2024 Year end tax planning and financial reporting guide - unlocking tax and reporting insights for year end success > Download the full guide
12 June 2019 | Minutes to read: 3


By William Buck

Within the NFP sector, there have been several new governance regulations introduced. The below articles provide a snapshot into the recent changes and key issues to be aware of within the NFP sector that may impact on the governance of your organisation.

AICD updates governance principles

At a time when governance is in the spotlight, the Australian Institute of Company Directors has updated its Not-for-profit Governance Principles.

The Royal Commission into Aged Care Quality and Safety and reports highlighting governance concerns within the community and NFPs, the second edition of the Principles provides a practical framework to help NFPs –big and small – understand and achieve good governance.

It’s a benchmark resource for NFP leaders.

The document has three components: 10 individual principles, supporting practices, and guidance.

Topic Principle
Purpose and strategy The organisation has a clear purpose and a strategy, which aligns its activities to its purpose
Roles and responsibilities There is clarity about the roles, responsibilities and relationships of the board
Board composition The board’s structure and composition enable it to fulfil its role effectively
Board effectiveness The board is run effectively and its performance is periodically evaluated
Risk management Board decision-making is informed by an understanding of risk and how it is managed
Performance The organisation uses its resources appropriately and evaluates its performance
Accountability and transparency The board demonstrates accountability by providing information to stakeholders about the organisation and its performance
Stakeholder engagement There is meaningful engagement of stakeholders and their interests are understood and considered by the board
Conduct and compliance The expectations of behaviour for the people involved in the organisation are clear and understood
Culture The board models and works to instil a culture that supports the organisation’s purpose and strategy

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,’ he said.

The Principles are primarily for directors and executives but will be valuable to others involved in NFP governance such as managers, staff and volunteers. The document complements the Australian Charities and Not-for-profits Commission’s Governance Standards and is intended to be applied voluntarily.

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.

The AICD encourages users to conduct regular assessments of their performance and to report them to members and stakeholders, preferably on an annual basis. The institute suggests that users adopt an “if not, why not” approach to reporting. This means that, where an organisation is failing to meet the Principles’ standards, it outlines to stakeholders why this is so.


ACNC releases online self-evaluation tool

The ACNC has released a new pdf file to allow charities to monitor their compliance with governance standards.

Charities fill in the pdf with the steps they are taking to meet their obligations. They are prompted to list policies and procedures they are following.

There is no obligation to fill in the file and send it to the commission.

The resource will help charities to identify issues that might prevent them from meeting their obligations. Answering ‘no’ to a question does not necessarily mean that a charity is failing to comply. But it could be a handy prompt to reconsider governance practices.

You can access the self-evaluation tool at www.acnc.gov.au/self-evaluation-charities.

ACNC updates fundraising guidance

The ACNC has updated its fundraising guidance, urging charities to remain transparent on administration costs and refrain from misleading the public on the use or destination of donations.

Read more at: www.acnc.gov.au/tools/guides/working-fundraising-agencies and www.acnc.gov.au/for-public/understanding-charities/charities-and-fundraising.

Related Insights