AICD’s Not-for-Profit Governance Principles are a key source of publicly available guidance for directors of Australian not-for-profits, including charities.

    The Not-for-Profit Governance Principles have been updated from the previous 2013 and 2019 editions to reflect the evolving governance environment including heightened board focus on organisational culture, stakeholders and sustainability. Structured to provide clarity and actionable insights, each Principle is presented as a chapter that comprises key points, director questions, case studies and links to additional resources.

    The Principles also include a foreword from Assistant Minister for Competition, Charities and Treasury Andrew Leigh, who welcomed the publication of the guidance for the NFP sector as a valuable supplement to the Australian Charities and Not-for-profits Commission’s extensive suite of free resources.

    In a webinar recorded in April 2024, AICD policy adviser Sean Dondas MAICD, Good Sammy Enterprises and Therapy Focus chair Fiona Payne FAICD, and Reformed Theological College chair Ken Dean FAICD, also a former chair of Mission Australia, discussed the updated Principles and answered questions from directors joining online. The following is a summary of the discussion.

    Core responsibilities

    A core responsibility of an NFP board is to contribute to defining, documenting and realising the NFP’s purpose, vision and strategy, said Dondas. The board should ensure that an NFP’s purpose, vision and strategy is communicated and understood by stakeholders.

    Some of the key updates in the Principles address the roles and responsibilities of employees and volunteers, including those that engage with beneficiaries and clients, as well as the role of third-party service providers, including software systems, accounting and legal services, and professional fundraising bodies.

    Some of the questions directors should be asking in this area include:

    • Is there a comprehensive delegation policy? Does the board understand what cannot be delegated?
    • How often are board and board committee charters reviewed?
    • Is the board clear about the roles and responsibilities of the CEO, including the relationship between the board and CEO?

    Guidance on board composition and effectiveness advises that a board should appoint a mix of people with a diverse set of skills, experience and backgrounds.

    Boards should be proactive with inductions, succession planning, monitoring tenure and turnover, and board evaluations. Boards might wish to consider director remuneration or other forms of recognition as tools to promote diverse backgrounds and skills on NFP boards.


    The issue of remuneration was one of the leading topics in the Q&A session at the end of the webinar. The AICD’s most recent NFP governance and performance study showed that more organisations are offering remuneration to directors.

    Payne said it’s important to understand it is not always possible — or legal — to remunerate directors or board members. “If you can, then why would you want to, and for some, can you?” were questions to ask if the issue is being considered by a board, she added. “Can you afford to? Does the complexity of your business require you to? Then if you do decide that you would like to pay the director, what would that look like?”

    For larger organisations with higher levels of complexity, where there is increased risk plus time commitments and a need for more expertise, then there appeared to be a growing trend toward this being reflected by small payments to directors, noted Payne.

    “It is important to remember that the amount being paid to NFP directors is a fraction of what is paid to directors in private companies,” she said. “With increasing responsibilities and the risks associated with being a director — particularly in highly regulated environments like the care sector — then it is likely we will see more paid boards.”

    Hearing the client voice

    The updated Principles document contains a targeted resource on how to elevate the client voice into the board’s decision-making. A poll of webinar participants on the day found that using an advisory committee was the most popular mechanism for doing this, followed by employee and volunteer engagement, and board composition, respectively.

    “Board composition is obviously very important and an end goal in terms of ensuring the people sitting around the boardroom table reflect the community they serve,” said Payne, speaking to the poll results.

    She noted that although board members might think they know the organisation, “we are all on a journey to ensure that the voice of the clients we serve is heard in the operations of the organisation — but importantly in the decisions that the organisation is making, which is obviously one of the key roles for the board”.

    Financial sustainability, risk and reporting

    Financial sustainability and NFP risks around reliance on a single funder or a small number of funding sources has become a constant concern, as it shapes what the organisation can and can’t deliver for its beneficiaries and clients. The Principles outline having clear roles and responsibilities to oversee funding risks.

    Considerations include what can be delegated — whether to management or using a risk committee — and also the role of the board in setting that risk appetite aligned with the purpose, vision and strategy, and regulatory obligations, said Dondas.

    Periodic review of the risk management framework is essential to ensure the framework and the risk appetite statement are in alignment, up to date and reflect and incorporate emerging risks.

    The performance and accountability of the board should also be measured and reported. “Recognise that you can’t measure everything,” said Dean. “Measure what you can and assess what you can’t measure. Have some rigour about reporting it.”

    Trends are key in performance reporting. One red flag to watch out for, according to Dean, would be if action items remained on the agenda repeatedly, without being dealt with.

    “Take that really seriously, look at that, think about that,” he said. “If things are staying on that list month after month or meeting after meeting, that’s a real concern that becomes a reflection of the performance and accountability within the organisation.”

    Board minutes

    Board minutes are not only a legal document, but also a good communication tool and the basis of establishing accountability of the board, noted Dean.

    “If you don’t have a good record of what you’ve decided and how you are going about doing things, then you can’t hold yourself accountable and you can’t hold anyone else accountable,” he said.

    “Put some focus on having good minutes that clearly record what and why the organisation is moving in particular directions. That then becomes the basis of performance and accountability.”

    Maintaining a good culture

    Organisational culture starts with the tone set by the board and senior management. The Principles recommend that the board should receive reporting and regularly assess the organisation’s culture to address areas of concerns or potential risks, including attitudes and behaviours regarding cybersecurity and sexual harassment. It is also important for directors to engage directly with employees and volunteers.

    “Volunteers are really important to us,” said Dean. “We need to have mechanisms not only for recruiting volunteers who are on board with the purpose of the organisation — because that’s what they’re going to engage with, and why they’re interested in being part of the organisation — but also recognising the contributions of everyone, not just volunteers, but paid employees as well.”

    He added that volunteer induction and having oversight of that at the board level is essential. “It’s really key if they’re going to be properly engaged in delivering services.”

    Access the full webinar recording (available until 14 April 2028).

    Find out about upcoming webinars here

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