Using the code

The code is for use by all third sector organisations in Scotland, whatever their shape, size or activities. The code’s principles apply equally to all organisations, but how an organisation follows each principle will depend on its size, income, activities and complexity.

How it works

The code sets out five core principles that encourage third sector organisations to look at, and improve, their governance. All five principles are equally important.

Laws and regulations are fundamental to good governance. However, keeping to the code is not a legal or regulatory requirement. The code provides a standard for us all to aim for. It is there to support continuous improvement and strengthen the effectiveness of governance across the third sector.

The code is supported by the SCVO Good Governance Checkup, which is an online tool to guide you through the principles of the code. The Good Governance Checkup asks a series of questions about your organisation and gives you a personalised action plan with links to further resources. Your board can use the online tool to identify areas where you’re doing well, check where you can improve, and monitor your progress over time.

Terminology

There are many different terms used for the governing bodies of third-sector organisations, such as:

• the board
• the committee
• the trustees, and
• the directors.

The difference between these terms usually reflects the different legal structure of organisations, and their history and culture. In this code we use the term ‘the board’ to mean an organisation’s governing body, which is ultimately accountable for the organisation.

Equality and diversity

Understanding and keeping to the principles of equality, diversity and inclusion supports and enables boards to be effective and informed, and to make better decisions.

The code is based on the understanding that all third sector organisations should fully recognise equality, diversity and inclusion (for example, diversity of background, thought and experience, as well as the protected characteristics defined by the Equality Act 2010).

This is an essential part of good governance and underpins all five of the core principles.

The five core principles

The five core principles are:

• organisational purpose
• leadership
• board behaviour
• control and risk management
• effectiveness