Associa'ons  Forum’s  Future  Leaders  Conference  Governance  &  Effec-ve  Boards  

14  November  2013  

John  Peacock,  General  Manager,  Associa4ons  Forum    Disclaimer:  This  is  prac'cal  advice  based  on  observa'ons  of  associa'ons  and  chari'es.  We  are  not  a  law  firm.  Professional  advice  should  be  sought  before  making  decisions  based  on  this  general  presenta'on.  

About  Associa-ons  Forum  •  Commercial  en4ty  assis4ng  associa4ons  •  470+  member  organisa4ons;  largest  Australian/NZ  event;  

Malaysia,  Singapore,  India,  South  Africa  •  From  viewpoint  of  services,  similar  to  an  associa4on  

–  Educa4on  and  training  –  Publica4ons  and  communica4ons  –  Surveys  and  research  e.g.  benchmarking,  membership  –  Consul4ng  and  advice  on  governance  and  planning  – Mentoring    

About  the  presenter  •  In  my  20’s:  worked  for  corporate  employers  •  In  my  30’s:  worked  for  associa4ons  •  In  my  40’s:  founded  Associa4ons  Forum  •  In  my  50’s:  expanding  Associa4ons  Forum’s  offerings  to  

associa4ons  plus  assis4ng  associa4on  development  in  other  coun4es  

What  this  session  will  cover:  

1.  Importance  of  the  sector  and  principles  2.  Key  documents  includign  cons4tu4ons  and  

strategic  plans  3.  The  difference  between  governance  and  

management  4.  Roles,  accountability  &  responsibili4es  of  

members,  Directors,  Chair  and  CEO  

Terminology  

Governing  Document   Cons4tu4on,  Rules,  Memorandum  &  Ar'cles  of  Associa'on  

Governing  Body   Board,  Trustees,  Council,  Commi\ee,  Management  Commi\ee  

Individuals  on  Governing  Body  

Directors,  Trustees,  Councillors,  Commi\ee  Member  

Senior  Staff  Person     Execu4ve  Officer  (EO)  Chief  Execu4ve  Officer  (CEO)  Execu4ve  Director  (ED)  Administra4ve  Officer  (AO)  

5  

Acts  of  Parliament  &  laws  that  create  associa-ons  and  chari-es  

Commonwealth   Corpora4ons  Act   Public  Co  Limited  by  Guarantee   Ltd  

States  &  Territories   Associa4on  Incorpora4on  Acts  

Incorporated  Associa4on   Inc.  

Commonwealth,  State  &  Territories  

Industrial  Rela4ons  Acts  

Unions  &  Registered  Employer  Industrial  Associa4ons  

N/A  

Royal  Charter   N/A   N/A   N/A  

Others  

6

Corpora-ons  Law  directs  many  governance  principles  

7

•  Associa4ons  increasingly  being  incorporated  as  Companies  Limited  by  Guarantee  (CLG)  

•  Some  State/Territory  incorporated  associa4ons  allow  ‘transfer’  to  being  CLG  

•  Transfer  straighcorward  (NSW,  ACT,  NT),  difficult  (Vic,  SA)  or  not  possible  (Qld,  WA,  Tas)  

•  Some  advantages  in  CLG  •  Na4onal  law  is  more  widely  understood    

Main  Types  of  en--es  under  Corpora-ons  Act  (C’th)  

Private  Company  Ltd  by  Shares  

Shareholders   Not  listed     Pty  Ltd  

Public  Company  Ltd  by  Shares  

Shareholders   Unlisted  or  listed  on  ASX  

Ltd  

Public  Company  Limited  by  Guarantee  

Members   No  owners   Ltd  

8

To  confirm  how  an  associa4on  or  charity  is  incorporated,  visit  Australian  Business  Register  website:  •  h\p://www.abr.business.gov.au/Index.aspx  

Key  requirements  in  cons-tu-on  for  NFP  taxa-on  status  

•  Objects  •  Membership  (re  mutuality  principle)  •  No  distribu4on  to  members  clause  •  Winding  up  clause  •  See:  “Tax  Concessions  &  Endorsements  Guide:  Guide  for  Associa'ons,  Chari'es  and  Not-­‐for-­‐Profits”  on  Associa'ons  Forum  website  

9

Recipient (DGR)

9

9

9

9

Certain types only

1 2

The mutuality principle is applicable to those organisations that are formed by members pursuing a common purpose; some receipts by such organisation s are treated as non-assessable for income tax purposes Only certain types of associations and not-for-profit organisations are exempt from income tax and can self-assess their entitlements. Many associations and not-for-profit organisations are taxable, but may be entitled to special rules for calculating taxable income, lodging income tax returns and special rates of tax; self-assessed entities are included in this category Public and not-for-profit hospitals and public ambulance services are eligible for this concession Only associations that are also public benevolent institutions or health promotion charities are eligible for this exemption Certain non-government not-for-profit organisations are eligible for this concession Subject to certain requirements, benefits provided by religious institutions to religious practitioners are FBT exempt if they are mainly for the practitioners’ pastoral duties, or other duties related to the practice, study, teaching or propagation of religious beliefs The entity must be a deductible gift recipient to access this concession The entity must be an income tax exempt charity, income tax exempt fund, or deductible gift recipient to access this concession The only organisations that do not need to be endorsed are those listed by name in the tax law, including prescribed private funds Endorsements by the Australian Taxation Office required. The ATO assesses applications on a case by case basis and makes a decision for each particular entity Certain organisations can be income tax exempt and can self-assess their entitlements This advice is general in nature. Specific advice should be sought about applicability to the relevant organisation

3 4 5 6

7 8 9 (E)

Note:

© Makinson & d'Apice Lawyers 2012

Level 12 135 King Street Sydney NSW 2000 $# Box 495 Sydney NSW 2001 • DX 296 Sydney Phone 02 9233 7788 • Facsimile 02 9233 1550 Email wdapice@makdap.com.au • www.makdap.com.au

For additional information regarding any aspect of our client services, please feel free to contact:

• Bill d'Apice, Partner

635665_3:WDA:SLE

Tax Concessions & Endorsements: Guide for Associations, Charities & Not-For-Profits

Types of Not-For-Profits

Mutuality Principle

(income tax exemption for

member-related receipts)

Income Tax Exemption

(E)

Fringe Benefits Tax (FBT) Exemption (subject to capping

threshold) (E)

FBT Rebate (E)

FBT Exemption (uncapped) (E)

GST Concessions for Charities & Gift

Deductible Entities

(E)

GST Concessions for Not-For-Profit

Organisations

Refunds of Franking Credits

Deductible Gift

(E)

C

harit

ies

Public Benevolent Institutions (PBI)

& Health Promotion

Charities (E)

Yes

Yes

Yes 6

Yes

Yes

8 Certain types only

Yes

Yes

Charity:

Charitable Institutions (E)

Yes

Yes

6

Yes

Yes

8

Yes

Yes

Certain types only

Charity:

Charitable Funds (E)

Yes

Yes

Yes

8

Yes

Yes

Certain types only

Income Tax Exempt Funds (E)

Yes

Yes 7

Yes 8

Yes

Typical Association eg industry, professional,

special causes & other Not- For-Profits

Yes 1

Certain types only

Yes 2

Certain types only

Yes 3 & 4

Certain types only

Yes 5

Certain types only

Yes 7

Certain types only

Yes

Certain types only

Yes 8

Certain types only

Yes 9

Associa-on’s  12  key  documents  

1.  Legisla4on  –  plus  explana4on  of  what  it  means  to  your  associa4on  and  people  2.  Cons4tu4on  –  voted  upon  and  changed  by  Members  at  General  Mee4ng  3.  Governance  Charter  –  can  be  changed  by  the  Board  4.  By-­‐Laws  (op4onal)  –  decided  by  the  Board  5.  Statements  of  Purpose  –  Mission  cascades  into  Goals  then  Ac4vi4es  6.  Plan  –  sta4ng  what/who/when  and  presented  in  grid  format  7.  Budget  –  linked  to  Plan;  prepared  by  CEO;  approved  by  Board  8.  List  of  Directors  and  Office  Bearers  –  how  long  on  Board  and  “day  job”  9.  Minutes  –  Board  mee4ngs,  commi\ees  and  general  mee4ng  minutes  10. Staff  organisa4on  chart  –  can  be  changed  by  CEO;  will  it  achieve  the  Plan?  11. Annual  Report  –  records  past  achievements  and  challenges;  acknowledges  efforts  12. Audited  financial  report  –  plus  5  years  financial  history  

11  

Find  out  more  from  ABN  Lookup  

12

About  Cons-tu-ons

•  Act  of  Parliaments  overrides  Cons4tu4on  •  Cons'tu'on  is  your  mini-­‐law  •  MEMBERS  change  the  Cons4tu4on  through  a  formal  process  at  a  GENERAL  MEETING  

•  Clear  and  relevant,  not  ambiguous  and  opera4onal  •  Include  valida4on  of  Taxa4on  status  e.g.  “mutual”  •  Cons4tu4ons  likely  to  need  changes  every  3  years  •  Cons4tu4ons  should  include  “locked-­‐in”  ma\ers  requiring  AGM  75%  majority  of  votes  cast    

Content  of  Cons-tu-ons A.  Purpose  /  Objects  B.  Members  

–  Defining  who  can  be  a  Member;  expulsion  of  a  Member  –  It  is  OK  to  be  exclusive  and  par4cular,  but  not  discriminatory  –  Sta4ng  who  has  right  to  vote  at  a  “General  Mee4ng”  

C.  Directors  –  Who  appoints  and  how;  how  to  dismiss  Directors  –  Office  Bearers;  who  should  not  make  decisions  separate  to  the  Board  –  Composi4on,  length  of  term  and  term  limits  for  Directors  and  Office  

Bearers  –  Sta4ng  who  has  right  to  vote  at  a  “Board  Mee4ng”  

D.  Key  staff  appointments  and  responsibility    E.  Procedural  ma\ers  

Accountability  &  Responsibility  

ACCOUNTABLE   RESPONSIBLE  &  AUTHORITY  

MEMBERS   NOT  APPLICABLE  –  CAN  CHOOSE  TO  JOIN  OR  NOT  

NOT  APPLICABLE  –  GIVEN  RIGHT  TO  VOTE  AT  GENERAL  MEETING  

DIRECTORS   MEMBERS   GOVERNANCE  

OFFICE  BEARERS   DIRECTORS   TASKS  AS  DIRECTED  &  BETWEEN  MEETINGS  ON  SOME  MATTERS  

CEO   DIRECTORS  VIA  THE  CHAIR   IMPLEMENT  PLAN  AND  BUDGET  AND  MANAGE  STAFF  

15

It is a problem when the only Members are the Directors. In this case, they are accountable to themselves

What  Boards    should  do  

•  Maintain  a  focus  on  ‘why  we  are  here’:  Mission  •  Concentrate  on  the  long  term  •  Facilitate  open  board  discussion  and  unity  of  voice  •  Respect  the  pivotal  role  and  boundaries  of  the  CEO  •  Be  proac4ve,  decisive  &  consistent  •  Determine  and  access  required  informa4on  •  Rely  on  evidence,  not  anecdote  

16  

Who  should  be  on  a  Board?  

•  This  is  directed  by  the  Cons4tu4on  •  Usually  process  of  elec4on  by  members  •  Reflec4ng  and  being  connected  with  members  is  good,  but  it  may  narrow  the  skill  set  

•  If  members  comprise  majority  of  the  Board,  having  external  Director(s)  can  assist  

•  Some  na4onal  associa4ons  and  chari4es  have  a  Director  from  every  State/Territory  

17

Associa-ons  Forum  Board  Survey      

18

2008   2009   2010   2011   2012   2013  

Number  Mee-ngs  Face  to  face  

7.0   7.0   6.4   6.3   5.9   5.6  

Average  Board  Size   11.2   11.6   9.6   10.0   11.2   10.1  

Ideal  Board  Size   N/A   8.4   8.0   8.6   8.5   8.4  

What  is  corporate  governance?  

•  “Corporate  governance  is  the  system  by  which  companies  are  directed  and  controlled  

•  Boards  of  Directors  are  responsible  for  the  governance  of  their  companies  

•  (Members)  role  in  governance  is  to  appoint  the  Directors  &  the  Auditors  and  to  sa'sfy  themselves  that  an  appropriate  governance  structure  is  in  place.”  

 -­‐  Cadbury  Report  (UK)  1991  

19  

Reality  of  being  an  associa-on  Director  

1.  Broadly  same  obliga4ons  as  “for-­‐profit”  directors  

2.  Oven  less  resources  3.  More  complex  environment  because  making  

a  profit  is  not  the  key  objec4ve  4.  Usually  no  or  minimal  remunera4on  

20  

Do  Directors  necessarily  have  to  act  for  the  benefit  of  members?  

1.  Cons4tu4ons  need  to  state  the  “Objects”  of  the  associa4on  or  charity  

2.  Directors  need  to  work  towards  achievement  of  the  “Objects”    

3.  Of  course,  the  Objects  may  say  “the  associa4on  will  help  members”,  but  this  may  or  may  not  be  the  case  

21  

Directors  are  not  ‘delegates’  

•  Directors  are  not  ‘delegates’  of  another  body  or  the  people  who  elected  them  

•  Whilst  it  is  understandable  that  Directors  may  feel  some  responsibility  to  advance  such  interests,  the  Directors  must  act  in  the  interests  of  the  organisa4on  

22

Alternate  Directors  

•  Alternate  Directors  are  allowed  by  the  Act  and  if  specifically  men4oned  in  the  Cons4tu4on  

•  However,  Alternate  Directors  are  not  recommended  •  Frequent  use  of  Alternate  Directors  diminishes  Board  processes  

•  Proxies  are  a  right  for  vo4ng  members  at  General  Mee4ngs  –  but  not  at  Board  mee4ngs  

•  Neither  a  Director  nor  Alternate  Director  can  vote  at  a  Board  mee4ng  as  a  “proxy”  for  another  Director:  only  one  vote  per  person  

23

Fiduciary  duty  legally  defined  

•  “A  fiduciary  is  someone  who  has  undertaken  to  act  for  and  on  behalf  of  another  in  a  par'cular  ma\er  in  circumstances  which  give  rise  to  a  rela'onship  of  trust  and  confidence.”  

•  -­‐  Bristol  &  West  Building  Society  v  Mothew  [1998]  Ch.  1  at  18  per  Lord  Mille\  (UK)  

24

Fiduciary  duty  in  prac-ce  

•  Must  act  honestly,  in  good  faith,  and  to  the  best  of  their  ability  in  the  interests  of  the  organisa4on.    

•  Must  not  allow  conflic4ng  interests  or  personal  advantage  to  override  the  interests  of  the  organisa4on.  

•  The  organisa4on  must  always  come  first    

25  

Officers’  Statutory  Legal  Du-es:  What  you  must  do  

“A  Director  or  other  officer…  must  exercise  their  powers  and  discharge  their  du'es:  •  …with  a  degree  of  care  and  diligence  that  a  reasonable  person  would  exercise…”  

•  “…in  good  faith  in  the  best  interests  of  the  corpora'on  and  for  a  proper  purpose.”  

26  

Officers’  Statutory  Legal  Du-es:  What  you  must  not  do  

“A  Director,  secretary,  other  officer  or  employee  must  not  improperly  use  their  posi'on  to……gain  an  advantage  for  themselves  or  someone  else  or  cause  detriment  to  the  corpora'on.  “A  person  who  gains  informa'on  because  they  are  of  have  been  a  Director,  other  officer  or  employee  must  not  improperly  use  the  informa'on  to……gain  an  advantage  for  themselves  or  someone  else  or  cause  detriment  to  the  corpora'on.  

27  

Officers’  Statutory  Legal  Du-es:  Criminal  offences  

“A  Director  or  other  officer  …  commits  an  offence  if  they:  a)  are  reckless  b)  are  inten'onally  dishonest  And  fail  to  exercise  their  powers  and  discharge  their  du'es  c)  in  good  faith  in  the  best  interests  of  the  corpora'on;  or  d)  for  a  proper  purpose.  

28  

A  Director  has  a  duty  to  prevent  insolvent  trading  

•  Directors  only  –  not  Officers  •  Being  Director  when  •  “…the  company  incurs  a  debt  and  the  company  is  insolvent  at  the  'me  or  becomes  insolvent  by  incurring  the  debt…  and  there  are  reasonable  grounds  for  suspec'ng  that  the  company  is  (or  would  become)  insolvent.  

29

Prac-cal  implica-ons  of  directors’  du-es  

•  Avoid  conflict  of  interest  •  Maintain  confiden4ality  •  Have  a  Code  of  Conduct  for  the  current  Board,  with  such  ma\ers  as  Terms  of  Reference,  Role  of  the  Chair,  Minutes  policy  

•  Board  induc4on  and  development  •  Board  assessment  

30

Du-es  summarised  

Fiduciary  duty   Common  Law   Directors  &  Officers  

Reasonable,  financial,  objec4ve  

S180(1)   Directors  &  Officers  

Honest,  interests  of  organisa4on  as  a  whole,  avoid  conflicts,  independent,  posi4ve  ac4on  

S181(1)   Directors  &  Officers  

Not  to  gain  personal  advantage   s182   Directors  &  Officers  

Not  to  misuse  informa4on   s183   Directors  &  Officers  

Avoid  insolvent  trading   s558(G)   Directors  only  

31

Directors  have  responsibili-es:  but  do  Members?  

1.   Directors  have  fiduciary  and  statutory  du4es  -­‐  they  must  act  in  the  interests  of  the  associa4on  as  a  whole  Members  have  no  fiduciary  or  statutory  du'es  and  can  act  in  their  own  interest,  subject  to  the  Objects  

2.   Directors  must  manage  conflicts  of  interest  Members  do  not  have  conflicts  of  interest  as  they  owe  no  fiduciary  duty  

3.   Directors  must  meet  regularly  at  Board  Mee4ngs  to  perform  the  governance  func4on  and  make  decisions  Members  may  choose  to  a\end  and  vote  at  a  General  Mee'ng  or  not  

32

Board  Mee-ngs  (for  Directors)  cf.  General  Mee-ngs  (for  Members)  

1.  Board  Mee4ngs  can  happen  frequently  and  at  short  (but  reasonable)  no4ce  according  to  needs  General  Mee'ngs  require  21  days  no'ce  or  >  per  cons'tu'on  

2.  Subject  to  previous  advice,  any  subject  can  be  raised  and  decided  on-­‐the-­‐spot  at  a  Board  Mee4ng  General  Mee'ngs  require  prior  documenta'on  sta'ng  ma\ers  to  be  covered  &  no  ma\ers  to  come  from  the  floor  

3.  Directors  should  not  be  able  to  give  proxies  to  another  Director  -­‐  and  Alternate  Directors  are  not  recommended  Members  should  be  able  to  vote  in  person  or  by  proxy  at  General  Mee'ngs  

General  Mee4ngs  have  more  process  than  Board  mee4ngs    

33

Members’  role  in  governance  is  limited  

•  Associa4ons  and  chari4es  have  no  owners  •  Members  have  no  rights  to  assets  •  Members  must  consent  to  join  that  associa4on  –  they  cannot  

be  “deemed”  to  be  a  member  •  Members  contract  to  “guarantee”  an  amount  (usually  small  

eg  $20)  in  the  event  of  a  windup  •  Members  can  vote  for  changing  the  Cons4tu4on  (75%  

majority  of  members  vo4ng  in  person  or  by  proxy)  plus  remove  and  generally  vote  for  Directors  at  General  Mee4ngs  

•  Cons4tu4ons  should  not  include  ma\ers  for  Directors  such  as  the  level  of  membership  fees  

34

Boards  govern:  Managers  manage  •  Associa4ons  need  profits,  hence  earnings  are  retained  •  When  sufficient  money,  hire  administra4on  =  easy  step  •  Yet  administra4ve  staff  need  to  be  managed  by  volunteers  •  Board  needs  to  employ  capable  CEO  to  implement  Plan  -­‐  and  

take  a  step  back  to  be  watchful  and  vigilant = a  harder  step  •  Let  volunteers  enjoy  their  4me,  not  be  overworked  and  suffer  

burnout,  and  do  oversight  role,  not  do  everything  •  Associa4ons  will  not  reach  poten4al  without  management  

level  staff  •  Associa4on  staff  must  have  associa4on  management  training  

–  and  this  training  mo4vates  staff  

Simplified  best  prac-ce  flow  

Members  elect  Board  

Board  approves  Plan  

CEO  implements  

Plan  

36

Board  focuses  on  Mission  and  Strategy  

•  The  Board  should  focus  on  the  Mission  and  the  key  strategic  objec4ves  

•  When  an  associa4on  employs  management,  Boards  should  allow  management  to  achieve  the  Plan  

•  When  an  associa4on  or  charity  does  not  employ  management,  the  Board  needs  to  note  difference  between  its  management  and  governance  roles  

•  If  Directors  need  to  communicate  with  staff  and  management  team,  this  should  be  done  via  the  CEO  

37  

Boards  must  ensure  Plans  •  Every  en4ty  (corporate,  government,  associa4on)  must  plan  •  Plan  contains  the  top,  say,  5  things  Board  has  agreed  needs  to  

be  achieved    •  Planning  days  with  independent  associa4on  facilitators  are  

mo4va4ng  •  When  you  know  your  Plan  and  Balance  Sheet,  a  Budget  can  

be  developed  •  Associa4on  plans  will  be  strategic  plus  opera4onal  •  Plans  referred  to  at  every  Board  mee4ng  –  Board  monitors  •  Plans  need  ownership  by  Board  &  CEO  -­‐  and  other  volunteers  

and  staff  must  see  where  they  fit  in  to  the  Plan  and  Budget  

Statements  of  Purpose  

•  VISION  is  big  picture  for  the  industry,  profession  or  cause  –  op4onal  

•  MISSION  is  vital:  purpose  for  the  organisa4on’s  existence  

•  GOALS  are  4meless  and  are  there  to  achieve  the  Mission  

•  Specific  ACTIVITIES  are  current  and  are  there  to  achieve  the  Goals  

Mission    The  Mission  of  XYZ  is  to  advance  the  XYZ  profession  and  to  represent  the  interests  of  members.    

 Goals  (this  is  the  “linking”  piece  that  is  o=en  missed)  In  order  to  achieve  our  Mission,  we  will:  1.  Educate  2.  Inform  3.  Advocate  4.  Expand  business  opportuni4es  5.  Have  good  governance  

Example of Statements of Purpose

40

Once  Mission  &  Goals  are  decided,  move  to  details  in  grid  format  

GOAL   ACTIVITY   RESPONSIBLE   TIMING   NOTE   PRIORITY  

1  Educate   1.1  Conference   Event  Mgr   May  ‘13   Meas   B1  

1.2  On  line  learning     External   Jul  ‘14   A3  

2  Inform   2.1  Newsle\er   Comms  Mgr   Qtrly   Meas  

2.2  Website   Comms  Mgr   Ongoing   Meas   B2  

3  Advocate   3.1  Develop  policies   Board   Dec  ‘14  

3.2  Meet  Minister   President   Jan  ‘14   A2  

4  Expansion   4.1  Trade  mission   CEO   Aug  ‘14   Meas  

4.2  Economic  analysis   External   Nov  ‘14   B3  

5  Governance   5.1  New  database   CEO   Jul  ‘14  

5.2  Review  Cons4t’n   Sub  C’tee   May  ‘14   A1  

5.3  Govern  training   CEO   Nov  ‘14  

41

Governance  Charter  

•  Each  year,  the  Board  needs  to  reaffirm  in  wri4ng  HOW  it  will  operate  

•  “Governance  Charter”  =  prac4cal  and  current  •  Address  behaviour  expected  •  Address  conflicts  of  interest  &  confiden4ality  •  Also  Director  Nomina4on,  Induc4on,  Development,  Assessment,  Succession  Planning  

42

Issues  affec-ng  associa-on  Board  performance  

1.  Time  spent  on  opera4onal  issues,  short-­‐term  or  immediate  past  

2.  Redoing  work  that  has  been  (or  should  have  been)  performed  by  staff  

3.  Inefficient  Board  priori4es  e.g.  work  overload  4.  Bad  Board  mee4ng  processes  and  behaviour  5.  Lack  of  apprecia4on  of  knowledge  limita4ons  6.  Cumbersome  commi\ee  structure  

43  

Board  decisions  1.  Decisions  are  what  is  minuted  or  what  happens  2.  Formal  mo4ons  may  add  clarity  to  the  decision  3.  However,  formal  mo4ons  are  not  obligatory  nor  

do  they  need  to  be  proposed  and  seconded  4.  Once  the  Board  makes  a  decisions,  all  Directors  

should  support  the  decision  5.  When  decisions  are  made  that  Directors  do  not  

personally  agree  with,  they  may  ask  that  their  posi4on  be  recorded  in  the  minutes  

6.  In  some  circumstances,  Directors  may  decide  to  resign  

44  

Board  decision  processes  •  Adequate  &  relevant  informa4on  is  required,  

received  with  appropriate  considera4on  4me  •  Important  Board  papers  require  prior  reading  •  Within  the  agenda  and  no4ng  4me  available,  

the  Chair  should  enable  full  discussion  to  allow  the  Board  to  reach  a  conclusion  

•  Aim  for  consensus  where  possible  •  Plus…the  Business  Judgement  rule  >>>  

45  

Office  Bearers:  first  among  equals  

•  For  prac4cal  reasons,  President  and  Vice  President  needed  •  Company  Secretaries  should  ideally  not  be  a  volunteer  •  Company  Secretaries  should  receive  specific  training  •  The  larger  the  Board,  the  more  Office  Bearers  likely  •  Board  is  responsible  for  decisions  of  Office  Bearers  •  Should  not  become  an  “inner  Board”  •  Also,  as  all  share  financial  responsibility,  we  suggest  be\er  to  

have  a  Finance  &  Audit  Commi\ee  rather  than  “Treasurer”  •  Tasks  specifically  delegated  –  not  an  ongoing  mandate  

46

Chairing  mee-ngs  

•  It  is  usual  for  the  President  of  the  associa4on  to  Chair  the  Board  mee4ngs  &  AGM  

•  Chairs  need  personal  authority  &  a\endees  respect  •  CEO  must  be  very  suppor4ve  of  Chair,  and  act  to  brief  the  Chair  and  supply  relevant  informa4on  

•  Agenda’s  need  to  be  clear  and  have  4ming  •  Chairs  need  to  sense  the  flow  of  the  mee4ng;  including  when  to  speed  up  or  go  into  detail  

•  At  AGM,  Chairs  need  a  step-­‐by-­‐step  “run  sheet”  

47  

Director  Assessment  &  Improving  Board  Performance  

•  Board  should  be  commi\ed  to  a  process  of  Director  assessment  and  Board  evalua4on  

•  The  process  should  be  established  before  a  problem  occurs  

•  Evaluate  board  effec4veness  regularly  •  Establish  a  process  of  directors’  assessment  •  This  process,  oven  externally  facilitated,  occurs  outside  regular  Board  business  

48  

Commidees  •  Your  Board  must  determine  which  commi\ee  structure  

works  best  for  it.    •  The  commi\ee  structure  should  be  flexible  and  meet  

the  changing  needs  of  the  Board.    •  Boards  should  be  willing  to  experiment,  keeping  in  

mind  that  commi\ees  are  only  tools  Boards  use  to  get  their  work  done.    

•  The  right  tool  for  today  may  not  be  the  right  tool  for  tomorrow  -­‐  Which  tool  will  get  the  job  done?  

A  quick  word  about  finances  

•  “Not-­‐for-­‐profit”  is  the  wrong  term:  surplus  or  profits  are  necessary  

•  Reserves  are  never  to  be  distributed  to  members  •  Directors  reimbursed  for  reasonable  expenses  •  Adequate  or  large  financial  reserves  are  important  for  future  growth  

•  Financial  repor4ng  is  some4mes  poor  -­‐  yet  should  not  nor  need  not  be  substandard  

•  Budge4ng  can  be  linked  closely  to  Plans

For  ongoing  viability,  major  change  may  be  required

•  Most  NFP  organisa4ons  are  viable:  some  4ny,  niche  causes  exist  for  years  

•  Merger  with  other  organisa4on(s)  •  Evolu4on  (or  revolu4on)  in  what  associa4on  does/Mission  

•  Internal  changes  in  Cons4tu4on,  Governance,  Opera4ons,  Services

Reminder:  problems  can  occur •  Scandal  or  fraud  •  Going  broke  •  Confusion  as  to  purpose  •  Internal  schisms,  fac4ons  and  poli4cs  •  No  regular  transi4on  to  new  Directors  •  Poor  governance  by  the  Board  •  Micromanagement  by  the  Board  •  Wrong  person  as  CEO  •  Not  ge~ng  professionals  to  assist  when  required

Thank  you! •  John  Peacock,  Associa4ons  Forum  Pty  Ltd  •  www.associa4ons.net.au  •  0412  55  8817  •  jpeacock@nfp.net.au  •  Journals,  flyers  and  business  cards  available  •  Thanks  for  a\ending  Future  Leaders  Conference  J  •  CEO  Symposium:  MELB:  20-­‐21  February  2014  •  AF  Na4onal  Conference:  CANB:  16-­‐17  July  2014  

Australian  Chari-es  and  Not-­‐for-­‐Profits  Commission  (ACNC)  

•  Chari4es  must  be  registered  if  want  access  to  concessions  under  CW  law,  including  charity  tax  concessions  

•  If  endorsed  by  ATO  then  carried  over  to  ACNC  •  Five  key  values  of:  Fairness,  Accountability,  Independence,  Integrity  and  Respect  (FAIIR)  

•  h\p://www.acnc.gov.au/  

ACNC's  approach  to  legal  meaning  of  charity  

•  The  Chari'es  Act  2013  was  passed  on  27  June  2013  •  Act  introduces  statutory  defini4ons  of  charity,    charitable  purpose,  public  benefit    -­‐common  law  meaning    -­‐  clarifies  areas  of  uncertainty  

•  ACNC  consult  on  defini4on  of  charity,  charitable  purpose  and  sub-­‐types  of  chari4es  

•  Defini4on  will  apply  from  1st  January  2014  •  h\p://www.aph.gov.au/Parliamentary_Business/Bills_Legisla4on/Bills_Search_Results/Result?bId=r5077  

 

Coali-on  and  ACNC •  Intend  to  repeal  the  new  defini4on  of  Chari4es  Bill    •  Abolish  ACNC  and  replace  it  with  a  small  ‘centre  for  excellence’  run  by  the  sector  

•  Argue  that  defini4on  of  charity  is  clear  with  400  years  of  case  law  

•  But  with  a  large  number  of  new  cross-­‐bench  Senators  the  outcome  of  rescinding  legisla4on  not  known