Charities’ Governance Procedure Reviews: what are they, and what are charities required to do?
Charities’ Governance Procedure Reviews: what are they, and what are charities required to do?
The Charities Amendment Act 2023 introduced a new requirement for registered charities to review their governance procedures every three years (from 5 October 2023 onwards).
Charities are now being asked as part of their annual returns to Charities Services to confirm whether they have conducted a review of their governance procedures in the year for which they are filing the return.
The legislation frames this requirement as a duty, which means that a charity’s officers (e.g. its trustees or board members) must comply or will be in breach of the charity’s legal obligations.
This is a broad requirement for which the process is self-driven, and there is limited practical guidance available to charities to understand how they can comply.
We have prepared this article to guide charities when considering carrying out a governance procedure review.
How often can charities review their governance procedures?
Every three years as required by the legislation is the minimum, so there is nothing stopping a charity reviewing its governance procedures more frequently.
Many things which charities do regularly will form part of a governance procedure review, such as preparing and updating policies and procedures that relate to governance of the charity.
Some charities will also conduct a governance procedure review when they update their governing document to comply with changes in the law. Incorporated societies which are updating their constitutions and re-registering under the Incorporated Societies Act 2022 by the 5 April 2026 deadline will be able to say they have conducted a governance procedure review in that process.
What is being reviewed?
Governance procedures must be reviewed whether they are set out in the charity’s governing document or elsewhere. For many charities, governance procedures will live in a variety of different places and documents.
Each review will need to look at:
- The charity’s governing document - trust deed / rules / constitution.
- Any other documentation the charity has in place relating to governance – e.g. policies, guidelines, handbooks, procedures. As an example, this might include a conflicts of interest policy, a procedure for delegation of authority, or a staff handbook.
What should the review cover?
The legislation requires that a review must consider whether the governance procedures are:
- fit for purpose;
- help the charity to achieve its charitable purpose; and
- help the charity to comply with the Act’s requirements.
In practical terms, that may involve:
- reviewing the governing document and making any updates required to reflect changes in the charity, the way it operates, and/or the law;
- reviewing the charitable purpose(s) to make sure they are clear and still relevant;
- reviewing and updating applicable policies and procedures;
- creating new policies and procedures to address any gaps; and
- addressing governance at the charity’s AGM.
Depending on what your charity does, there may also be other specific areas that need to be considered, such as privacy, health and safety, staff/volunteer management, and record-keeping.
Not every review will require big changes
The nature of each governance procedure review will vary depending on a charity’s recent activities.
While a charity’s next review may involve updating the constitution and various related policies, the next review three years later may require less changes and instead consideration and confirmation that the status quo remains appropriate.
Importantly, the governance procedure review is a self-driven process which will look different for every charity.
Your charity should consider obtaining legal advice to ensure a governance procedure review is carried out effectively, and it may also be necessary to link in with other professional advisors such as for financial or investment advice.
The team at MoranLaw has the expertise and experience to help your charity meet the requirements for three-yearly governance procedure reviews and carrying out any changes or updates the review may necessitate. Get in touch today.
