It is with interest that I read a recent publication by the Australian Institute of Directors titled, Good Governance Principles and Guidance for Not for Profit Organisations (“the AICD NFP Guide”).
The not for profit (‘NFP’) sector is currently the subject of substantial reform. With the recent inception of the Australian Charities and Not for Profits Commission (‘ACNC’) the NFP sector will be monitored more closely with a specific focus on corporate governance. Currently, the ACNC only monitors charities, but the ACNC will also monitor other NFP organisations in the near future.
The AICD NFP Guide has condensed some of the most pertinent principles of good governance for NFP organisations into 10 points. These points are as follows:
- Roles and Responsibilities – ensure that all board members of your organisation have a clear understanding of their roles and duties.
- Board Composition – when composing the board for an NFP organisation you should consider the different skills each board member “brings to the table”. The size of the board will also impact the effectiveness of the organisation.
- Purpose and Strategy – a purpose and strategy is best determined prior to the organisation commencing. Also, consider a purpose statement which will give the organisation direction.
- Recognition and Management of Risk – ensure you give due consideration to the risks your organisation may face. Prioritise these risks and set out a strategy to minimise those risks from occurring.
- Organisational Performance – in order to track the progress and success of your organisation, discuss and set performance indicators. For example, this could be a membership target;
- Board Effectiveness – ensure your board is meeting regularly, and each member is presented with a comprehensive meeting agenda prior to the meeting.
- Integrity and Accountability – the key to integrity and accountability is transparency. The organisation should be keeping all stakeholders informed and up to date on all matters including finances, meeting discussions and progress of the organisation’s performance.
- Organisation Building – the board members of a NFP organisation should acknowledge that it is their duty to act in the best interests of the organisation as a whole (regard should be given to the objectives in the organisation’s constitution).
- Culture of Ethics – it is important that your board maintain a “personality”. The personality will filter through, which will in turn shape your organisation.
- Engagement – ensure your board is effectively communicating and engaging with stakeholders which include donors, sponsors and volunteers.
These sound principles should also apply across the board to any company and business.
If you require assistance in establishing, or maintaining your NFP organisation do not hesitate to contact me.