A key responsibility for those governing a charity is to make sure that the charity has the resources it needs to carry out its work – so it can achieve its charitable purpose. The governing body (such as a board or committee of management) must work to gather the resources necessary for a charity to undertake its work, but also to ensure that these resources are protected from abuse and used in an efficient and lawful way.
What understanding of finances must a charity’s responsible person have?
Responsible persons, like board or committee members, must have a level of financial understanding that will enable them to make informed decisions about their charity’s finances. While many boards appoint treasurers and board members with financial expertise, every board member must be able to read and understand a charity’s financial information.
If you are a responsible person you can participate in training to improve your understanding of finances, as part of your role. You must be appropriately informed about the matters on which you may make a decision. You cannot make informed decisions about your charity’s finances without an understanding of the concepts that relate to them. At the very least, you should be able to determine whether your charity is solvent and what the impact of any decision you make will be on your charity’s financial health.
Governance Standards and financial management
Charity board members have duties under the ACNC Governance Standards. These duties, set out in governance standard 5, include to:
- ensure that the financial affairs of the charity are managed responsibly (Duty 6)
- not to allow the charity to operate while it is insolvent (Duty 7)
A related duty under this standard is to disclose conflicts of interest.
Learn more about managing charity money
We have a range of resources and tools to help you manage your charity's money.
This guide explains how to set up strong financial controls, keep charity status, submit Annual Information Statements, notify us of errors, managing money and resources and keeping finances secure.
Our templates for charities include review and audit templates, and an example financial disclosure and example responsible persons declaration.
External guides, support and tips
- CPA Australia: A guide to understanding financial reports of not-for-profit entities
- CPA Australia: Charities - A guide to financial reporting and assurance requirements
- CPA Australia: Financial management of not-for-profit organisations
Financial education and support (external)
Accounting for Good: Free support centre for non-profit organisations
- Australian Taxation Office: Manage your invoices, payments and records
- Business Victoria: Cash flow forecasting
- Davidson Institute: Financial Education (videos) and Guide for Community Board Members
- OurCommunity: Cash flow management
- Pro Bono Australia: Cash Flow Forecasting for NFPs
Tools and tips (external)
Australian Taxation Office: ATO Definitions
OurCommunity: Financial help sheets and resources
- OurCommunity: Damn Good Advice for Treasurers – Twenty-five questions a not-for-profit Treasurer needs to ask
- OurCommunity: Damn Good Advice for Board Members: Twenty-five questions a not-for-profit board member needs to ask about the finances