organisational Purpose.

What is Organisational Purpose?

  • Principle 1 – organisational purpose: the board is clear about the charity’s aims and ensures that these are being delivered effectively and sustainably.
  • This principle is the most fundamental for the successful governance of any charity.
  • All other principles will feed into the charity’s organisational purpose. Every decision made by a charity should have the aim and effect of furthering the organisational purpose. 
  • The board should have a shared understanding and commitment to the charity’s purposes and should be capable of articulating these clearly.
  • The board should be able to demonstrate that the charity is effective in achieving its charitable purposes and agreed outcomes.

Why is it important?

  • Every decision a charity makes should further its charitable purpose.
  • Therefore, it is essential that the board are clear and in agreeance as to what the charity’s organisational purpose is.
  • The board should govern the charity in a way which will best achieve its aims and goals with the resources available to them.
  • It is a legal responsibility for the trustees of a charity to ensure that the charity is fulfilling its purpose and no other purpose. Failing to be clear on the organisational purpose will lead to a failure in the trustees’ duties.
  • The organisational purpose should be reviewed regularly to ensure that it remains relevant
  • The structures created with the aim of achieving the organisational purpose should also be reviewed to guarantee that they are the best fit for purpose.
  • The trustees must agree on the organisational purpose to avoid having confused and ineffective goals.

How can we help?

  • Determining Organisational Purpose:
    • We can advise on how often you should be reviewing your organisation’s objects (or charitable purposes).
  • Achieving the purpose:
    • We can recommend strategies for best achieving your organisation’s charitable purposes.
  • Analysing the External Environment and Planning for Sustainability:
    • We can advise on the board’s broader responsibilities towards communities, stakeholders, wider society and the environment.

Tips for best practice:

  • The board should ensure that the charitable purposes (objects) remain relevant and valid considering external factors
  • The board should develop a strategy which aims to achieve the charitable purposes. The board should be in agreeance as to the desired outcomes and impacts of their decisions on the charitable purpose.
  • The board should ensure that any new board members are suitable and committed to achieving the charitable purpose.
  • All trustees should be capable of explaining the charity’s purpose and its public benefit
  • The board should evaluate the charity’s impact by measuring and assessing results outputs and outcomes.
  • The board should regularly review the sustainability of its income sources and business models in terms of effectiveness in achieving its charitable purposes. Sustainability should be considered in the short, medium and long term.
  • The trustees should weigh up the benefits and risks of their structure, if other organisations are fulfilling similar charitable purposes more effectively and/or if the charity’s viability is uncertain

 

 

 

 

 

 

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