Good governance is core business, argues Australian National Charities and Not-for-profits Commission (ACNC) Acting Commissioner Deborah Jenkins.
It is core business for all charity boards to ensure their organisation is run properly and effectively, and core business for the ACNC to guide and support boards to meet their responsibilities.
When we are working with charities, one of the most common risks we identify is charities not meeting one or more of the ACNC Governance Standards. That’s why, if you are on a charity board, it is critical you are familiar with them.
The ACNC Governance Standards are high-level principles, rather than precise rules, to guide boards and leaders of organisations in deciding how to govern their charity. Because they are not prescriptive, it is up to each organisation to determine the specific actions, policies and procedures they need to put in place to meet them.
There are six standards. In broad terms, they require that a registered entity is charitable — it exists to benefit others, not for private interest or profit and, as it evolves over time, it stays to true to its purpose. The standards require that a charity operates lawfully, is run in an accountable and responsible way and helps to maintain public trust in charities, and support charities to continue to do their work.
Top tips for directors
We know one of the best ways to bolster transparency and accountability in the sector is through education. We want to support charities to strengthen their governance and improve their practices. We provide a lot of guidance and resources, including these top 10 tips for board members to stay on top of good governance.
- Know what the charitable purpose of your charity is and make sure everyone is working towards it. If you are unsure, ask yourself whether your actions promote your charity’s charitable purpose.
- Be clear about your role and make sure that the roles and responsibilities of everyone at your charity are well understood, whether people are volunteers, members, board members, clients or employees.
- Understand your charity’s financial position and be familiar with its financial statements. Everyone on the board shares a responsibility to make sure the charity’s finances are managed well.
- Keep your responsibilities and legal duties in mind when making decisions as a board member, particularly difficult decisions.
- Have a copy of your charity’s rules: read them, understand them, follow them and if you are ever unsure, ask other board members or get professional advice.
- Although board members act as a group, do not just follow the crowd. You should always do what you think is best for your charity, even if sometimes it means taking a different view to other board members.
- Understand your charity’s obligations to government agencies and make sure your charity is meeting them.
- Listen to the other board members and work as part of a team. The board shares a collective responsibility for the charity and you should see board members as colleagues.
- Declare and manage conflicts of interest. Most members of a board will encounter conflicts of interest and you should feel confident to handle them responsibly.
- Always act in the best interests of your charity. As a board member, you have a responsibility to put its interests above your own personal interests.
Online education resources
In a boost to the education resources available for boards and those who lead charities, we have just launched a new, free online program of short courses. For new board members, the Governing Charities program covers the foundations of how to run a successful charity, while those with more experience may benefit from consolidating or supplementing their knowledge with courses that cover a range of topics, including the ACNC Governance Standards.
Meeting the standards is a condition of registration as a charity. Failure to do so may lead us to issue a warning or a direction to a charity. In the most serious cases charity registration can be revoked, which would result in loss of access to certain government funding, exemptions, concessions and benefits.
We know most charities want to do the right thing and our compliance approach is to focus on serious or deliberate breaches of one or more of the standards. For example: there is a concern that money is being diverted to non-charitable purposes; serious conflicts of interest are not being disclosed; or there is gross financial negligence. A charity must be able to demonstrate that the steps it has taken to meet the standards are appropriate, considering factors such as its size, purpose and activities. In our experience, most charities work with us to fix any potential issue.
We are always looking to improve our education resources to support governance in the sector, so have a look at our new online courses — we would value your feedback.
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