Preena Patel
- Senior Associate
- Charity Law & Not-for-Profit
Is it time for a policy health check?
For many charities, policy housekeeping only becomes a priority when something prompts a review, for example, when completing the annual return, preparing for a board meeting, responding to a funder’s due diligence questions or dealing with an issue that exposes a gap. Sometimes, however, policies come into focus after the event, when something has gone wrong or when trustees need to make quick decisions in difficult circumstances.
The Charity Commission annual return is often one such trigger. Registered charities in England and Wales must submit an annual return, or report income and spending, each year. The return can require trustees to confirm key information about how the charity is run, which often leads charities to ask a more practical question: do we have the right policies in place and are they up-to-date?
It is a question worth asking regularly. Policies are not simply administrative documents. Used properly, they help trustees demonstrate oversight, manage risk, delegate authority clearly, and ensure that decisions are taken consistently and in accordance with the charity’s purposes. They can also be useful evidence of good governance if the charity is dealing with a regulator, funder, auditor, bank or other stakeholder.
Policies are also a form of governance insurance. They may not prevent difficult situations from arising but they can help trustees make better decisions when the charity is under pressure. If trustees need to consider a serious incident report, respond to a whistleblowing concern, deal with a controversial donation, or approve urgent expenditure, a clear policy framework can help them act quickly and consistently. It is much easier to follow an agreed process than to create one from scratch in the middle of a live issue.
There is no single policy checklist that will be right for every charity. What is appropriate will depend on the charity’s size, legal form, activities, funding model and risk profile. A small grant making charity with no staff will not need the same suite of operational policies as a large service-delivery charity working directly with children or adults at risk. Similarly, a charity involved in public fundraising, overseas grant-making, campaigning, trading activity or significant digital work is likely to need more tailored policies and procedures than a charity with a simpler operating model.
That said, there are some common areas that most charities should consider. These include conflicts of interest, trustee conduct, delegation of authority, financial controls, risk management, reserves, data protection, complaints and serious incident reporting. Depending on the charity’s activities, policies on safeguarding, grant-making, donation acceptance and refusal, fundraising, investment, anti-bribery, anti-money laundering and whistleblowing may also be relevant. These are often the areas that become most important when issues arise, for example, where a donation raises reputational concerns or a safeguarding or data incident needs to be managed. The key point is not simply to collect policies, but to ensure they accurately reflect how the charity operates in practice.
Recent developments in sector guidance also make this a good time for trustees to take stock. The refreshed Charity Governance Code encourages charities to think about how good governance principles apply in their particular circumstances, rather than adopting generic policies or processes. Similarly, the revised Charity Commission guidance on grant making and conflicts of interest include some high level points that trustees may want to add in to their policies.
A good policy review should be proportionate. Trustees could start by mapping the policies the charity already has, noting when they were last reviewed, identifying who is responsible for them and considering whether they still reflect the charity’s current activities and governance structure. It is also worth checking policies against the charity’s governing document, committee terms of reference, delegation framework and financial controls. If these documents do not align, it can create uncertainty about who has authority to make decisions and how those decisions should be made.
The strongest policy frameworks are living documents. They are reviewed regularly, understood by those who need to use them, and updated when the charity’s activities, risks or regulatory expectations change. A policy that is current, practical and embedded in decision-making can be an important tool for trustees.
If you would like further advice on reviewing your governance policies, please contact the Charities Team at Wedlake Bell.
This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.
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