Guiding Principles - Decision-making

Charity Commision – decision making principles

Alongside understanding and referencing the processes outlined within your governing document the Charity Commission also outlines seven decision making principles. These principles help trustees make effective and legally compliant decisions, ensuring the charity operates in the best interests of its beneficiaries.

1. Act Within Your Powers

Trustees must ensure that their decisions are within the powers granted by the charity's governing document and relevant laws. This means making decisions that help achieve the charity's purposes and following any specific rules associated with those powers.

2. Act in Good Faith

Trustees should act with genuine, honest intentions, prioritising the best interests of the charity. This involves making decisions that are intended to benefit the charity and its beneficiaries.

3. Be Sufficiently Informed

Trustees must gather and consider all necessary information before making a decision. This includes understanding the potential impact of the decision and seeking professional advice when needed.

4. Take Account of All Relevant Factors

Trustees should consider all factors that are relevant to the decision at hand. This means weighing the pros and cons and understanding how the decision aligns with the charity's objectives.

5. Ignore Irrelevant Factors

Trustees must disregard any factors that are not relevant to the decision. This helps ensure that decisions are made based on appropriate and pertinent information.

6. Manage Conflicts of Interest

Trustees should identify and manage any conflicts of interest. This involves declaring any personal interests that could influence their decision-making and following the charity's policy on managing conflicts.

7. Make Decisions That Are Reasonable

Trustees must ensure that their decisions fall within the range of decisions that a reasonable trustee body could make. This means making decisions that are justifiable and defensible based on the information available.

The Charity Commission have a short quiz aimed at new trustees which can help you to understand the application of these principles.

Simple checklist

Review the below to understand if your trustee board are following good practice. If you can answer yes to all the below you and your fellow trustees have a sound basis for decision making. If you have answered no then consider putting in new processes or policies.

All trustees understand the charity’s governing document and decision-making powers.

Decision-making processes are clear, documented, and followed consistently.

Conflicts of interest are identified, managed, and recorded transparently. Larger organisations may want to develop a specific policy.

Trustees consult relevant information and consider stakeholders before making decisions

Decisions are justified, reasonable, and recorded. This can be simply keeping a record of decisions within meeting minutes.

NCVO Charity Ethical Principles

The National Council for Voluntary Organisations (NVCO) has created Charity Ethical Principles to help not for profit organisations be open and ethical in how they work with people. The principles state that charities should:

respect every individual’s dignity and rights to privacy and confidentiality

commit to challenging any instances of sexism, gender inequality and other power imbalances that leave some people at risk of harm

value and improve diversity in their governing bodies, workforce and volunteers

Charity Governance Code

The Charity Governance Code is a practical tool designed to help charities, and their trustees develop high standards of governance. It is not a legal requirement but provides a framework for continuous improvement towards exemplary leadership and governance. The Code covers the following key areas:

Organisational purpose

Leadership

Integrity

Decision making, risk and control

Board Effectiveness

Diversity

Openness and accountability

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