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The Australian Charities and Not-for-profits Commission has released new guidance to help charities operating within a complex structure ensure they have strong governance and comply with their obligations.
Operating within a complex structure – sometimes also known as operating as a ‘group’ – typically involves multiple entities that might have varying structures, purposes or operations. Complex structures can be made up of a variety of organisations – for example: trusts, incorporated associations, unincorporated bodies, companies limited by guarantee or private companies.
These structures can help charities manage risk, focus on different programs or operate across multiple locations. Sometimes separate entities may be required to operate different services. Greater structural complexity can also create governance and operational complexity. This complexity can result in confusion about roles, responsibilities and obligations. We want to support those involved in running charities to understand some of the issues we have seen.
Our new guidance outlines areas of governance that charities within a complex structure need to focus on. They include:
- policies and procedures
- record-keeping
- common boards and directorships
- board meetings
- roles within complex structures
- conflicts of interest
- related party transactions
ACNC Commissioner Sue Woodward AM said that without clear systems and good communication, it can be harder to meet the ACNC’s Governance Standards and External Conduct Standards.
‘While operating within a complex structure is not in itself a problem – and the ACNC recognises there are often good and legitimate reasons for charities to do so – it is important that any charity operating within such a structure takes extra care.’
‘The ACNC’s new guidance on good governance in complex structures is part of our education-first approach. This approach sees us provide practical information to help charities, and the people involved in running them, to get things right, rather than only focus on enforcement,’ she said.
Charities, especially those with shared boards or governance arrangements, are encouraged to read the guidance and seek professional advice if needed.