Chris Riches:

Hi and welcome to our latest ACNC webinar. Today’s session focuses on some of the key information that new charity board members should be armed with as they take their place on a charities board, as well as some of the things they should be aware of when stepping into the role. My name’s Chris Richards, and I’m from the ACNC’s education team. With me today is my colleague Matt Crichton. Hi, Matt.

Matt Crichton:

Hello everyone.

Chris:

Now, before we launch into the webinar, the usual few housekeeping matters, which we’ll rattle through quick smart. First up, if you’ve got any troubles with the audio, for our webinar today, you can try listening through your phone, you can call the number listed in the email you will have received upon sign up, and put in an access code and listen to the webinar that way. You can also ask a question at any time through the webinar by using the tools in the Go To Webinar panel on your screen. We have our colleagues Heath and Michael ready, waiting and with typing fingers prepared, to respond to any questions that come through. As we go along today, we’ll try and answer all the question that come through, but depending on the quantity of them, we may not be able to get to everyone. If your question isn’t answered, please feel free to send us an email, and we will get back to you.

We will allow a little bit of time at the end for Q. and A. so if you wanted to watch the presentation and save your questions until the end, you can do that as well. We are recording this webinar, and this recording, as well as the transcript and the slides, they’ll be published on the webinar, on the website in a couple of days. This also means you don’t have to write down all the website references in the presentation today. They’ll be contained in a follow up email that we’ll get out to you ASAP.

And finally, as usual, we really value your feedback. If you have any suggestions for ways we can improve our webinars, please let us know in a short survey at the end of the webinar, or send us an email with your comments.

Matt:

Okey dokey. We will cover a number of topics today, which you should be able to see on your screen now. We’ve got, this is an overview of what we’ll cover today. We have five quick questions to ask so when you start on a charities board, these are the sort of questions you should ask yourself, to make sure that you’re prepared for the beginning of your role. We’ll have a look at the ACNC, just what the ACNC does and what it requires of charities. We’ll have a look at the duties of responsible persons, and just a quick note on responsible persons, you might see the phrase responsible persons used a fair bit throughout the webinar, and then sometimes you’ll see the word board members, phrase board members used. They’re effectively an interchangeable phrase.

The ACNC refers to the people that are in charge of a charity as responsible persons. So in this dot point here when we say duties of responsible persons, that may as well say duties for board members, committee members or whatever your, whatever idiosyncratic phrase you have for your organisation.

We’ll also have a look at some general tips for board members. There we go, there’s the interchangeable phrase, right there. And finally we’ll just give you some main points to take away from this, once we’re done. And also at the end, as Chris mentioned, we’ll have some Q. and A., so if there have been some questions come up throughout the webinar, we’ll take the time at the end, five or ten minutes or so, to answer those.

OK, so I’ll pass you over to Chris to continue.

Chris:

No probs. Now, last month’s webinar, you may have attended, you may remember, that was about annual general meetings. So after the annual general meeting, we’ve probably got quite a few new board members who have joined up. So good on you for doing so. What we would like to probably say to you all, if you have joined up, is to congratulate you. We’ve got about 56,000 registered charities here in Australia, and they do rely on the contributions of board members, who give up their time, often without remuneration, to help the organisation they support. Without volunteers like these, including volunteer board members, there’s plenty of charities that would struggle to be as effective as they are, and some of them may not even exist anymore. So a big thank you, and a big acknowledgement to all of you. Existing board members, new board members, bravo, good luck.

So we’ve got a few quick questions here that you should perhaps, particularly new board members, should perhaps ask when you jump on board. Now, it’s important to note here, that some of them you’ve probably already covered as you’ve gotten onto a board. None of them are formal ACNC requirements. But what they are is important, I guess in trying to ensure good governance and high functioning board. And of course, every charity is different, as we often say. So there might be some extra questions you might need to ask that are particularly relevant to your charity. The ones we’ve listed here are, the first is to clarify your role. Ensure you’re clear on your role on the board, and what your responsibilities will be. A positional role description can be very handy here.

Second point is an induction pack. Have you got yours? would be the question to ask. A properly inducted board member is a quickly productive board member. So if you haven’t received an induction pack, talk to your charity about ensuring you have the information and the documents you need to hit the ground running.

Handover, handover processes are important, if you’re taking over a specified board role. Organise some time with your predecessor to sit down and discuss the ins and outs of that role, and that’s a good idea. Adequate and documented handover processes are vital. Meeting details, is another important one. It might sound pretty basic, but it’s always a good way to confirm when, where, how, and how often, meetings are staged, as well as how you’ll receive things like agendas and minutes.

And the final thing, although it’s not the final thing on the list on your screen, a run down of your charity’s duties to the ACNC should be a part of a charity’s induction process or welcome pack, and all new board members should be clear on them. Now, we’ll cover elements of these points in more detail throughout the webinar, but first up, just as a bit of an introduction, what is the ACNC and what do we do?

Matt:

Thanks Chris. The ACNC is the independent national regulator of charities, and the ACNC has five main functions, as you can see on the screen. We register charities, we maintain the charity register, which is an online database of all registered charities, which has some information about all registered charities on. It’s free for everyone and is searchable, so if you wanted to look up some information about a particular charity, you can go to the charity register and do so. We provide advice, guidance and education for charities about a range of things, particularly about their obligations to the ACNC Of course, we monitor charity compliance with those obligations. So if charities get in a bit of trouble and that trouble is something that the ACNC can look into, that’s part of what we do.

And finally we have responsibility in our work to try and reduce red tape for charities, and that may be working on streamlined reporting arrangements with state and territory governments, or other way ways to try and reduce the reporting burden that many charities face. But there is a lot more information about all of these points in particular on the ACNC website, if you go to acnc.gov.au/about, you can read all about that. And searchable online database is listed there as well, /charityregister.

Chris:

Alright, now we’ve mentioned responsible persons a couple of minutes back. As we’ve mentioned before, it’s the term that the ACNC uses to describe the people who are ultimately responsible for the way a charity is run, and who vote on decisions. Again, more likely to know them as board or committee members, maybe directors. Maybe trustees. But it’s this group of individuals who together are ultimately responsible for overseeing the charity’s operations and making sure it’s working towards its charitable purpose. It’s worth noting that responsible persons may employ or may engage staff to carry out some of their day to day tasks, and if that occurs, the staff are responsible to, and would report to, the organisation’s responsible persons. Again, we’ve got a pretty useful fact sheet on responsible persons, and the fact sheet is on your screen.

Matt:

And so if you have been elected to your charity’s board, its committee, you are a responsible person, and that’s who we’re referring to when we say responsible person. And the responsible persons of each charity, must know the obligations that the charity has to the ACNC, and there’s an overview here on the screen of what the main obligations are. A charity has to maintain its charity registration. So that means it must continue to operate in a not-for-profit way, and it must continue to have a solely charitable purpose, or purposes, and pursue those purposes with its activities. It has to keep records. So responsible persons should e aware of this, that keeping records is an obligation that the charity has, and they must be correct and accurate financial records, as well as operational records. There’s an obligation to report to the ACNC, and in short, this is filling in an annual form, or a statement, called the annual information statement. And that will be due at different times of the year for different charities, depending on their own operations, but the responsible persons of a charity need to be aware of this requirement in particular, and know when they are required to submit this statement.

The responsible persons need to remember that there’s an obligation for charities to notify the ACNC of changes, and in particular, that’s changes to the charity’s legal name. So if you have a change in name, you’re going to have to let us know. The change to, any change to the address for service, which is the formal address to which we send notifications and correspondence. Any changes to the charity’s governing document, which you might know as the constitution or the rules. And changes in the list of responsible persons, and this is probably something that comes up a little bit more often than the other three that I just mentioned. So if there’s someone that’s stepped down from the board, someone new has come onto the board, the charity has an obligation to let the ACNC know about that.

All of these notifications can be done online via the ACNC charity portal, as our cartoon friend there on the screen is currently doing. And finally, you have to meet the governance standards. These are a particular set of standards that charities must meet to maintain registration. We’ll go through them a little bit more, in a little bit more detail, a little bit later on. But those five points there on the screen are the main things, as an overview, that charities’ responsible persons really need to know about, to make sure that their organisation is meeting its obligations to the ACNC.

Chris:

Now, governance standards, just got a quick bit of a mention there. That’s one of the ongoing obligations for registered charities. They have to meet the ACNC’s governance standards. Now, the governance standards are a set of five minimum standards for running a charity. They include standards that cover things like charity processes, activities, governance and compliance. The standards require charities to, and we’re going to, there we go… demonstrate that they’re not-for-profit. Work towards charitable purposes. Provide information about its purpose to the public. That they take reasonable steps to be accountable to their members, and provide them with decent and adequate opportunities to raise concerns about how the charity is governed. Got to comply with the law, as it says there. So that means not commit a serious offence, things like fraud, that sort of stuff, under Australian law, or breach a law that may result in a penalty of 60 penalty units or more. Got to take reasonable steps that responsible persons are not disqualified from managing a corporation, or disqualified from being a responsible person of a registered charity.

Now, the fifth standard, which looks at duties of responsible persons, we’re going to launch into a little bit more detail about that in the next couple of minutes. Now, for new charity board members, there are seven duties, and you need to know them. We’re going to cover them right now. More on these standards can be found via those two links at the bottom of the page.

Matt:

OK, so jumping straight to that standard which looks at the duties of responsible persons, there are seven main things to consider in this standard, and as Chris mentioned, it is covered by Governance Standard Number 5. This standard requires that a charity’s responsible persons, number one, act with reasonable care and due diligence, that they act honestly and fairly in the best interests of the charity, to not misuse the position that they have as responsible person. Also, to not misuse any information that they may gain in the position as a responsible person. They need to disclose any conflicts of interest that they may have. They need to ensure that the charity is managed, financially it’s managed responsibly, and also, which I suppose leads onto the seventh point, that they are not allowed to allow the charity to operate while insolvent. We will explain that in a few minutes. But I suppose if you’re adequately covering point six there, I think point seven will probably become redundant, because it’s unlikely that you can do six, and then also not do seven.

OK, we’ll have a look at each of these duties in a little bit more detail, so you as a new responsible person know exactly what the ACNC expects of you in your new role.

Chris:

OK, so the first one, duty number one, is to act with reasonable care and diligence. So, as you can see, there’s some key points up on the slide. But as a charity board member, you are going to have to fulfil a number of different duties. It’s a big responsibility, you probably realise that. It’s a responsibility not only to the charity and its members, and those who it works with, but also to the wider community.

Now, the first duty that we’ve got sort of reinforces, really emphasises this responsibility and the importance of exercising care and diligence in your role, or roles. It involves playing an active role in providing and monitoring the charity’s development and management, and being aware of obligations. You also need to stay informed about the charity. Informed about things like its work, its finances, I guess what the general health, or the general state that it’s in. Now, being informed is just knowing about, or being aware, it’s also, I guess, a level of understanding as well. If, for example, a reasonable person receives some important financial information about the charity, it’s not enough just to read, or to look at the figures. They need to be able to understand the figures. They need to be able to know what that means for the charity. As a general point, you need to be an informed and engaged board member.

Other ways to comply with this standard are to read any board papers, ensure you are, I guess, properly, appropriately informed about matters on which you need to make a decision, and attend board meetings on a regular basis. Now, board members should be aware that missing several board meetings in a row without a compelling reason to do so, might be seen as a breach of this duty. It’s also important to remember that you can always ask for help, or seek the knowledge of professionals, or even the expertise of another responsible person, for example if you’ve got issues with understanding the financials, go and have a word to the treasurer. But you should always carefully consider any advice you are given, and ask questions to ensure you understand the standard.

Matt:

Yeah, that last one’s an important point. It’s not enough to simply just sit on the board and nod your head and pretend to know what’s going on, if you don’t. It’s part of your responsibility to act with care and diligence, is exactly as Chris described. Responsibility to ask questions and to find out more information if helps you make a more informed decision. The second point that we mentioned before is that the Governance Number Five requires that charities’ responsible persons act honestly, in the best interests of the charity, and for the charities’ purposes. So if you do hold a position of responsibility at the charity, the decisions you make and I suppose your considerations in coming to a decision, must be with the charity’s interest at the forefront.

Any personal interests or interests of other organisations that you may be involved in, or even if you’re not involved in them, they need to be set aside. So when you’re acting in your role as a charity board member, you need to step into your charity board member shoes, and have a look at your actions from the perspective of the charity, and ask yourself, what would be best for the charity in this situation? For example if you’re making a decision at a board meeting, be diligent, as we mentioned before. Don’t just follow the crowd. You should always think, you should always do, sorry, what you think is best for your charity, even if sometimes it means that you might be taking a different view to other board members. And it’s an important point, because there’s nothing wrong with that, and sometimes the best outcomes come on the back of hard fought decisions at the board level, and it may include some discussion, debate, even argument. But at least those issues are teased out and explained, discussed, put through the rigour that they should be, before a decision is made.

Chris:

It also shows that board members who are willing to do that, and who are able to do that, are well informed, and well engaged as well, and that’s always a positive.

Matt:

Absolutely. So your duty as a responsible person is to do the best you can, on its behalf. You’re acting in the interests of the charity, to guide the organisation, so that it can do the best work that it can.

Chris:

Duty number three is, it’s pretty clear. Don’t misuse your position as a responsible person. It’s linked to duty two, in a way. Part of acting in a charity’s best interests, as a board member, is to ensure that you, as a responsible person, don’t misuse your position. Any actions which might run counter to this duty are a misuse of your position of responsibility. An example of breach of this duty might be someone running a charity who uses their position to pay a company owned by friends or relatives. When there really is no reason to make such a payment. No goods or services have been provided to the charity, for example. Your role as a charity board member isn’t about providing benefits to yourself or to others. It is to ensure that the charity is doing the best it can, to further its purposes, and to help its beneficiaries. Misusing your position in this way will not only result in a breach of the governance standards, but it can also lead to other serious problems, criminal charges perhaps as well. So yeah, make sure that you comply with duty number three.

Matt:

The next one is sort of follows on from that on. So don’t misuse your position as a responsible person, with information either. So you’re going to come across some information that maybe sensitive or even confidential. It’s important that as a responsible person, you remember the duty to treat that information with the care and importance that it deserves, and if there’s something sensitive or confidential, it’s kept within house, and not misused for other purposes, whether that be for personal gain or whatnot. And it doesn’t just cover the obvious stuff, financial information, contracts, project management and personnel issues, that sort of thing. It can cover information about a charity’s operations or future direction, or what happened at last Tuesday’s board meeting, and that sort of thing. So make sure you handle information with discretion and respect, be careful, or be aware of the nature of the information, how sensitive it may be, and act appropriately with that information.

Chris:

Duty number five is, it looks at conflicts of interest. Disclosing actual, potential or perceived conflicts of interests. Now, board members need to become skilled at separating their role with the charity from the rest of their everyday life. It’s a bit of a juggling act sometimes, but doing so helps guard against conflicts of interest. There’s always crossovers between different parts of our lives, between personal, professional, work all of that sort of stuff. Anyone who serves as a responsible person for a charity needs to take care that these intertwined parts of their lives don’t improperly impact on the charity they serve.

Now, for charities’ responsible persons, having a conflict of interest doesn’t necessarily need to be a bad thing. The key is how they are managed. As part of their duties, responsible persons should properly address any actual or perceived conflicts of interest. This means that there needs to be clear and open disclosure of any conflict between their duty to act for the charity, and their personal or private interest, as well as making sure they are not part of any discussions or decision making on a matter where there is such a conflict. Responsible persons, board members, they can remove themselves from the room when these discussions take place. That’s a very common way of ensuring that there’s a bit of a separate there, that conflicts of interest are ruled out of the equation. You should also ensure that your charity has a policy on conflicts of interest, and maintains a register of interest. This type of approach should be followed, even if the conflict of interest is perceived or potential, rather than just actual.

A conflict should be disclosed whenever an independent observer could doubt that a responsible person is acting in the best interests of the charity. Now, we’ve talked in webinars back a couple of months ago now, about potential, perceived and actual conflicts of interest. Actual conflicts of interest, as the name suggests, are conflicts which are occurring or have occurred. Potential, those that might occur. And perceived are those that perhaps from the outside, they’re situations that could give the impression that someone might be influenced by a conflicting interest.

For new charity board members, it’s a good idea to find out whether your organisation holds a register of interest document. And that’s a document where board members can publicly disclose their interests to ensure transparency and good governance. Again, the ACNC has a great guide on managing conflicts of interest. There’s the link there. And July was our webinar on managing conflicts of interest, if you want to go back to our website, go to /webinars, have a bit of a look, and you’ll find out a lot more about the topics.

Matt:

It is a tricky one, so it’s worth having a look, or reading through the guide there. Not only is it tricky, it’s something that people overlook, particularly that concept of a perceived conflict of interest, so it’s worth having a look at the July webinar, or having a look at the guidance on the website. And now, onto the next duty, ensuring the financial affairs of the charity are managed responsibly. And of course there’s this important aspect of responsible persons role in a charity. And for new charity board members, the ACNC’s emphasis is clear. You don’t have to be a financial genius to be on a charity board, but you really do need to be aware of the finances, and at least be willing to ask questions about a charity’s finances. So you should have a least a basic grasp of a financial statement.

And if you do pull up your charity’s financial information, you should again have a basic understanding of what’s going on, or at least be able to interpret it in a way that gives you a fairly clear impression of the financial state of your organisation. Of course it’s perfectly reasonable for charity board members to ask questions of their treasurer or financial officer, or whoever’s given that designation at the board level to be responsible for this sort of thing, if they’re not sure about something in the financial information. In fact, that sort of interaction with that person on the board, should be encouraged. There should be a regular avenue of conversation with the other board members, and the treasurer, or whoever it might be, should be able to answer the questions posed to them, and if not, should be able to go away and figure out the answer, find the answer, and bring it back to the board.

So ultimately, a good approach when you’re considering financial matters, is to consider how any decision you make could affect the financial health of the charity. And of course, charities should have processes for managing their money responsibly and protecting themselves against any financial mismanagement or fraud, and that may be sign offs for certain spending, or approval processes and that sort of thing.

Chris:

Seventh duty, and it gets a little bit of a mention here, about charity solvency. Not allowed to operate, not able to allow your charity to operate whilst it’s insolvent. And a key part of any board member’s efforts to ensure proper financial management in their organisation is this duty. Insolvency is when an organisation cannot pay all its debts when they fall due. That’s pretty much the basic, I guess definition of what insolvency is. If a responsible person perhaps reasonably suspects that a charity cannot pay its debts when they become due, then they should take all reasonable steps to prevent a charity from taking on more debt. In addition to this, the charity’s board should regularly review its financial position, and ensure there’s enough money to pay for its activities, and in addition again, as we’ve mentioned before, have that dialogue between yourselves, your financial officers, your treasurers. If in doubt, get the knowledge, ask some questions and seek out the answers that you required.

Matt:

Now, we’ve just gone over the specific duties that charity board members or responsible persons have to the ACNC under the governance standards, but there are a number of other just general good governance tips that new charity board members should take note of, and should consider when they think about how they’re going to approach their position on the charity board. And when we speak about governance, we refer to the actions a charity and its responsible persons take to ensure that it’s effectively run and properly run. That’s what we mean when we say good governance, or governance. Just basically the operations of the charity. Now, we’ve touched on inductions and handovers a little bit at the beginning, but we do really recommend that a new charity board member asks for an induction pack or a welcome pack, or something like that to prepare them for their role on the charity board.

And again, we say the word pack, welcome pack. It doesn’t have to be extensive or expensively produced fliers, magazines or anything like that. In short, it’s information that the board member needs to know to be able to fulfil their duties properly. And just in the way that it would be for any new person going to a new organisation to do anything new, there needs to be some level of instruction given to that person, and a handover, again, pack or set of instructions or some important things to know, is a really crucial thing for the person to be able to do their job properly, I suppose. So this can include copies of the charity’s governing document, annual report, financial reports, other information that allows the person to get access to some important charity information or accounts. It might even have step by step descriptions of important charity processes. How to get approval to spend money, or how to log into certain computer systems to be able to manage the personnel and volunteers, and that sort of thing. From the really simple and practical, up to the more overarching, there should be the information covered for the new person, so that they’re able to complete their role effectively.

And if you’re taking over a specific board role from someone else, that might be you’re now the treasurer, when someone else was before, for example, you should coordinate some sort of handover process, where you can have a good chat to the previous holder of that position, and talk about what the role requires. And even try and get a handle on some of the difficulties or struggles that that person may have had in the previous term, and it might be that you can make some changes and improvements, based on their experiences.

Chris:

Again, we’ve mentioned governing document, governing documents, throughout this webinar. It’s important for responsible persons to be familiar with it. Now, governing document. It’s a formal document. What it does is it sets out the charity’s charitable purpose or purposes. The organisations aims, mission, what you do, who you work with, who you help. It also sets out how the charity operates on a not-for-profit basis, and the way that the charity’s board or committee makes decisions or consults members. New board members, as we said, should seek out this document, and should familiarise yourselves with it. And once you do so, again, make sure you know where it is. Again, don’t just have it stashed away somewhere where you don’t know where it is, in a folder somewhere on a desktop, on your computer or in a filing cabinet somewhere.

Your governing document needs to be, I guess, an active document. We say it should be a living and breathing relevant document, one that’s known. One that’s also regularly updated when required as well. Charities are not standing still, and if they don’t stand still, there might be times where you do need to update your governing document, and if you do, you’ll need to let us know, but please feel free to do so. The ACNC, as we said, needs to be notified of any changes you do make to your governing document. We also need to get a copy of the documents if you’ve made a change. If you do, and if you want more information on governing documents, there’s a lovely little link there. Go have a read, have a look, learn a little bit more.

Matt:

Meetings and agendas are important as well for the responsible person to have a handle of. So they’re a prime example of good governance practice, and ensuring members are kept informed about a charity’s activities. Each charity will organise and run meetings in subtly different ways, and it depends on all sorts of variables. It depends on the work it does, stakeholders, partners, for example. There are even times of the year where meetings may have to be held more often, to ensure certain things are still on track, and that may be if you’re running a particular project or something new, for example. And important feature of a well-run, productive meeting is a good agenda, and your agenda should include the topics to be discussed at the meeting, and the likely time that you expect each of them to take. The responsibility for each of the discussions. It might be that certain people are responsible for certain topics, and need to present to the board, or whoever the broader membership on certain things. And the purpose of the item being discussed. So does a decision need to be made? Or does it just need to be noted? Is it just for information? Is the organisation seeking advice, or is it just for discussion only? Those sorts of things are pretty important, and it keeps the people at the meeting informed, and I suppose engaged, because we’ve all been at meetings where you sit back and you think gees, what’s the point of this? You don’t want that to happen at your charity meeting. You want everyone there to be engaged and paying attention to everything that goes on. So that’s one really good way to make sure that that does happen. So just take the time to prepare a good agenda.

Make sure you invite the right people to attend the meeting. Some meetings will require broader membership, some meetings are just for the board itself. So have a think about what the purpose of the meeting is. And make sure that board members and whoever else is informed well in advance. That might be sending an email with the agenda before the meeting, or however you might do it. But just making sure they’re aware of what’s going to be discussed is a really important step.

Chris:

Now, I’m getting a little bit of déjà vu here, because we’ve found our way back to A.G.M.s again. Now, last month’s webinar that we looked after, discussed in detail this topic. As well as the ins and outs of how to run an A.G.M. Now, a number of charities might have held theirs by now, or they’re probably getting pretty close to staging their A.G.M. They may have already given a formal notice, informed their members, and that sort of stuff. If you haven’t, get onto it. Check out your documents and all of that sort of stuff, to ensure you’re doing the right thing. But generally, A.G.M.s, they are an important good governance tool, good governance practice. It basically sees organisations able to present a report to their members about how the charity is travelling financially, and what it’s been up to over the last 12 months. Charities can use A.G.M.s to make changes to their governing documents, or even their name. They can also have board elections at their A.G.M. This means those responsible persons may change at this time. Those running a charity need to be aware that if they use the A.G.M. to change its legal name, governing documents, all responsible persons again, please let the ACNC know. And that’s all done through the charity portal.

Now, there’s no specific requirement under the ACNC legislation to hold an A.G.M. However, doing so is a good way for your charity to demonstrate that it is accountable to its members and that’s outlined in governance standard two. There’s also no requirement for charities to advise of the date of your A.G.M. or register your upcoming A.G.M. with the ACNC That’s important to note, but there’s a caveat here. You’ll still need to follow any requirements around holding an A.G.M. as set out in your governing documents or as the model rules. And for many organisations, if they are incorporated associations, they will have a state regulator that will perhaps set out those guidelines. How much notice you need to give, and that sort of stuff. So be aware of those. And yes, there might be other commonwealth agencies as well as state and territory agencies that may be responsible, you may have obligations to when it comes to A.G.M., legal structure, those sorts of things. So again, be aware of the requirements, and continue to follow them.

Matt:

We have spoken a fair bit about responsible financial management, so just something worth reiterating. A responsible person needs to make sure the charity has the resources required to be able to do its work, and help protect those resources. Use them efficiently, and of course lawfully. And this may cover things like reserves, keeping some money tucked away. Budgeting, spending, other elements of financial management. And again, this is the point we really want to drive home. It’s really important to have a basic level of financial understanding when looking at these things. It’s no good looking at a financial statement of the charity, just having really no idea what it says to you. It might be worth for your organisation looking into some training maybe, to have your board members up to speed with what they need to look for when they’re analysing a financial statement.

Chris:

You’ve got a responsibility to keep records, and responsible persons need to know what those record keeping obligations are, and who it needs to report to. Now, as you can see up there on the screen, there’s two different types of records that we generally talk about. You’ve got to keep certain financial or written financial and operational records. Now, you can keep records in any format you choose, so long as they’re easy to find. Now, that can obvious be, and is more likely to be an electronic form. You can also develop your own system or process to keep these records as well. You have to keep records for seven years, and you have to keep records in English, or in a form that can be easily translated into English.

Now, your charity doesn’t have to provide records to the ACNC unless asked. But, of course, keeping proper records can help your charity on a number of fronts. It can help it show that it’s continuing to be run as a not-for-profit, and pursuing its charitable purposes, help understand that that your charity is in good financial health, allow responsible people to make good decisions, assess that the right kinds of decisions are being made, communicate your charity’s activities and finances, helps you prepare reports as required. All of those sorts of things, as well as meeting obligations under the ACNC Act, tax responsibilities, other relevant laws. That sort of stuff. Again, we’ve got a pretty good run down of record keeping via the link there at the bottom of the slide.

Matt:

One other thing to bear in mind when you’re acting as a responsible person is the management of internal disputes. Now, most charities and board members will experience some sort of difference of opinion or some kind of dispute at some stage, and internal disputes can be across the board table, amongst the directors, or it might be between volunteers, staff members, others. It can happen throughout the whole range of the organisation. Now of course, we’re not saying that everyone has to get along like best friends. That might not happen. Be great if it did, but it might not happen, that’s reality. But there are a number of things to bear in mind when you’re a responsible person of a charity, to ensure that any disputes don’t derail the work of the organisation, and the functioning of the board and all the staff involved. So remember the charity’s charitable purposes and what is paramount. People can coexist and work together. Maybe not getting along as best they possibly could all the time, but once a dispute starts to affect the charity [coughs] excuse me, as a whole, it puts the charity at risk of breaching the ACNC Act [coughs].

Chris:

I might do some breathing, might do some talking. That’s alright. Having some policies on handling disputes and that sort of stuff are very important. Helps arbitrate, helps resolve disputes and that sort of thing. There are times perhaps where there may be the need for a mediator, as we call them, or an impartial advisor. They don’t have to be, they can be professional, they don’t have to be. They can be just I guess an interested, or unbiased third party, I suppose, who can sit there and listen to both sides of an argument or both sides of a dispute, and is trusted by both parties. Can come up with a bit of a solution. A way forward, I suppose. So that’s another thing to be, I guess, aware of. Last thing to be aware of is that the ACNC does not handle, mediate, sorry, internal disputes. That’s something that we don’t do. So be aware of that. Again, we have a guide on dealing with internal disputes, and what we’ll do is we’ll include a link to that in the follow up email that we’ll send out to everyone after this webinar is done.

We’ve mentioned also the responsibilities that your organisation, you charity, might have to other regulators. Now while the ACNC is the national charity regulator here in Australia, there are a number of others, state, territory, commonwealth level regulators that your charity may have obligations to. Here on the screen, as you can see, there’s some examples of some of the organisations that you may have responsibilities to. Everyone from the A.T.O. and ASIC or ORIC, to state and territory bodies that look after fund raising and incorporation, that sort of thing. Again, we’ve got a good run down on our site. That’s on our other regulators page, and the link is there at the bottom of the slide. Be aware of them, it’s always handy to know who you’ve actually got to answer to, and who you’ve got to be responsible to.

Matt:

I’ll have another go. I think my throat is allowing me to talk now. Let’s have a look at some key points to remember throughout today’s webinar before we go into some questions that have come through. Number one, know your role. So new board members should be clear on the role, and what they have to do. It’s a good idea to provide a position or role description for people who come onto a board, and we’ve mentioned that induction pack. So have some sort of information that that person can have a look at, and understand what’s required of them in taking on their new role on the board.

Chris:

Responsible persons should be aware of their obligations to the ACNC The governance standards, ongoing obligations, and they should also be obviously aware of their responsibilities to the ACNC as a responsible person as well. Know where your governing document is, know what it says. Familiarise yourselves with it, and ensure, play your role in ensuring that the document is a relevant one, and isn’t gathering dust in a corner somewhere.

Matt:

Meetings are really important, so board members should always be prepared for meetings, and this includes familiarising themselves with the agendas and in advance, and being prepared to ask questions and answer questions too, particularly of the membership that might be there. Financial management, don’t underestimate the importance of this as a board member. It shouldn’t be lumped all on say the treasurer or the financial officer, or whatever staff you’ve got looking after, the board really needs to know what’s happening with the charity’s finances.

Chris:

You have to keep records. They’ve got to be adequate. They cover finances, they also cover operational records, as we explained just before. And as a responsible person, board members, they do have a crucial role in this. And finally, ensure that you’re doing the right thing in your responsibilities to other regulators. State, federal, territory, that sort of stuff. Be aware of who you need to be responsible to. It goes beyond the ACNC.

So, now that we’ve run through all of those bits and pieces, we’ve got a couple of questions. And there’s one that’s come through about the term, someone said to us that they’ve heard the term, or know of the term, delegation, or delegating duties. Matt, did you want to provide a little bit of information about what we mean, or what it is meant, when we say that someone has delegated their duties, or responsibilities?

Matt:

Yeah, sure. Some responsibilities of a board can be delegated, which sort of means handed over, formally handed over to other people to complete. So this means that certain tasks that would ordinarily be the domain of the board or certain board members, can just be carried out by other individuals, and this is perhaps maybe for larger organisations, someone like a CEO or for smaller organisations, even a volunteer. Maybe head volunteer or a staff member, or certain subcommittees. So there are a range of ways that this can happen. It’s important to remember though that any delegation will depend on your charity’s rules. So whatever is stipulated in its governing document. And also any legislation that might apply to your charity. It may be that certain things are only allowed via a board decision or formal resolution, that sort of thing. It might be that you can’t delegate everything to someone else as a board. It’s worth checking your organisation’s rules and any legislation that applies. And remember, even if you do delegate some things, the board itself still bears the ultimate responsibility for any decisions that are made. So while it can delegate some of the duties, it can’t hand over its responsibility. They can’t tell the CEO that they want the CEO to do a certain task, and then wash their hands of the results of that task, if they don’t go the way that they wanted it to. So the board does bear ultimate responsibility, even on tasks that have been delegated to others.

So if you do delegate, it’s important to have that delegation in writing, particularly if you’re delegating particular powers that the board would ordinarily have. If you’re handing over certain powers to individuals or other groups, then it’s worth having that in writing, so that everyone can see exactly what that means, and what they’re allowed to do.

Chris:

And delegations aren’t something to be done lightly either.

Matt:

No, that’s right.

Chris:

They’re things that you should perhaps think about, and it’s probably something that’s well worth discussing at a meeting, at a board meeting to have a chat about it. Have we got time for one more?

Matt:

Yeah, probably got time for one more. What have we got? Someone’s asked about the idea behind a committee or a subcommittee. So they have a committee. They have board. They also have a committee and a subcommittee. Now quite sure what the purposes of these are, and if they mean anything different.

Chris:

It’s sort of a little bit of a flow on here from the idea of delegation, in a way. Committees are things that boards can set up, because there might be difficulties, might be a challenge to get all board members to meet. There might be other times, and this is something that’s pretty common actually. Committees can be set up to help the board. Draw in the expertise or the knowledge of people who aren’t on the board, but who have relevant knowledge on certain matters. These can be called subcommittees. They’re sometimes called standing committees. I’ve even heard them called ad hoc committees, which is always interesting. An example of one of these might be, a board might get a finance committee or appoint a finance committee.

It includes maybe an independent person with some accounting experience, and that would help ensure that the charity’s financial position is examined closely and regularly, and maybe done so more often than what the board may be able to do in its more normal duties. In this way, the committee would be able to help provide the board with better information, and that leads to better decisions. Although of course the board maintains overall responsibility on things like this.

Committees can make recommendations to the board, but generally don’t make decisions that bind the charity on their own behalf. Generally recommendations go to the board. The board then discusses them, debates them, and makes the decision based on that recommendation. Now, your charity again might have a governing document, or information in the governing document about how you can establish committees, what they can be used for, who can be a members.

Make sure you check your rules before establishing a committee. And look, if you want to establish a committee and your governing documents don’t explicitly say one way or the other about what you can and can’t do, maybe again it’s time to have a bit of a think about changing those governing documents, updating them and bringing them into the modern era, by making them relevant and having them cover things like committees and that sort of stuff. Board members should, I guess, help their charities stay focused on their objectives, and manage their finances effectively and comply with the operational and the legal, and the ethical requirements of the charity.

Matt:

Just before we finish, someone’s just asked, we mentioned financial, knowing what financial, knowing what your financials are as a board member. There are just a few organisations that help with this sort of thing. So if you were looking for some resources to help you understand charity finances or simple things such as interpreting a financial statement and that sort of thing, you can have a look at some CPA or the CAANZ or Accounting for Good website. We’ve got a few links on our website at acnc.gov.au/reporting, which has information that we’ve got to help you out, but also some links to external resources as well that may help. And we will include a link to that page on the follow up email that comes out after this webinar. So it really is worth taking the time to have a look at what’s available. Some may be paid training, some might be done for free, and there might be some online courses that you can take, but it’s worth taking the time to familiarise yourself with the layout, and the information that’s generally contained in a financial statement, so that you do know what you’re looking at, and you’re able to make some informed decisions as a charity board member. And that applies to tiny organisations as well as larger ones.

Chris:

And a bit of, just a bit of a shout out to NSCALA, which we have links to on our site, the National Standard Chartered Accounts. Go have a look. It’s on our website, /nscoa, I hope I’ve got that right. Have a look at, that’s a very good I guess little basic rundown of a number of financial terms and other bits and pieces. Standards and all of that sort of stuff. Again, well worth a look, and NSCALA is particularly focused upon the charitable sector as well, so it’s very relevant there.

Now, we’ve got some ways to stay in touch. There’s the normal ways of staying in touch, Facebook, Twitter, YouTube, all that sort of stuff. We’ve just about reached the end of things. So we might wander off and allow people to have lunch, or brunch, or whatever they want to have. We will hang around perhaps just a touch for any last minute questions that have come through. Thank you to Michael and to Heath for looking after those. Again, if we don’t get around to answering those questions, drop us an email, that’s via education@acnc.gov.au and drop us an email, and we’ll endeavour to get an answer back to you.

Now, we’ve got a survey that we’ll flick up after we’re done here, so we would really appreciate it if you take the time to complete it. It’s only, I think, three questions, so it’s a couple of minutes. And if you’ve got any extra comments, or any questions about the webinar, again, education@acnc.gov.au. Thanks to Heath, thanks to Michael, thanks to Matt, and we will wander off. Thank you very much for joining us today. See you later.

Matt:

Thank you, bye.

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