The Code for Sports Governance (the “SG Code”) was originally launched in October 2016 and became mandatory for those organisations seeking Government and National Lottery funding from April 2017. A revised version was published in July 2021 with strengthened diversity and inclusion content and a focus on increasing transparency in this area.
The SG Code sets out the levels of transparency, accountability and financial integrity that will be required to obtain public funding and has been applied to over 4,000 organisations. Since its introduction, governance standards in sports organisations have significantly improved and representation on boards by females, people from ethnically diverse backgrounds and those with declared disabilities has equally increased. As with any organisation, those charged with decision making should reflect the principal stakeholders whom they are responsible for and society.
Another new development is the requirement to appoint a director with responsibility for welfare and safety in their sport.
The Code remains designed around five key principles:
- Structure
- People
- Communication
- Standards and conduct
- Policies and processes
The three-tiered approach to compliance taken in the first instance remains in place. This was implemented to achieve proportionality with the regulation and avoid unnecessary administrative, and consequently financial burdens. Quite rightly, as organisations are applying for and spending public money, the obligations become more onerous as the level of funding increases. The requirements of each principle and the threshold for each tier are available to download so not repeated here.
The principals contained in Tier One are mandatory for all organisations seeking funding. When taken as a whole, the principals are designed to ensure that organisations are properly constituted, have a clear purpose and record decision making appropriately and transparently. Additional focus has been placed on skills, diversity, and independence.
It’s important to note that there are specific requirements relating to financial procedures and practices, including oversight of financial planning, ensuring that decision making is not managed by one person alone and that accounts are independently scrutinised. Incorporating this specific accountability into the Code supports the aim of ensuring that those organisations applying for funding can be trusted to spend the money wisely.
Whereas some voluntary organisations may well eye the corporate world with suspicion, corporate governance is well established for both public and private companies which do not, overall, rely on public funding. It is right that organised sport should “catch up”, therefore. Not all the content of the UK Corporate Governance Code 2018 (the “CGC”) fits sports governance though. For example, Remuneration features heavily in the CGC but not at all in the SG Code, reflecting the voluntary nature of sports governance.
However, all organisations, no matter how they are funded or what they do, serve a purpose, and have a place in society. It matters, therefore, if they fail as it will always be the stakeholders who suffer. Therefore, governance is important and the recent developments in sports governance should be welcomed.
Clearly, the SG Code is not designed for large organisations such as professional football clubs which exist as private or public companies and should refer to the applicable established corporate governance codes already in the public domain. It is instead aimed at organisations which rely on public funding to survive. Considering the sums of money involved, it is important that good governance is in place to ensure that the grants made are utilised efficiently for the benefit of the organisation’s stakeholder base – the end user who wants to play and participate. It’s therefore encouraging that the government has recognised that those in need and receipt of funding, first and foremost, need good governance.
