On 8 December 2011, the Treasury released a consultation paper
on current governance arrangements for the not-for-profit
(NFP) sector. The Government is consulting on what
the core organisational governance principles applying to a
registered NFP should be. The consultation will form an important
component of the Australian Charities and Not-for-profits
Commission (ACNC) legislation commencing on 1 July
2012. Charities and NFPs should consider their governance
arrangements in the context of the five governance principles
identified in the consultation paper and take the opportunity to
make a submission to Treasury.
The consultation paper can be accessed here.
The Consultation paper identifies five governance principles
which are grouped in to the following areas:
Duties and minimum standards of responsible individuals,
including rules for proper organisational arrangements
This includes appropriate standards to be complied with by the
persons responsible for the governance of NFPs including in respect
ability to ensure that the NFP entity is operating to the
highest standards of accountability.
Disclosure requirements and managing conflicts of interest
The government is considering what information charities and
NFPs should be required to disclose including in respect to:
remuneration of responsible persons
types of conflict of interest that responsible individuals in
NFPs should disclose and manage - this attaches to both commercial
and legal conflicts.
Risk management procedures, including internal and external
reviews and auditing requirements
Treasury is considering the appropriate mechanisms for the ACNC
to implement mandatory internal and external reviews and audits of
charities and NFPs.
The coverage of the minimum requirements of governing rules
Treasury is considering:
the appropriate minimum content of the constitutions or other
governing documents of charities and NFPs
the ACNC's role in enforcing these requirements.
Relationships with members
A significant factor being considered is the appropriate
governance rules governing the relationship between a charity or
NFP and its members; and whether the requirements should apply to
non membership entities. That is, looking at the relationship with
the charity or NFP.
The Treasury is also examining whether the ACNC should impose
compulsory meeting requirements.
Considering the impact on your organisation
The issue of governance is central to any organisation including
charities and NFPs. The Consultation paper can have the effect of
changing how charities and NFPs operate today and may affect how
people engage with and involve themselves in such organisations in
In assessing the appropriate governance principles in their own
contexts, charities and NFPs will need to consider the following
size, in terms of human capital
existing reporting requirements
direction, growth and future strategy
The closing date for submissions is Friday, 20 January 2012.
Gadens Lawyers is able to advise charities and
NFPs seeking to understand the principles set out in the
consultation paper, review their governance arrangements and assist
in making a submission to the Treasury.
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