During the course of advising charities and not-for-profit organisations over many years, we have noticed some common issues that are important to our clients.
Over the next few months, we will run a series of short summaries of those legal issues that every charity and not-for-profit organisation should consider.
This month we will deal with the topic of governance.
It is important that your organisation is well managed so it can focus on its mission and purpose. We recommend you consider the following:
Do you have a governing document (e.g. constitution) that aligns with your activities? Charities registered with ACNC could risk losing the charitable status (and tax concessions) if they undertake activities that do not fit within the stated objects in their governing document.
When was the last time you reviewed your governing document? It is useful to review your constitution periodically to ensure compliance and appropriate governance arrangements, and if your organisation is registered with the ACNC is the most recent version of your constitution uploaded onto the ACNC Register?
Are processes for appointment or election of directors and office bearers clear?
Is there a maximum term for directors to promote some turnover on the Board?
Have you identified what skills are required for your directors and whether these must be taken into account when appointing or electing directors?
Does the Board receive presentations on governance and regulatory issues?
Does the Board have appropriate committee structures?
Are reports from management to the Board appropriate? Are directors informed about key financial issues?
Is there a strategic plan in place? If so, does management report to the Board on performance against the key items in the strategic plan?
Does your constitution contain appropriate winding up provisions and, if your organisation is a DGR, does it contain appropriate provisions for surplus DGR funds if DGR endorsement is revoked?
Do you have a dispute resolution mechanism and is this appropriate for your needs?
Do you have an appropriate and effective mechanism for disclosing conflicts of interest?
What internal systems do you have, to manage and prevent fraud? Are these adequate?
Please do not hesitate to contact us for any advice regarding best practice, meeting governance standards and managing board conflicts.