Transcript

Matt:

Hello, everybody, and welcome to today’s webinar, which is titled, as you can see on your screen, Staying on track: tips for managing a charity and meeting obligations. My name is Matt Crichton. I’m from the Education Team here at the ACNC. And joining me to present today’s webinar is Heath Eldridge, who is from our Advice Team. Morning, Heath. Well it’s not morning now, good afternoon, Heath.

Heath:

Afternoon.

Matt:

(Chuckles) Well it’s morning somewhere in the country. OK, just before we get into the webinar proper, just a few bits of admin to clear up. If you have any trouble with the audio for the webinar you can call in using your phone. In the confirmation email you got there should have been a number, a phone number as an option to dial-in to the webinar and listen to the audio that way. You will have received a code as well to put in when you call up the number. So if you’re having trouble with your computer audio then try the phone option. That usually works.

If you’ve got any questions as we go through the webinar, feel free to ask them. We’ve got a couple of colleagues, it’s Chris and Michael today, in the background answering some questions via chat there, so use the GoToWebinar control panel on your screen to ask some questions as we go through the webinar. But of course if you wanted to save your questions for the end of the formal presentation, that’s fine too. We’ll have a Q&A session then and you can ask some questions and we’ll try and answer as many questions live as we can. But just on the questions, try and keep them general in nature. If you have something really specific about your charity it’s probably best to just give us a call and speak to someone from our Advice Team on 13 22 62, but otherwise keep your questions general in nature and we’ll do our best to answer them as best we can. But if we don’t get around to yours because of the sheer volume then we will get back to you via email later on.

And finally, we are recording this session, so if you have to leave early, or if you miss bits or whatever, you will get emailed a link to the recording of this in the next couple of days, so you can go back and watch it and check out some of the resources and whatever that we mention throughout the webinar then. So if you don’t feel like taking lots of notes as we go through, and jotting down the URLs of different web resources, that’s fine, you can do that later, we’ll send you an email with all the links.

OK, now let’s have a look at what we will cover today. Today’s a fairly broad topic for the webinar, we’re going to cover several topics that really could probably be webinars in and of themselves, so we’re going to try and get through them in as much detail as we can, but noting that they are probably pretty deep topics that we could go into much more detail if we had more time.

So we’ll do our best to do it effectively and succinctly, but we will have a look at the ACNC obligations for charities. We’ll have a look at governance as a concept and the importance of investing in governance in managing a charity. We’ll have a look at fundraising which is of course a very important topic for many charities, and how best to manage charity money. We’ll take a look at conflicts of interest and disputes, and how best charities can manage them.

Handling complaints is another bit we’ll look at, and how to do this effectively and in a way that benefits the organisation. And we’ll finish up with a look at record-keeping, which is one of the obligations for charities registered with the ACNC, we’ll have a look at that in more detail later on. And then finally, transparency and just the general principle of transparency and how it’s important for good charity management and good governance.

OK, the first thing we’ll have a look at today is the obligation that charities have to the ACNC. So Heath, all charities registered with the ACNC do have obligations if they are to remain registered with the ACNC. Could you just give us an overview of what we, at the ACNC, require of charities?

Heath:

Yeah, Matt. So the ACNC does have a few requirements of charities, and we’re going to just look over a few of those here. One of those is to keep their charity status. Obviously charities want to keep their charity status, they need to continue to operate on a not-for-profit basis and they need to continue to pursue their charitable purpose or purposes. You need to do that to become registered, and you need to continue to do that.

You need to notify the ACNC of certain changes, in particular if you change your legal name, if you change your address for service, if you change your responsible persons, and these responsible persons are the members of your charity’s governing body, including directors or committee members or trustees, you need to let us know if someone takes on or finishes in the role of a responsible person, or if their details change. You need to let us know of any changes to your governing documents, that is your formal documents that set out the way the charity operates, its rules and purposes, often called a constitution, rules, or trust deed. You must also let us know if you think your charity is not meeting its ongoing obligations in any significant way, and as a result you’re no longer entitled to be registered.

You need to keep records, both financial records and records of the charity’s operations. We’re going to talk about that a little bit more later on. You need to report information annually. So almost all charities need to submit an Annual Information Statement each year, and you need to do that. And you need to meet the ACNC Governance Standards. Those are on our website, if you follow the link that’s on your screen right now, but there are five Governance Standards that charities need to follow.

I did mention earlier there the address for service. So the address for service is the address that at the ACNC we use to send you documents and notifications. That’s particularly important because we do need to be able to contact you, but in particular at the moment we’re going through an upgrade of our IT facilities and we’ll be sending you important information about those upgrades and how they might affect you, so that’s a, I suppose you’d say a particular priority for the ACNC at the moment to have those address for services correct, so if that changes it’s important to let us know.

Matt:

Yeah, and it’s actually it’s one that charities may sometimes, understandably in many ways, forget if an email address changes, because in many cases an email address is the address for service for a charity, and if the email address, or the most appropriate email address changes, it’s something that can slip the minds of people involved in managing a charity. And then it becomes tricky later on because the ACNC isn’t able to contact that charity because the address for service isn’t up to date, and the charity has, there have been cases where a charity has missed notifications and that has led to them missing their Annual Information Statements, and in the most extreme cases even losing their Charity Register for failing to meet their obligations over a couple of years.

Heath:

That’s right.

Matt:

So just make sure your address for service, if you’re a registered charity make sure your address for service is up to date. And Heath did mention the Governance Standards there, and it’s the final dot point on this slide. We probably don’t have the… it’s not within the scope of this webinar to go into the Governance Standards in detail, but as we said we’ll send you a link to the information on the ACNC website. And we do have a couple of webinars coming up later in the year that will look at the Governance Standards in more detail.

OK, but on governance generally, it is an important feature of being in charge of a charity and something that people, if you’re a responsible person, or even staff or volunteers, need to be aware of in the day-to-day operations of a charity. Governance can be, well sometimes it’s a bit of a nebulous term and it’s hard to pinpoint exactly, but it just generally refers to the processes and activities, relationships even of your charity, that make sure the charity is effectively and properly run. Good governance would be charities having the right practices and procedures in place that help them do their work effectively, openly, and allows the responsible persons and the staff and volunteers involved to clearly know what their role is within the organisation.

Good governance is important because it can help the charity with its day-to-day work, and make sure that the charity’s work aligns with its charitable purposes, its values as well, and allows the people to be able to work effectively in pursuing the charitable purpose. When we say investing in governance, it’s just a matter of taking the time to set up the good policies, the procedures and the processes to be able to build upon, to take the time to properly train responsible persons, staff and volunteers, to let them know what their roles require and what the processes and procedures are for the charity. And of course this is going to look different for different charities, larger charities will have different processes and practices than smaller charities, but the principles of investing in governance remain.

It’s something that can be overlooked sometimes. Charities in their, especially early on in their excitement for getting started and wanting to pursue certain activities and getting right into the, I guess we could call it the on the ground work of charity activities, may think that taking the time to set up things like policies and procedures may be taking away from the charity activities, but it’s really not the case, and it should be thought of as an integral part in setting up a well run charity is setting up the policies, the procedures and the processes to be able to allow it to run effectively later on.

Heath:

Yeah.

Matt:

OK, also it will help you establish a good culture in the organisation, too, which will mitigate against disputes and other problems later on, so it really is something that charities should take the time to think about and invest some time and money into, if needs be.

Fundraising, this is a big topic for many charities, and of course it’s something we hear a lot about at the ACNC. But Heath, fundraising, despite its importance for many charities, isn’t a direct responsibility, a regulatory responsibility of the ACNC, though, is it?

Heath:

That’s right. Fundraising is mostly regulated at the state level, so each state and territory has its own rules and regulations for fundraising, which may include the need for a license or permit. Also some states have different rules for the types of fundraising activities charities can do, and some restrictions and requirements.

An example of that is the rules around gambling, bingo and the like, knowing particular requirements for those. It’s up to the responsible persons of the charity to know the rules for each state and territory, and we do have some information on our website to support you with that, which is the link on the screen. We did say there that this is managed by the state, or regulated by the state based regulators, but it’s important to remember that it does impact on the governance of the charity and generally how you run your organisation, which does come within the remit of the ACNC.

Matt:

Yeah, it’s more the responsibility of people involved in the charity to have oversight of the charity’s activities, and this may be its fundraising activities and how it conducts fundraising, and how it engages with people when fundraising. So oversight of fundraising practices is an important aspect of good governance. Even though, as we mentioned, here at the ACNC we may not have regulatory oversight of fundraising per se, the responsibilities of the people running a charity are such that they should be aware of the practices taken in the name of the charity when fundraising.

And in particular there’s a couple of points here, as you can see on the slide, working with fundraising agencies and other fundraisers is a big one, so if a charity engages a third party fundraising entity, a company to take on fundraising activities on behalf of the charity, it’s important for people involved in the charity, the responsible persons in particular, to know that this doesn’t mean that they have, you know, effectively washed their hands of the responsibility of the activity or the actions taken in the name of the charity. That is still the responsibility of the charity, and the responsible persons should know that, they should be aware of what sort of practices are being undertaken by the fundraising agencies they’ve engaged with, and should have a view of what is being done in the name of the charity.

Similarly when engaging with people in vulnerable circumstances. As we know, there are people in our community that may not be in a position to understand what’s being asked of them when dealing with a fundraiser, or may not have the capacity to say no to someone soliciting for donations, so it’s important that the responsible persons of a charity are aware of the way in which their charity engages with people in vulnerable circumstances; they should make sure that it’s respectful, that it aligns with the values of the charity. And of course be aware that it has a knock-on effect for the reputation of the charity if certain activities or certain practices are done in a way which will reflect negatively on the organisation.

And we have a dot point here for crowdfunding. And this is a new one, and many charities are looking at this as a way to augment their already established fundraising practices. Again it’s something that the responsible persons should look into and consider carefully the crowdfunding websites that they use, and most commonly it is a website, and have a look at the terms and conditions under which they run a campaign, and what’s involved in the particular website that they’re using. Again outsourcing the act of raising funds does not mean a charity can outsource the responsibility for the actions taken in the name of the charity, and in that sense we’re reiterating the importance of fundraising or oversight of fundraising as a part of good charity governance.

You can get some more detailed guidance on each of those main topics there, working with fundraising agencies, engaging with people in vulnerable circumstances, and crowdfunding, and of course the rules and regulations at the state level and what other government levels, on our website there at acnc.gov.au/fundraising.

Just following on from fundraising is managing charity money, of course a very important aspect of good charity governance. So Heath, can you just take us through some of the things that people involved in a charity should consider to make sure that their charity’s finances are managed properly?

Heath:

Yeah. Look they’ve got a few key points that we should focus on for managing charity money. One of them is that it’s important to have clear permissions and controls set up, and these should be documented. To establish the authority for using funds or approving funds there should be a clear process to follow. An example of this would be that a lot of charities require that two people sign-off on using money.

Matt:

Just on that actually, I’ll just interject there, a report was released I think today or yesterday out of the U.K. from the U.K.’s Charity Commission which suggests that in many instances of fraud they found that one of the main causes was a simple lack of adequate controls, financial controls that is. So as Heath mentioned, things such as authority for using funds and, you know, access to bank accounts and that sort of thing, having the appropriate controls in place can prevent instances of fraud.

Heath:

Yeah. The responsible persons should have a clear view of the finances of the charity. They should know how it all works in practice, the people making the decisions, the processes for getting funding approved, etcetera. So if you’re a responsible person in your charity it is important that you know what’s going on in that charity’s finances.

Accountability, one of the requirements of the ACNC Governance Standards is that a charity is accountable. Charities should provide regular updates on finances to their members. Charities should be aware of conflicts of interest. We’re going to talk about conflicts of interest a little bit later, so I won’t talk too much about this now, but it is relevant to how we manage charity money. And in practice another aspect to this is keeping funds secure, so that could consist of having good passwords for internet banking, not ones that can be guessed easily, and the access to funds follows the authority or delegation you’ve set up. So it’s no good having a set of rules that say two people need to sign-off on expenditure and then not following it. Same thing with physical money, you should have locks on your cupboards, safe codes, just depending on…

Matt:

Lots of that common-sense stuff (chuckles).

Heath:

… yeah, common sense, exactly, depending on the circumstances of your charity.

Lastly, you need to keep financial records. We’re going to talk about this one a little bit later on, but having financial records allows you to have a clear idea of what’s going on, and you need to report on financial information in the Annual Information Statement, too.

Matt:

Actually I’ll just go back to that slide, just at the bottom there there’s a really good guide on managing charity money which will go into some of these aspects in a little bit more detail, so if you wanted to have a look at that guide on the website, or you can even download a PDF version of it, it’s at acnc.gov.au/managingcharitymoney. But again, as I said at the beginning, we are recording this and going to send out a follow-up email with all these links, so if you don’t want to be bothered taking notes and writing down these URLs, that’s fine too.

Internal disputes, this is something that pops up quite a bit with charities, and I’m sure any organisation more generally (chuckles), but it’s something that it can really cause detriment to a charity, the way a charity is run, the way a charity can conduct its activities. In some cases it can really tear a charity apart, and it’s something that organisations should be on top of and be capable of mitigating and dealing with if it pops up.

An internal dispute, as we see it, is a disagreement, as the slide says, between individuals or groups within a charity, so it may be that a few people within a charity want to take the charity in a particular direction and a few others disagree, and that dispute goes beyond what you would consider a regular dispute or disagreement and becomes a larger problem for the organisation.

Now Heath, the second dot point here mentions that the ACNC doesn’t deal with internal disputes.

Heath:

Yeah, that’s an important thing to remember. Ultimately the ACNC does not deal with internal disputes, we’re not a mediator, we expect the charity to sort out these sort of disputes, however we can get involved in a dispute if there’s a serious risk to public trust and confidence. So one of the things that we… one of the objects we have in the ACNC is to maintain, protect and enhance public trust and confidence in the sector through increased accountability and transparency. If there’s a risk to that the ACNC can become involved, because that could represent a breach of the ACNC Act.

Disputes can be difficult, but there are steps you can take to prevent or resolve internal disputes. So in terms of preventing disputes, a good start is to have rules and processes in place whereby people understand what the process is and avoids this sort of situation arising in the first place. In terms of resolving them, if they can’t be resolved among the individuals, we would generally recommend that you consider seeking mediation. Some of the state governments offer mediation services, as well as various other mediators, and they’re easily found online.

Matt:

Yeah, importantly a simple thing that can mitigate the effects of disputes is just a culture of open and respectful communication, as we’ve got there on the slide. It seems a bit obvious (chuckles), but it’s something that really goes a long way to resolving these disputes when they arise is people involved in a charity that are used to open dialogue, respectful communication, and are capable of dealing with disagreements in a respectful and mature manner. And of course the last dot point there, just it’s important to not ignore the disputes and don’t forget to document progress, so for example if you do come to a resolution on a particular issue that was causing grief amongst people in the charity it’s important to have that resolution written down so it can be referred to later, if this dispute rears it’s ugly head again you can refer to the resolution that was reached and the documentation that supports that. It’s a simple way, a simple but effective way to be able to combat the nastiness that internal disputes can become.

Heath:

I think it has a lot to do, though, with having processes and rules in place. Questions like knowing who your members are, what your process is for selecting your responsible persons, and how the charity makes decisions, that’s what seems to come up to me.

Matt:

Yeah. Yeah, and if the rules are clear, the processes and the procedures by which certain decisions are made, and how the charity goes in a particular direction then, yeah, that can go a long way to mitigating any disputes. And much with many of the other topics today we’ve got some more information on this in particular on the website acnc.gov.au/internaldisputes.

Conflicts of interest is another one that pops up quite a bit, and it’s something that is pretty, as I said it pops up quite a bit so it’s pretty common for charities, but doesn’t necessarily need to be thought of as a bad thing, as long as conflicts of interest can be managed well they don’t need to hold back the charity in any way. Now a conflict of interest is when the personal interests of a particular person involved with the charity conflicts with that person’s responsibility to act in the best interests of the charity. We have probably three main types of conflicts of interest to think about, and they’re subtly different, but each of them are important in being able to confidently manage a conflict of interest.

The first one is an actual conflict, this is probably the easiest one, it’s when you are being influenced by a conflicting interest, for example if a charity’s considering whether to give a grant to a kindergarten that your child attends, and therefore as one of the decision-makers you’re probably incapable of making an objective, impartial decision. That would be an actual conflict of interest. The interests of you as an individual conflict with the interests of the charity.

The second one’s potential conflicts of interest, so this is where you could be influenced by a conflict of interest, and an example of this may be that you’re on a charity board, but you’ve taken up employment with another charity and you may at some point apply for a grant as an employee of one charity and a board member of another charity, so it could be that your interests conflict in that instance.

The third one is moving a little bit on from a potential into a perceived conflict of interest, and that’s when you could appear to be influenced by a conflict of interest. And it may be that you’re not, but the perception alone is enough to warrant you thinking about how this looks to other people. So for example if you’re on a charity board and you’re reviewing quotes for a service, and one of the potential providers you’re looking at happens to be the employer of your brother or sister, now while you believe you may be capable of making an impartial decision and acting in the best interests of the charity, and the fact that your brother or sister works there doesn’t influence your decision, the perception is that you may be conflicted and incapable of making the impartial decision is enough to warrant the charity maybe taking action and maybe removing you from that particular vote or that particular decision. So even though in the third one, even though there may not be a real conflict, that there is a perception to people looking in from the outside may be enough for you to deal with it as if it was a conflict of interest.

Now as I said, these conflicts of interest don’t necessarily need to be thought of as a bad thing, and it’s likely that almost all charities will face a conflict of interest at some point, it’s the managing of them that’s important. And Heath, not managing them correctly or well can be detrimental.

Heath:

That’s true. There’s a few things to bear in mind there. Conflicts of interest can affect the reputation of the charity. I mentioned a few minutes ago that concept of public trust and confidence, if there’s not a perception that you are managing your conflicts of interest well that can be a risk to the reputation of your charity, and potentially even to charities more broadly. People can question the way the charity is run if they suspect that people are benefitting privately from the charity and its decisions.

There’s a danger that conflicts of interest can run into the territory of private benefit for individuals, and this is of concern to the ACNC, this is one of the things that we would potentially look at. They can undermine the role of responsible persons as a collective. The responsible persons are responsible for making decisions and they need to be able to do so fairly, and they need to be seen to be doing so fairly. That’s probably some key points, some key risks if they’re not, if conflicts of interest are not managed, and we do again have a link on the screen that was acnc.gov.au/conflictsofinterest. Again, as Matt said, that’ll be in the email that gets sent out, but that’s got some resources for dealing with conflicts of interest.

Matt:

All right, handling complaints, this is an interesting one, and similar to conflicts of interest it doesn’t necessarily need to be thought of as a bad thing for charities, even though maybe the complaint carries some inherent negativity, the way a charity can deal with the complaint can actually be turned into a positive for the organisation, and I think charities and the responsible persons involved in charities need to, well it’s probably a good idea to think of it in that way. So as I said, Heath, it doesn’t necessarily need to be doom and gloom. In what ways can a charity benefit from receiving complaints?

Heath:

Yeah, I think there’s a few benefits a charity can get from complaints. Like you say, most charities will get complaints at some point or another. It’s an opportunity to protect and improve your charity’s reputation, so to really get on the front foot and mitigate any ill felling towards the charity, to explain what you’re doing, if that’s possible – obviously sometimes it’s not because these things can be confidential – but to really get out there and give a clear account for what you do as best you can in the circumstance.

There’s an opportunity to take the complaints seriously and manage them well, which will alert you to failings within the charity and its processes. It’s quite possible when you receive a complaint that there’s something you could be doing better, and receiving that complaint and taking it seriously allows you to evaluate that, and it gives you the chance to look at your processes and check on the work being done. Perhaps there’s a problem with the quality of your services, and there’s an opportunity to do that better. Lastly, dealing with a complaint will provide you with a clearer view of the areas you need to improve.

Matt:

We have a link down the bottom here, this time it’s not to the ACNC’s website, this one goes to the website of the Not-for-profit Law area of Justice Connect, which has just this week – this week or last week; I think it was this week – anyway, they’ve just published a new guide and model policy and procedure for handling complaints effectively, and it’s certainly worth having a look at it. It’s free, it’s available there at the website at nfplaw.org.au/complainthandling, and if you’re involved in a charity and the charity has had some struggles with complaints, or doesn’t have a policy and doesn’t know where to begin, this is a really great resource to get a hold of. So I’d recommend going there, having a look at the document, it’s got a brief overview at the beginning which would solve some of the benefits of dealing with complaints well and effectively, some of the things we’ve mentioned today, but also has a model policy and procedure that charities can adopt and adapt to their own organisation’s situation to then use to handle their own complaints effectively.

But as we mentioned, similar to conflicts of interest, it’s something that’s certainly worth thinking about, and charities should have a policy or a procedure set in place to be able to deal with them when they arise. Waiting for a big complaint or a big conflict of interest to arise before you take action isn’t the best way, and it can probably cause greater problems for the charity, so if you take the time to think about these things early, have a procedure or process in place which is based on a clear policy that everyone can access is a really good way of mitigating the negativity that can come from both a conflict of interest and a complaint.

We mentioned at the beginning that record-keeping was one of the obligations that registered charities have to the ACNC, and it is, and we’ll go over some of the importance of this now. Just briefly, when we say record-keeping we’re just talking about a piece of information, a record this is, a piece of information that shows that a charity has operated in a particular way, or acted in a particular way, or indeed with money, that it has spent or received its funds or other assets in a particular way, it’s just in short something that shows what the charity has done either operationally or financially. And it is one of the obligations that all charities have to the ACNC, to keep records. And Heath, can you just give us an overview of precisely what we do require here at the ACNC of registered charities in the way or record-keeping?

Heath:

Look the most important thing is that they have records, and if we look at them, you’ve mentioned financial and operational records. So if we look at them, in terms of financial records, charities need to correctly record and explain how your charity spends or receives its money and other assets. It needs to correctly record and explain your charity’s financial position and performance, and allow for true and fair financial statements to be prepared and audited or reviewed if required. And it’s important to note that even if your charity does not need to submit financial reports, so only medium and large charities need to submit financial reports to the ACNC, but even if you don’t, you still need to keep financial records that meet these requirements. The ACNC Act, or the ACNC Commissioner, could require your charity to prepare financial statements if that was necessary.

Matt:

And just on the financial records, that this is something that’s pretty common, or would be pretty common for almost all charities, that they have statements, annual financial reports prepared anyway, so the requirement to keep financial records isn’t anything beyond what a charity should be doing anyway. It’s just making sure that one of the obligations aligns with these principles of good governance that require a charity to keep good, clear financial records. And how about operational records, Heath?

Heath:

These are a little bit harder to specify exactly what’s required, but these are the documents that talk about your charity’s operations. They definitely need to show that it’s entitled to be registered as a charity and its subtypes, so what sort of… what are its charitable purposes. They need to show that it’s meeting its obligations under the ACNC Act, and its obligations under tax law. The ACNC Act does not define what the operational records are, but they can include meeting minutes, business plans, contracts, evaluation reports. We’ve got some more examples of what may be an operational record at acnc.gov.au/recordkeeping. That link again is on your screen.

Charities can have their own system for record-keeping, but they need to be in English or in a form that can be easily translated to English, and they must be kept for seven years. We don’t require you to submit these records, but we could ask for them. And again there’s a second link there on the website, on the screen to the acnc.gov.au/recordkeepingchecklist, which gives you a useful list to help you stay on top of your record-keeping.

Matt:

And again the operational records may sound a bit vague, I mean the definition of an operational record, but it is basically the sort of things that you’d have that show what the organisation is doing. And this is going to look different for different organisations, depending on what they do, but as Heath said, it’s the sort of documents, records that cover your activities, and this may be in the form of, as we said, business plans, or reports, or meeting minutes, that sort of thing.

Heath:

And another thing to consider is that over time there may be changes in you responsible persons. Having records allows you to see why a particular decision was made potentially a number of years ago.

Matt:

Yeah, exactly. So it goes beyond just meeting the ACNC obligations. Of course that’s an important thing, but it forms a good practice for people within the charity to then have a really clear view of what’s going on both financially and operationally, and a timeless view of what’s going on. So as Heath mentioned, if the entire responsible persons and staff and volunteers have changed over ten years, and that’s fine, the records show what has happened over that period of time, without the need for the individuals involved to be able to tell the story. The records should be able to show the financial position and the operational activities of the organisation.

So it’s probably a good idea, as the last dot point there says, to have a record-keeping policy, something that sets out how your charity is to keep the records, where it’s to keep records, the security of these records, who has access to records, and even, as we’ve got there, backup procedures for electronic and paper records. And it’s a way to reinstate the importance for the people involved that record-keeping shows everyone involved in the organisation what’s going on with the charity. Setting a good culture for record-keeping is an important step.

OK, we’re on to our final main topic now, and this is transparency. It’s sort of becoming a theme of today’s webinar is that the sort of nebulous nature of some of these terms transparency, of course we know what it means conceptually, but how that works in practice for a charity may be difficult for some people. And of course again it’s going to look different for different charities, but it is a crucial principle that underpins public trust and confidence in a charity. And this would underpin almost all aspects of a charity’s operations, including how the funds are raised, how they’re used, and how they’re distributed. It’s important for a charity and its responsible persons to be open about its fundraising, its use of funds, and where it intends to direct funds in the future, whether that be through planned projects or whatnot.

It’s important to let people know any criteria that you have for beneficiaries to access some of your services. So in many charities some of the services are restricted to certain beneficiaries based on certain identifying characteristics, and it’s important to be open about that and not… allow people to have a look at the policies and the reasons for why you are doing certain things, and why you’re providing certain services.

Being transparent about the operations of the charity is important, and this can be done through proper notice of annual general meetings and board elections, and allowing people involved in the charity, the members, or even supporters, to be able to ask questions of the responsible persons at annual general meetings, and even ask questions about the direction of the charity and that sort of thing.

Heath:

That’s right, just about why decisions are made, and how they’re made.

Matt:

Exactly. And it can go a long way to mitigating disputes if the steps involved in making a decision are clear to all the people, all the interested parties. As we mentioned a conflict of interest, whether that be actual or perceived, is easy to deal with if there’s a culture of transparency in the organisation. If a conflict of interest pops up and the culture of transparency is there, it’s something that will be dealt with really simply, really easily, and not have to be a problem for the organisation.

And finally, reporting, whether this be to government regulators or just to the general public on your activities, your performance, the way you’ve used your funds, the principle of transparency can mean that your charity benefits from the increased trust that transparency will bring to the organisation.

So again this will look different for different organisations, and different organisations have lots of different processes of varying complexity, but keeping in mind the principle of transparency, when thinking about setting up your processes and procedures and how you go about your operations, is a really important way to make sure your charity’s effectively managed.

OK, as I mentioned today’s topics are big and deep enough to warrant full hour webinars on their own, so we’re only giving a slight overview today in the way of… in a way to show the best ways to manage a charity, or the most important things to think about when you are thinking about the way your charity is managed. We’ll have all of these links to resources on our website in the follow-up email that we do send you within the next couple of days, usually it’s within say two days of the broadcast of the webinar you’ll receive a follow-up email with a link to the recording and the useful resources. But now we do have a chance for some questions.

So we’ve had Chris and Michael busily asking, answering, sorry, answering questions in the background as we’ve been going along. We’ve had a few good ones come through that we thought we would answer live and share for you. Let’s start with one question we’ve got about good governance, and someone has just asked: How do you make sure your charity has good governance? And I think this stems from that sort of vague nature of the term governance and good governance, people would like to know in practice what this means.

So Chris, do you want to have a – oh, Chris; sorry, Chris is answering in the background – Heath, do you want to have a go at answering this one? How do you make sure your charity has good governance?

Heath:

Governance can look different to different charities, so it does depend on what you’re doing and what the size of your operations are. A common feature, though, is that you’ll have strong policies and processes, so take the time to set up the processes that you will rely on later, as we mentioned earlier, and this is a good investment in your charity being able to do the work that its set up to achieve.

Matt:

Yeah, and that’s not taking away from your charity activities, I think.

Heath:

Not at all.

Matt:

Yeah, that’s a myth that people sort of get sucked into is thinking that, you know, writing a policy or thinking about a policy is just taking time and money away from the charitable activities. It’s all part of the charity’s activities.

Heath:

And actually it makes your charitable activities possible.

Matt:

Yeah.

Heath:

Have a good handover for new board members, staff and volunteers. And be aware of the regulatory environment for your charity. So we’re one of the regulators for charities, but a lot of charities do have to report to or follow rules from other regulators, and it’s very important to be aware of who that is.

Matt:

Yeah, exactly. And that point that Heath’s just mentioned about a good handover is really important, because we know that charities have a fair bit of turnover in staff and volunteers, and sometimes even responsible persons, so it’s important to make sure that new people are aware of the processes and procedures of the organisation, and there can be a seamless continuation of a good culture of governance when people change.

Another question on governance, it’s about small charities, so: Does a small charity need to worry about governance too?

Heath:

Look, yes, it does, a small charity definitely needs to worry about governance, but as we mentioned earlier, it does look a bit different compared to bigger charities, but a lot of the same principles do apply. So having good procedures and policies in place, and a good understanding of the roles of volunteers and staff, if there are any, good record-keeping, and a good handover for new people. Don’t fall into the trap of thinking that whatever problem doesn’t apply to your organisation because it is so small. Even the smallest charities can run into trouble if they fail to think about how they manage their affairs.

Matt:

Yeah, so governance isn’t just a term that applies to the biggest charities with lots of revenue, it goes right down to the smallest organisation, too, and it’s about making sure that you’ve got the right processes in place to be able… that allow the charity to be able to do its charitable work.

A few more questions coming through. I think, ooh, we’ve had a look at governance. Oh, here’s an interesting one about a charity board, so in thinking about good management of a charity, someone’s asked whether or not a charity board – and just on that throughout this webinar we’ve referred to them as responsible persons generally because that’s one of the terms that we’ve used at the ACNC – so: Does the charity board, or the responsible persons as a collective, have to have specific skills? So for example do you need to have an accountant on the board, or a lawyer, or a fundraising professional, does a board need to have these certain skills?

Heath:

Look there’s no requirement for that. It can be a good idea, though, for example particularly if it’s relevant to the work the charity’s conducting. You want people who want to be there, and that want to do a good job. If you can get the skills too, though, that’s fantastic. It’s also maybe worth looking for people that have skills in certain areas if you think your charity needs it. For example, if you’re looking to increase your fundraising, that fundraising professional might well add to your organisation.

Good policies and procedures can mitigate any potential disadvantage of not having these skills on a board. So for example, you may not have any accountants available, but if you do have in place processes to keep strong financial records and have those audited, that will help you cover that shortfall.

Matt:

Yeah, but certainly it is a good idea. I mean if you’ve got the people available, and you know people who are interested who want to be on the board who do have these skills, maybe in their professional capacity they are dealing with much of this, then it’s great, and then the charity can really benefit from that. But, yeah, it’s a balance, depends on the charity needs, it’s not necessarily worth you know holding off on charity activities just because you don’t have an accountant or a lawyer on the board, there are ways around that. As Heath mentioned, good policies and procedures is one way. But certainly if you’ve got those people available they can be, yeah, wonderful assets to your charity, and all good luck to you (chuckles).

Heath:

That’s right.

Matt:

Let’s have a look at one more question. OK, just this is more a practical question, so: What are some tips for good record-keeping and management? So we’ve gone on and on about the importance of record-keeping and how this underpins management, but what are some practical tips?

Heath:

You need to be clear about the importance of record-keeping in your organisation, so develop that as part of your culture, make sure it’s very clear to all your people that record-keeping is a priority for your organisation. Have clearly labelled records, financial records, receipts, invoices, operational records, contracts, business plans, meeting minutes, and as part of that make them in such a manner that they’re accessible for those that need to see them. Familiarity with keeping records and the expectations to do so will help. Encourage people to be documenting operational aspects.

For management, make sure the staff and volunteers are aware of what’s expected in terms of keeping records. Provide opportunities for staff and volunteers to speak about their roles and bring up any issues they have. And don’t let conflicts go unaddressed.

Matt:

Yeah, and I think in being busy day-to-day and trying to get through all the work that you need to get through it can be easy to overlook some of these important aspects, but for example that point about just providing opportunities for staff and volunteers to speak about their roles and bring up any issues they have is a great one, it can really bring up any problems or provide early detection of any problems that’s happening within certain aspects of the organisation. And it also makes people, the people involved, whether they be staff, paid staff or volunteers, it makes them feel engaged in the work that you’re doing, or makes them feel more engaged in the work that you’re doing, and more likely to contribute to a good culture of transparency and good governance.

And that point Heath mentioned about documenting operational aspects is a really good one. So although it may seem like a bit of a burden to have to document some things that happen, it’s probably good practice and can provide a great written record of what has happened internally within staff and within certain aspects or operations of your organisation, for others to view and be able to look at fairly and impartially.

Oh actually I just wanted to also reiterate the importance of the clearly labelled records. I think that’s a really simple and practical way people can do it. So you find maybe this goes across the board, no matter what size the charity is, but particularly with small charities that a certain person that has, you know, taken control of the financial records for many years has had their particular way of doing things, maybe an idiosyncratic filing system that no one else can follow, that sort of thing can make simple management that extra bit difficult, and it doesn’t need to be.

So having really simple processes and clearly labelled files, clearly labelled folders on your computer, with the right permissions and access of course, can go a long way to making sure your record-keeping is clear, accessible, and helps with charity management as well, and people management.

Heath:

That’s right.

Matt:

We’re sort of nearing the end of our time now, and that’ll probably do for the question and answer, but if you do have any other questions that pop up later on after we’ve finished the webinar, feel free to send us an email or give us a call, we’ll be happy to answer all of them for you. If you wanted to give us a call our number is, as you can see on the screen there, 13 22 62. If you want to remember that easily it’s 13 ACNC. Give us a call and speak to our very friendly and knowledgeable staff in our Advice Services Team, and they’re available between 9 a.m. and 5 p.m. Or send us an email at advice@acnc.gov.au, we can get back to you with more specific answers for your charity’s situation, if that’s the need.

Otherwise we’ve got lots of resources on the website, we’ve got web guidance, podcasts, some video content and webinars such this on various topics. And also our regular Commissioner’s Column and email updates it’s worth signing up for to hear about new things coming out of the ACNC. And we’re pretty big on social media, Facebook, Twitter, and our YouTube videos.

OK, that’s about it for us today. Thank you very much for your participation, and for your questions. We will, as I said at the beginning, we’ve recorded this webinar, we will post a link to… we’ll send you a link to the recorded webinar and all the resources as well in the coming days.

Just before we do finish up, when we’ve closed the webinar you will be provided with an opportunity to fill out a very short survey, and it is really short, I think it’s only two questions, or three questions, so it won’t take longer than 25 seconds I reckon. If you could fill that out, that would be really appreciated. We do get a lot out of the feedback we receive in the survey following the webinars. And if you have other questions, comments or feedback, education@acnc.gov.au is the destination for those. Which is different to any questions about your charity and its aspects in particular, which goes to that advice email address that I just mentioned before.

OK, once again thank you for your time. Thanks, Heath.

Heath:

Thanks, Matt.

Matt:

Thanks to our colleagues, Chris and Michael, who have been answering the questions throughout the webinar. We hope you’ve enjoyed it and gotten a lot out of it, and we look forward to seeing you again in a webinar in the future.

Thanks very much.

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