Complete the charity governance tool to self-assess the steps your charity is currently taking to manage related party transactions, and to identify any areas of improvement.
Make notes of any discussion or action items, and discuss them at your charity's next board or committee meeting. You can print or save your answers.
The questions and examples in the charity governance tool are intended only as a guide of the steps your charity may take. This is not a comprehensive list of compulsory requirements. This tool should be completed with the unique circumstances of your charity in mind.
While answering ‘no’ to a single question doesn’t necessarily indicate that your charity is not complying, it should prompt you to consider whether this affects its compliance with its obligations.
Related party transactions
A related party transaction is a transfer of resources, services, or obligations between related parties. It does not have to include financial payment.
Related parties refer to people or organisations that have a connection to the charity and have significant influence over the charity’s strategic and financial decisions. This includes:
- Responsible People (board or committee members, or trustees) and other senior management, and their close family members
- organisations where a related party controls the organisation, a related party has significant influence over that organisation, or a related party is a member of the key management personnel of that organisation.
Problems can arise when charities fail to adequately manage the potential risks caused by related party transactions, especially where relationships between Responsible People and a related party can bring about a conflict of interest.
Charities must report on their related party transactions through the Annual Information Statement.
