04 January, 2017
The UK Government has announced a new mandatory Code on Sports Governance that will apply to any sports body in receipt of government funding. The Code comes in force at a good time, in light of the recent abuse allegations linked with some London premier league clubs.
The new Code contains a mandatory series of requirements for organisations seeking sports funding from the Government.
It specifies three tiers of requirements depending on the amount of funding that the sporting body receives. Tier one is the basic level of compliance for those bodies who might be receiving funding for a specific project or on a one-off basis and that funding is £250,000 or less. Tier One compliance requires compliance with seven basic requirements including, for example, that the organisation should be properly constituted, have a clear purpose and, if membership based, be inclusive and accessible and that committee members should be subject to regular election and ideally should serve no more than nine years.
Tier Two compliance will apply to bodies who receive funding of sums between £250,000 and £1 million and will require the Tier One requirements to be met and a tailored set of requirements from Tier Three. The exact requirements to be imposed on a Tier Two organisation and the deadlines for compliance with those requirements will reflect the amount of the investment that the organisation receives and the base point from which the organisation is starting in terms of its current governance systems.
Finally Tier three compliance will apply to sporting bodies where funding is granted on a continuing basis over a period of years and is greater than £1 million. Tier Three compliance will require full compliance with all mandatory governance requirements in the Code in their full detail including detailed provisions on terms of appointment of board members, board size and composition, board recruitment, conflicts of interest, skills matrixes and obligations on boards to evaluate their own skills and performance and that of individual directors annually as well as requirements for external evaluation every four years.
Theoretically, a breach of any of these mandatory requirements would render a body ineligible for funding from the Government. The question is how compliance will be tested. It is unlikely that self-certification will be sufficient and therefore the process of demonstrating compliance through an audit for example will impose attendant cost and time constraints on sporting bodies.
A new addition to the Code is the topic of diversity. The Tier One requirement is that "In deciding who sits on its governing committee, the organisation considers the skills and diversity required of its committee members." At Tier Three the mandatory requirements on diversity make it clear that the 30% of each gender on its board is a target, not a quota. It also suggests that diversity should include diversity of socio-economic background and diversity of thought.
Sporting bodies should also be aware that compliance with the Code is not the only document they will need to comply with in terms of revamping their governance and practices.
The Government's sporting strategy document, Sporting Futures which was released in December 2015, also imposes a number of requirements and one of those requirements is that all organisations who receive public funding must carry out a regular staff survey yearly and act on the results internally as well as making the top line data available to Sport England. This requirement is included in the Code but as a Tier Three requirement.
Finally in order for sports bodies to be funded by Sport England, the Sporting Futures document makes it clear that sporting bodies will need to "make data available which is relevant to getting more people involved in sport and physical activity publicly available in an agreed format free of charge". This requirement for open data fits in with the previous Cameron government's push to have not only government agencies but banks and other organisations open up their data to their customers. Whether that push remains one that Theresa May's government will throw its weight behind remains to be seen. Despite this, sports bodies need to be careful as to what the nature is of the data they are publishing. Data made available to the public, must correspond to 'data protection principles' and there is more onerous rules where data published has the potential to be 'sensitive personal data'.
What is clear however is that the Government is on the path towards the greater professionalisation and transparency of sporting bodies. Whilst for some bodies, the changes to their governance and structure may be minor, for others who might aspire to receive greater funding in the future, the path towards compliance may be a fraught one, particularly in terms of achieving the diversity targets.
There remains therefore a number of known unknowns for sporting bodies in terms of compliance of and enforcement with the dual requirements of the Code and the Sporting Futures document. However armed with what they do know, sporting bodies should begin to think about what steps they need to take both immediately and for the long term, based on their long term strategy in order to bring their corporate governance and day-today practices into line with the requirements of the Code and Sporting Future.
Forbes Solicitors regularly advises and assists with a range of governance matters including reviewing policies and processes, providing training to members of staff and board, as well as assisting a board in fulfilling their legal obligations. If you have any concerns as a result of the new Code or would like general governance/DPA advice, please contact Daniel Milnes.