Australia: Sports governance: is your club operating like a risky business?

Last Updated: 8 November 2016
Article by Sazz Nasimi

In brief: The legal responsibility of running a club or an association has become onerous and very risky. It is little wonder many people think twice before accepting roles with local clubs or associations because the implications for them can be drastic if something goes wrong.

What you need to know:

  • Most non-professional clubs are incorporated as not-for-profit associations and are bound by the Associations Incorporation Reform Act 2012 (the Act).
  • Regardless of size, every sporting club needs to have good governance and abide by the obligations under the Act.
  • Even volunteering for a sporting club involves a certain level of accountability for player and management actions.
  • It's not just the big high-ranking clubs that encounter poor governance with dire consequences.

People today always look to find someone to blame if there is an incident in which harm flows. In addition, there are a whole range of laws that exist that govern the way in which clubs or associations can operate. These laws dictate what clubs should and shouldn't do in respect of their employees and in respect of their interrelationship with other clubs and bodies.

Those in charge of running clubs or associations are also at risk of being held responsible for the conduct of those who represent the clubs or associations either in a voluntary capacity or in an employment capacity.

Clubs must now operate as a small business

Irrespective of whether or not a club operates through the efforts and generosity of volunteers, the fact that those individuals are volunteers does not absolve them from being accountable for their club. These positions require staff and volunteers to have an understanding of their requirements, identify potential risks, and engage in good governance at all times.

Any person who takes up a positon within a club, whether it is paid or voluntary, must be aware of the legal requirements, operate the club as a business, and be conscious of best practice.

10 basic principles to ensure good governance for grassroots clubs

We cannot emphasise enough that encouraging good governance - even at grassroots - is paramount to the continued success of any sporting club or organisation.

The Australian Institute of Company Directors (AICD) has provided a helpful guide setting out ten basic principles for good governance for grassroots. These principles are:

  1. Roles and Responsibilities

There should be clarity regarding individual director responsibilities, organisational expectations of directors and the role of the board.

  1. Board Composition

A board needs to have the right group of people, having particular regard to each individual's background, skills and experience, and how the addition of an individual builds the collective capability and effective functioning of the board.

  1. Purpose and Strategy

The board plays an important role in setting the vision, purpose and strategies of the organisation, helping the organisation understand these and adapting the direction or plans as appropriate.

  1. Risk - Recognition and Management

By putting in place an appropriate system of risk oversight and internal controls, boards

can help increase the likelihood that their organisation will deliver on its purpose.

  1. Organisational Performance

The degree to which an organisation is delivering on its purpose can be difficult to assess, but this can be aided by the board determining and assessing appropriate performance categories and indicators for the organisation.

  1. Board Effectiveness

A board's effectiveness may be greatly enhanced through: careful forward planning of board-related activities; board meetings being run in an efficient manner; regular assessments of board performance; having a board succession plan; and the effective use of sub-committees, where appropriate.

  1. Integrity and Accountability

It is important that the board have in place a system whereby: there is a flow of information to the board that aids decision-making; there is transparency and accountability to external stakeholders; and the integrity of financial statements and other key information is safeguarded.

  1. Organisation Building

The board has a role to play in enhancing the capacity and capabilities of the organisation they serve.

  1. Culture and Ethics

The board sets the tone for ethical and responsible decision-making throughout the organisation.

  1. Engagement

The board helps an organisation to engage effectively with stakeholders.

Given the importance that grassroots clubs play in the community, it is vital that they strategise, plan and strive to meet the above principles in order to be effective in meeting their obligations.

Committee members must have a clear understanding of their responsibilities, duties, and the key operational aspects of their club.

Conclusion

If you are considering joining a club and becoming a member of its board or committee or occupying a position of authority, it is very important that you understand the rules that govern the club and what your legal obligations are. If you do not understand your obligations, you may, by way of either conduct or decision, be putting your committee and your members at risk.

The consequences of getting basic governance and operational requirements wrong can have a significant and detrimental effect on a club. As such, it is strongly recommended that grassroots clubs obtain legal advice to assist them with implementing good governance and guidance in meeting their statutory obligations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.

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