AICD launches revised governance guidance for NFPs

In the context of the Aged Care Royal Commission, and reports highlighting governance concerns within community and NFP organisations, the Principles (second edition) are a practical framework to help NFPs – both big and small - understand and achieve good governance. This revised edition reflects the changes in the sector since they were first released in 2013, including the heightened expectations of good NFP governance.

The Principles consist of three components: 10 individual principles, accompanied by supporting practices and guidance.

AICD Managing Director and CEO Angus Armour said good governance of NFP organisations had never been more important.

“Australians expect NFPs to be governed to the highest of standards, and the way they are run is increasingly being scrutinised.

“Over a history of more than 200 years, not-for-profits have been a powerful and positive influence on the development of Australian society.

“It is vital that we support the sector with free resources such as these. We thank all members and stakeholders who contributed to the development of these Principles,” he said.

The Principles are primarily for directors and executives but will be valuable to others involved in the governance of NFPs, such as managers, staff and volunteers.

The Principles are complementary to the Australian Charities and Not-for-profits Commission Governance Standards, and are intended to be voluntary in application.

The revised Principles provide a framework for NFPs and charities to consider good governance practices, including the board’s roles and responsibilities, managing conflicts of interest, organisational culture, stakeholder engagement and risk management. New supporting practices provide greater clarity for NFP directors on what good governance looks like, to help support and strengthen governance practice in the sector.

The AICD encourages users to conduct regular assessments of their performance and to report the outcome of this assessment to members and stakeholders, preferably on an annual basis. The AICD suggests users adopt an “if not, why not” approach to reporting. This means that where an organisation is not meeting any part of the Principles, it outlines to stakeholders why this is the case.