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Governance in Charities and Non-Profit Organisations
- Julien Haye
- May 15, 2024
- 14 min read
Updated: Sep 23
Charities and non-profit organisations play a vital role in addressing social needs, providing essential services, and advocating for causes that shape communities. Their ability to fulfil these missions depends not only on resources and goodwill but also on the strength of their governance.
Charity and non-profit governance refers to the structures, processes, and practices that guide and oversee an organisation’s work. At its centre is the board of trustees, responsible for ensuring that the charity delivers public benefit, complies with legal and regulatory standards, and uses its resources wisely. Governance is therefore both a framework for accountability and a safeguard for public trust.
Strong governance matters because the stakes are high. Failures in oversight can damage reputations, erode donor confidence, and, most importantly, harm beneficiaries. Effective governance, by contrast, strengthens resilience, ensures transparency, and enables charities to adapt to complex challenges while remaining true to their purpose.
This article explores the key components of governance in charities and non-profits, drawing on best practice guidance from the UK Charity Commission. It highlights the responsibilities of board members, the importance of culture and accountability, and the emerging challenges that boards must navigate. It also reflects on lessons from some of the world’s largest charities, where governance is tested at scale.
TABLE OF CONTENTS
Purpose and Accountability
At the heart of every charity lies a clear mission: to create public benefit. Governance provides the framework that ensures this mission is not only pursued with integrity but also sustained over time. Trustees carry the responsibility of aligning all activities with the organisation’s charitable objects, making decisions that advance its purpose while safeguarding its long-term viability.
Accountability is central to this duty. Charities operate in a unique environment where their legitimacy rests on the confidence of beneficiaries, donors, regulators, and the wider public. Each expects transparency in how funds are raised and spent, clarity on outcomes achieved, and assurance that risks are managed responsibly.
The UK Charity Commission reinforces this expectation through annual reporting requirements. Trustees must prepare accurate, accessible financial statements and provide a narrative report that explains how their charity delivers public benefit. For larger organisations, this includes a formal statement on risk management — confirming that charity board members have assessed major risks and established systems to mitigate them. This is not a compliance exercise, but a demonstration of stewardship and trustworthiness.
When accountability is embedded into governance, it strengthens credibility and fosters resilience. Donors are more inclined to give, beneficiaries feel represented, and the public sees an organisation acting transparently in pursuit of its mission. Purpose and accountability are therefore inseparable: one defines why a charity exists, the other ensures it can continue to serve effectively and with integrity.
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Roles and Responsibilities of Trustees
Charity trustees sit at the centre of charity governance. They carry collective responsibility for ensuring that the organisation operates lawfully, uses resources wisely, and remains faithful to its charitable purposes. In the UK, the Charity Commission defines trustees as “the people who share ultimate responsibility for governing a charity and directing how it is managed and run.”
Trustees are not managers. Their role is to set direction, provide oversight, and safeguard the organisation’s reputation. Day-to-day operations are delegated to staff and volunteers, but accountability for compliance, financial stewardship, and risk management always remains with the board.
Key responsibilities include:
Strategic leadership: defining mission and long-term priorities, and reviewing progress against them.
Financial oversight: approving budgets, monitoring reserves, and ensuring funds are used for public benefit.
Legal and regulatory compliance: filing annual returns, reports, and accounts, and keeping governance documents up to date.
Risk management: identifying threats to sustainability and reputation, and putting systems in place to manage them.
Culture and integrity: modelling ethical behaviour, managing conflicts of interest, and creating an environment of accountability.
Officer roles: the Chair leads the board and ensures effective meetings, the Treasurer oversees financial matters, and the Secretary maintains governance records, ensures compliance with reporting requirements, and manages board communications.
Trustees are also ambassadors. They strengthen fundraising, build partnerships, and act as advocates for the charity’s mission. Public confidence in charities is consistently high, and board members are the guardians of that trust.
Day-to-day operations are usually delegated to the Chief Executive (often called the Executive Director in international contexts) and their team, but accountability always remains with the trustees.
For a full breakdown of trustee duties, recruitment practices, and board best practice, see our dedicated article: Charity Board of Trustees: Roles, Responsibilities, and Best Practices.
Regulatory and Legal Framework
Every charity operates within a legal and regulatory framework designed to protect beneficiaries, uphold public confidence, and ensure accountability. In the United Kingdom, oversight is provided by the Charity Commission for England and Wales, the Office of the Scottish Charity Regulator (OSCR), and the Charity Commission for Northern Ireland. Her Majesty’s Revenue and Customs (HMRC) regulates tax affairs, while Companies House oversees charities registered as companies.
The role of trustees is central in this framework. Even when day-to-day operations are delegated to staff, board members remain ultimately responsible for ensuring that their charity complies with all relevant laws and regulations. This includes:
Annual reporting: filing timely and accurate annual returns, accounts, and trustees’ reports, which are publicly available on the register of charities.
Governing documents: maintaining up-to-date constitutions, policies, and procedures that reflect both legal requirements and best practice.
Safeguarding responsibilities: putting in place robust systems to protect anyone who comes into contact with the charity. This is a non-delegable duty of trustees, regardless of the size or type of organisation.
Fundraising regulation: following the Code of Fundraising Practice and ensuring donations are solicited and used ethically.
The Charity Commission’s guidance, particularly The Essential Trustee (CC3) and the Charity Governance Code, sets out clear expectations for the board of directors. Compliance is not simply about avoiding penalties. It is a visible demonstration of integrity and stewardship, helping to build trust with donors, beneficiaries, and the public.
Boards that treat compliance as part of their governance cycle demonstrate maturity to funders and regulators. Book a free consultation to review your board’s governance readiness and strengthen your charity’s oversight practices.
Risk and Oversight
Effective governance requires more than compliance — it demands foresight. Charities operate in environments exposed to financial pressure, regulatory scrutiny, reputational challenges, and, increasingly, digital and cyber risks. The role of trustees is to anticipate these risks, oversee systems to manage them, and ensure that the organisation remains resilient in the face of uncertainty.
The UK Charity Commission makes clear that board members are accountable for identifying major risks and confirming, in their annual report, that appropriate systems or procedures are in place to manage them. This expectation reflects a wider principle: risk management is not a technical exercise but a core element of governance and stewardship.
Practical mechanisms include maintaining a live risk register, embedding internal controls, and establishing clear escalation pathways. At board level, trustees should regularly review risk appetite, assess whether controls are proportionate, and commission external reviews when necessary.
Strong oversight also means recognising risks linked to culture and behaviour. Issues such as safeguarding failures or a reluctance to escalate problems rarely arise from process gaps alone — they often reflect cultural weaknesses. Boards that create an environment of openness and accountability are better equipped to identify and address risks before they escalate into crises.
Charities that embed risk awareness into governance not only protect themselves from harm but also build credibility with regulators, donors, and the public. Risk management, in this sense, is an enabler of trust and long-term sustainability.
Cyber risk is now one of the fastest-growing threats facing charities. Download our Cyber and Data Security Checklist for Charities to strengthen resilience and embed digital protection across your governance framework.
Financial Stewardship
Financial stewardship is one of the most visible responsibilities of voluntary organisation's governance. Trustees are accountable for ensuring that funds are raised, managed, and spent in ways that advance the charity’s purpose and deliver public benefit. Donors, regulators, and beneficiaries alike expect transparency and prudence in how resources are used.
Key responsibilities include:
Budget approval and oversight: Trustees must review and approve budgets, monitor performance against them, and ensure that financial reporting is accurate and timely.
Reserves policies: The Charity Commission expects charities to set out clear reserves policies in their annual reports. These policies should balance sustainability with mission delivery, explaining why funds are held and how they will be applied.
Fundraising oversight: Trustees are responsible for ensuring that fundraising activities comply with the Code of Fundraising Practice and that all income is applied to the purposes for which it was raised.
Investment governance: Charities with endowments or significant assets must ensure investments are managed responsibly and in line with their values. Increasingly, this includes consideration of ethical investment and ESG factors.
Sound financial stewardship is more than compliance; it demonstrates credibility and protects long-term viability. Mismanagement of funds — whether through poor oversight, weak controls, or unethical fundraising — can erode public confidence quickly and irreversibly.
Culture and Values
Governance reflects the culture and values of the organisation. Trustees set the tone from the top, shaping how decisions are made, how issues are escalated, and how people experience the charity at every level.
Strong governance begins with ethical leadership. Board members are expected to act with integrity, manage conflicts of interest transparently, and ensure that decisions are made in the best interests of beneficiaries. Codes of conduct, whistleblowing procedures, and clear ethical guidelines provide formal safeguards, but it is the behaviours of the board that determine whether these safeguards are lived in practice.
Culture also influences risk awareness. When staff and volunteers feel safe to raise concerns, potential problems are surfaced early. When psychological safety is absent, issues remain hidden until they cause significant harm. Boards that actively encourage openness and constructive challenge create an environment where risks are identified, discussed, and addressed in time.
The Charity Commission increasingly highlights culture as a governance priority. Failures in safeguarding, fundraising, or financial management often reveal not just process weaknesses but also cultural shortcomings. Trustees therefore have a responsibility to model the values they expect throughout the organisation and to ensure those values are aligned with the charity’s mission and public expectations.
The Risk Within provides a roadmap for embedding psychological safety into risk management. It identifies critical touch points across the risk lifecycle and offers clear actions to align leadership, culture, and governance. It is designed to help risk functions integrate more deeply into the business and strengthen decision-making at every level.
Diversity and Inclusion
Effective governance depends on the quality of decisions made in the boardroom. Diversity of background, skills, and perspective strengthens those decisions by reducing blind spots and challenging groupthink. Inclusion ensures that every trustee is able to contribute fully, creating a board culture where varied voices are not only present but valued.
The Charity Governance Code identifies equality, diversity, and inclusion (EDI) as a core principle of effective governance. Boards are encouraged to review their composition regularly, set clear diversity objectives, and recruit trustees who reflect the communities they serve. This extends beyond demographics to include professional expertise, lived experience, and generational perspective.
Succession planning is another critical aspect of inclusion. Without proactive recruitment and term limits, boards risk becoming stagnant or unrepresentative. Establishing clear policies for rotation and renewal ensures that governance remains dynamic, adaptive, and open to new ideas.
Managing conflicts of interest is equally important. Trustees must exercise independence of judgment, declaring and managing any personal or professional interests that could compromise decision-making. Transparent processes for handling conflicts reinforce both integrity and public trust.
Strategy and Impact
Good governance ensures that charities do more than comply — it enables them to achieve meaningful and lasting impact. Trustees are responsible for setting the organisation’s strategic direction, monitoring delivery, and ensuring that resources are applied in ways that align with the charity’s mission.
Strategic leadership begins with clarity of purpose. Boards must define long-term priorities, regularly review progress, and adapt plans in response to changing needs or external pressures. This requires balancing ambition with realism, ensuring that the charity remains focused on its objectives while staying financially and operationally sustainable.
Impact oversight is a natural extension of strategy. Trustees should expect clear reporting on how programmes deliver measurable outcomes for beneficiaries. Frameworks such as key performance indicators (KPIs), theory of change models, and impact assessments provide the evidence boards need to test whether resources are being used effectively. Where results fall short, trustees must be willing to challenge assumptions and adjust course.
The Charity Commission encourages trustees to demonstrate impact in their annual reports, linking activities and expenditure directly to public benefit. Doing so not only satisfies regulatory requirements but also builds confidence with donors, beneficiaries, and the wider public.
When strategy and impact are embedded into governance, boards shift from being guardians of compliance to stewards of long-term value. This perspective ensures that every decision, every pound raised, and every hour of volunteer time contributes meaningfully to the charity’s mission and strengthens trust in its work.
Digital and Data Governance
Digital tools and data are now central to how charities operate, from fundraising platforms and volunteer management systems to digital service delivery. With these opportunities come new governance responsibilities. Trustees must ensure that the use of technology strengthens transparency, protects stakeholders, and aligns with the charity’s mission.
Data protection is a core requirement. Under the UK GDPR and Data Protection Act, trustees are accountable for safeguarding personal information about donors, beneficiaries, staff, and volunteers. This includes ensuring appropriate policies, training, and systems are in place to manage data securely. Breaches can not only trigger regulatory penalties but also undermine public confidence.
Cybersecurity oversight is another critical responsibility. Charities are frequent targets of fraud and cyberattacks, particularly those that hold sensitive beneficiary data or rely heavily on online fundraising. Boards must treat digital resilience as part of overall risk management, ensuring that controls are proportionate and that incident response plans are tested.
Digital governance also brings opportunity. Technology enables charities to communicate impact more transparently, engage new donor communities, and deliver services more effectively. Boards that embrace innovation responsibly can extend their reach and improve their effectiveness, while reinforcing their accountability.
Emerging Challenges in Governance
The governance landscape for charities is evolving rapidly. Trustees must navigate pressures that extend well beyond traditional oversight, requiring adaptability, foresight, and resilience.
Funding pressures and economic uncertainty are at the forefront. Inflation, fluctuating donor income, and competition for grants force boards to balance ambition with sustainability. Strategic governance requires clear reserves policies, diversification of income, and scenario planning to protect against shocks.
Political and regulatory scrutiny is also increasing. From safeguarding failures to fundraising practices, high-profile inquiries remind boards that governance lapses quickly erode public trust. Trustees must remain alert to shifting regulatory expectations and ensure compliance is embedded across the organisation.
Reputation and crisis management are critical. Social media amplifies both successes and failures, meaning that safeguarding incidents, ethical missteps, or financial weaknesses can escalate into crises within hours. Boards need tested response plans, clear communication protocols, and a culture that prioritises openness and accountability.
Future-facing issues are reshaping governance expectations.
AI and digital transformation: Boards must assess ethical use, bias risks, and the impact of automation on service delivery.
Environmental, social, and governance (ESG) principles: Donors and funders increasingly expect charities to demonstrate sustainability and social responsibility, not only in programmes but in operations and investments.
Cross-border governance: International charities face complex challenges in balancing local autonomy with central oversight, particularly around compliance and risk management.
Trustees who anticipate these challenges and build them into governance frameworks are better positioned to safeguard resilience and preserve trust. Emerging risks cannot be fully eliminated, but they can be managed through proactive oversight, ethical leadership, and a culture of continuous learning.
Practical Enablers
Strong governance does not happen by chance. It requires deliberate structures, regular reflection, and a commitment to continuous improvement. Trustees can strengthen their boards by focusing on a set of practical enablers.
Trustee induction and training ensure that new members understand the charity’s mission, finances, and risks from the outset. Ongoing development — through Charity Commission guidance, sector workshops, or CPD opportunities — keeps skills current and supports confident decision-making.
Board evaluations help identify strengths and gaps in governance. Annual self-assessments, complemented by independent reviews every three years, provide trustees with clear insights into performance and opportunities for improvement.
Policies and procedures provide a framework for consistency and accountability.
Conflict of interest policies protect independence of judgment.
Financial policies ensure transparent budgeting, reporting, and controls.
Meeting procedures set out quorum, voting, and documentation standards.
Evaluation procedures formalise how boards assess their own effectiveness and that of senior management.
Oversight mechanisms build confidence with stakeholders. Regular independent audits verify financial integrity, performance reviews test effectiveness, and transparent public reporting strengthens trust with donors, beneficiaries, and the wider community.
External perspectives add value. Advisory boards, professional auditors, and specialist consultants can provide expertise in areas such as finance, risk, or digital resilience, helping trustees make better-informed decisions.
Above all, governance must be treated as a living practice. Boards that invest in training, evaluation, and robust oversight demonstrate both humility and ambition — qualities that inspire trust and ensure that governance continues to evolve with the challenges charities face.
Largest Charities and the Governance Imperative
Scale brings both opportunity and scrutiny. The largest charities in the world command resources and influence on a scale comparable to multinational corporations, and their governance structures are tested daily by complexity, public attention, and global operations.
Globally, some of the best-known examples include:
The Bill & Melinda Gates Foundation (USA) — with an endowment exceeding $50 billion, governed by independent trustees, strict conflict-of-interest rules, and transparent grant-making.
Wellcome Trust (UK) — one of Europe’s largest charitable foundations, with assets over £36 billion, subject to stringent UK charity law and independent governance reviews.
Médecins Sans Frontières (International) — a federation operating in 70+ countries, balancing local accountability with central oversight to maintain neutrality and effectiveness.
In the UK, the Charity Commission publishes annual data on the top 100 charities by income. Leading organisations include:
Cancer Research UK
Oxfam
British Council
National Trust
Save the Children
Together, these organisations manage tens of billions of pounds, employ thousands of staff, and deliver services across multiple sectors and geographies.
The governance lessons from these charities are clear:
Scale demands formality: Large boards rely on strong audit, finance, and risk committees, supported by regular external reviews.
Transparency is non-negotiable: Annual reports and impact statements must go beyond compliance to demonstrate ethical fundraising, stewardship of funds, and public benefit.
Global reach requires adaptability: Cross-border governance models must strike a balance between local autonomy and central standards.
Reputation management is critical: Failures in safeguarding, finance, or leadership in large charities quickly become international news.
For smaller organisations, studying the practices of the largest charities offers both inspiration and caution. Scale provides resources, but it also amplifies risk when governance falters. The lesson for boards of every size is the same: strong governance is not optional — it is the foundation of credibility, resilience, and long-term impact.
Conclusion
Governance is the backbone of every charity and non-profit organisation. It ensures that resources are safeguarded, missions are advanced with integrity, and public trust is earned and protected. From setting strategy and overseeing risk to modelling culture and values, trustees carry responsibilities that extend far beyond compliance.
The principles are clear: purpose must be anchored in accountability, boards must act with integrity, and decisions must always reflect the public benefit. Yet governance is not static. Emerging challenges such as digital risk, funding pressures, ESG expectations, and AI require boards to adapt continually and strengthen their practices.
Lessons from the world’s largest charities demonstrate that scale magnifies both opportunity and risk. Whether managing billions in assets or operating on modest community budgets, the same truth applies: strong governance is what enables charities to deliver meaningful, sustainable impact.
Every board has the opportunity to test and improve its governance maturity. By investing in training, evaluation, and culture, trustees can move beyond compliance to become true stewards of trust and resilience.
👉 Not sure where your organisation stands? Take our Charity Governance Maturity Assessment to benchmark your board, identify strengths and gaps, and gain practical insights into how to strengthen governance for long-term success.
About the Author: Julien Haye
Managing Director of Aevitium LTD and former Chief Risk Officer with over 26 years of experience in global financial services and non-profit organisations. Known for his pragmatic, people-first approach, Julien specialises in transforming risk and compliance into strategic enablers. He is the author of The Risk Within: Cultivating Psychological Safety for Strategic Decision-Making and hosts the RiskMasters podcast, where he shares insights from risk leaders and change makers.