Commissioner of Charities (COC) New Code of Conduct

The Commissioner of Charities (COC) released in April 2017 a new Code of Conduct which will take effect 1 January 2018 onwards. Here are some key pointers from a COC sharing session regarding the new Code.

1. Principle-based not rule-based. Two main principles: accountability and transparency.
2. Code released April 2017, takes effect 1 January 2018 onwards.
3. Charities must submit on Charities Portal the Governance Evaluation Checklist (GEC) for FY ending 31 Dec 2018. GEC is a comply or explain why cannot comply, but non-mandatory. GEC will be made available publicly on the Charities Portal so members of public can decide whether to donate / support the charity.
4. Tiers based on income or expenses (previously income only):
   1. For charities:
      1. < $50,000 exempted;
      2. < $500,000 Basic;
      3. $500,000 – $10 million Intermediate;
      4. $10 million or more Enhanced.
   2. For IPC: < $500,000 Intermediate, $500,000 or more: Enhanced.
5. Prof Tan Wee Liang, a Charity Council member shared key changes in the new Code.
6. A treasurer will have a 4-year consecutive term limit. If there is no treasurer, then the chairman becomes or is deemed to be the treasurer, so also a 4-year limit applies. After the 4-year limit,  a treasurer must step down from office for 2 years.
   1. If e.g. the treasurer left after 6 months into his term, and came back the next year, the clock continues from the 7th month.
   2. It is not necessary to amend governing instruments to include this treasurer term limit, but it is recommended to have some written document, e.g. term of reference or policy for this.
   3. Finance committee chairman is taken to be the same as the treasurer unless expressly stipulated to be different.
   4. If the ex-treasurer steps down and say joins the finance committee as a member only, it may be kosher for the purpose of calculating the 2-year step down. But ideally she should step down completely. The person can continue as a board member but in a different role / committee.
7. Board members should put themselves up for renomination and reappointment at least 1 in every 3 years. For charities > $10 million or IPC > $500,000, there should be a term limit for board members, with reappointment after 2 years. In the GEC, the organisation must disclose the reasons for retaining the board members who have served for more than 10 consecutive years. The idea here is to ensure succession and if cannot, then explain why.
8. On human resource (HR) and volunteer management, the charity should have a code of conduct for board members, staff and volunteers, to be approved by the board. There should be documented policies for reimbursement of expenses, gifts, social media, hospitality, disciplinary actions, etc.
9. On financial management and internal controls, this applies to all charities in at least the basic tier. There should be a policy for loans, donations, grants and/or financial assistance to other parties, employees etc. Particularly applicable where the charity’s money is to be used for purposes other than the charity’s purposes. E.g. lending money to a staff member, or lending / donating money to another charity. Such decisions should be submitted for board approval.
10. On risk management, applicable to intermediate tier and above, there should be a process to identify, regularly monitor and review the charity’s key risks (review work flows, processes, operations). It should cover mitigating measures and controls for all key risks. The Charity Council has resources on risk management: enterprise risk management toolkit, RSM Risk Governance for the Third Sector, etc.
11. On disclosure and transparency, a current holder of any office should disclose prior relevant offices.
    1. Also charities have to disclose board members’ remuneration and benefits for individual board members if any, or if not, then state so in the annual report. Charities should also disclose the top 3 highest paid staff (> $100,000 per annum); if not, then state that there is no such staff with such salary. They need not be named in the report.
    2. For Enhanced tier, charities must disclose the remuneration of employees who are related to the CEO / ED / board member, e.g. spouse / children.
12. For Enhanced tier charities, they should disclose whether there is whistleblowing policy.
13. Key governance areas to highlight (not new changes).
14. Segregation of board and executive function. Staff may become board member if expressly allowed by governing instruments, provided that the staff do not comprise 1/3 of the board, and the staff does not chair the board. A clear distinction should be drawn between her board role and her operational role. Board roles are e.g. strategic direction and not day to day operations, only reviewing and approving budget and key KPIs.
15. Succession planning. It is good practice to have a process to vet and consider potential board members for the role. E.g. conduct the online board assessment/board self-evaluation checklist by Social Service Institute (SSI). Have a Nominating Committee to identify potential board members. Have potential board committees serve on committees first, before being recommended by Nominating Committee to be co-opted onto the board for 1 year. Then finally formally appointed to board.
16. Conflict of interest. Resources available: SSI sample Conflict of Interest policy. Conflict declaration.
17. A potential resource available for charities: tap on the VWO-Charities Capability Fund, which covers training, consultancy (legal, corporate governance consultancy), infocommm technology (including laptops, software, website, accounting system), shared services (eg payroll finance functions).