Charity governance: in the spotlight and on the move

Junior consultant Maurizio Cuttin dives into some of the latest twist and turns in the realm of charity governance

2025 is proving to be a memorable year for charities and the third sector. You may have noticed recent headlines buzzing with a continuous stream of major announcements: from the introduction of a new Civil Society Covenant to the bold ambitions set out in NHS England’s new 10 Year Plan aimed at better integrating the voluntary and third sectors in the delivery of health and social care.

Add to this an expected revision to the current charity code of governance this Autumn, and the stage has been set for major change.

The pace of policy changes has been remarkable, making it challenging to keep up with every twist and turn. This article aims to break down these major developments and explore their implications for charity governance.

Mending Budget wounds

When Sir Keir Starmer stepped into 10 Downing Street last July, he made an early promise to reset the relationship between the government and civil society. Although the Labour Party's 2024 election manifesto spoke only in general terms about how a Labour government would achieve the vision of ‘government at its best when working in partnership with business, trade unions, civil society, faith groups, and communities,’ the prime minister’s team began working almost immediately on redefining this relationship.

There were hiccups along the way—the autumn budget was as tough as had been expected, and the national insurance tax hike impacted many charities’ finances. Yet, the government quickly pivoted, brainstorming new strategies to mend the fractures the sector suffered during austere times. By October 2024, they announced plans to co-create a new Civil Society Covenant, aiming to revive collaboration with the sector, alongside a framework to jumpstart the process.

Despite some setbacks, such as the controversial cut in international development funding from 0.5% of GDP to 0.3% - a move heavily criticised by many charities - by this point, the wheels were in motion. The pressures on civil society remained palpable, but something truly transformational was unfolding. A (renewed) commitment to nurturing these essential partnerships was in the works.

Enter the Civil Society Covenant

The Civil Society Covenant was officially unveiled on 17 July 2025 at a star-studded conference at London’s grandiose Science Museum, featuring everyone from the prime minister to the culture secretary, the health secretary and many other cabinet members.

Focusing on the practicalities, the Covenant's goals focus on fostering collaboration between the government and NGOs, ensuring that charities have a seat at the table when critical policy decisions are made. This initiative aims to create a more coherent framework for funding and support, recognising the invaluable contributions charities make to society.

The four guiding principles of the Covenant, developed in collaboration with the National Council for Voluntary Organisations (NCVO) and the Association of Chief Executives of Voluntary Organisations (ACEVO), are:

1. recognition and value – to ensure a strong and independent civil society
2. partnership and collaboration – to ensure effective service delivery and policy making, and shared learning of best practices
3. participation and inclusion – to ensure people and communities can be heard and make a difference
4. transparency and data – to ensure civil society and government have the information needed to best serve people and communities.

In addition to these foundational pillars, one of the Covenant's key tenets is the commitment to empowering communities. It emphasises the importance of participatory approaches in policymaking, ensuring that the voices of the beneficiaries are heard. This acknowledgment signals a promising shift towards greater inclusivity and collaboration—a positive development for financial and policy support in the sector. This encouraging approach is likely to be met with relief and may lead to constructive governance improvements by charities that have faced challenging years due to austerity, post-Brexit economic decline, and the global pandemic.

A revised Charity Code of Governance

Also on the horizon is the anticipated revised Charity Code of Governance, which promises to enhance the standards of practice within the sector. This new code, which follows up on the previous revision from 2017, is expected to place a stronger emphasis on emerging areas such as digital governance, environmental responsibility and enhanced stakeholder engagement. This is likely to be in addition to the seven existing core principles:

1. Organisational purpose
2. Leadership
3. Integrity
4. Decision-making, risk and control
5. Board effectiveness
6. Equality, diversity and inclusion (EDI)
7. Openness and accountability

As political discourse increasingly obsesses on allegations of 'waste, fraud, and abuse' in the public sector, it is likely that topics such as accountability, transparency, and ethical governance will also receive greater attention. Anticipated updates may include clearer guidelines on the roles and responsibilities of trustees, enhanced risk management processes, and strengthened safeguarding measures.

Renewal and redirection

As 2026 approaches, the charity sector is ripe for renewal and redirection. The overlap of these developments presents a unique moment for charities to take stock of their governance structures and practices. Whether through a governance review, a board effectiveness assessment, or developmental workshops, organisations have an opportunity to align themselves with the forthcoming changes.

The emerging changes in charity governance represent not just challenges to adapt to but also opportunities for organisations to enhance their impact, influence and ingenuity.

If you are interested in taking stock of where you are at, whether it’s through a governance review (GGI’s bread and butter), a board effectiveness review or some development workshops, get in touch with us.