Last updated 14 June 2022

Australian law imposes certain obligations on the responsible entities for registered charities.

Responsible entities will generally be the persons who have ultimate decision-making responsibility for the charity. The ACNC refers to them as Responsible Persons:

A Responsible Person is someone who is responsible for governing a charity. Generally, a charity’s Responsible Persons are its board or committee members, or trustees (including insolvency trustees or administrators).

Responsible Persons are required to ensure the charity complies with the law, including the ACNC’s Governance Standards and External Conduct Standards.

Under Governance Standard 5, Responsible Persons must act with reasonable care and diligence. This Standard also requires that Responsible Persons must:

  • act honestly and fairly in the best interests of the charity and for its charitable purposes
  • not misuse their position or information they gain as a Responsible Person
  • disclose actual or potential conflicts of interest
  • ensure that the financial affairs of the charity are managed responsibly, and
  • not allow the charity to operate while it is insolvent.

A key challenge for small charities is ensuring that Responsible Persons and their fellow directors are acting with reasonable care and diligence.

The challenge can feel overwhelming for volunteer directors of a small charity with ultimate responsibility for:

  • running the charity,
  • managing its finances,
  • managing its operations,
  • managing staff and volunteers,
  • overseeing the charity’s operations and ensuring it works towards achieving its charitable purposes.

Getting good processes in place to manage the Board’s decision-making is critical.

In previous insights we have emphasised the importance for the charity Board to develop a business plan, a risk management strategy and plan and a compliance plan.

This article focuses on the practicalities for directors/officeholders who are required to demonstrate they meet this obligation on an ongoing basis. In particular, we consider the importance for demonstrating good Board process with the use of:

  1. a timetable or workplan and meeting cycle for the Board;
  2. a meeting agenda and minutes template; and
  3. a Board paper template

Integrating the use of these tools with a charity’s policies and registers provides a valuable audit stream to demonstrate the Board is on top of its compliance obligations.

The Board’s timetable and workplan

A charity Board can be expected to meet on average between 4 – 6 times a year. It is important for the Board to have a workplan that addresses what needs to be covered at those meetings and their timing. The workplan should reflect the annual cycle of strategic planning, budgeting, financial and operational reporting, membership renewal (in the case of member-based organisations) and the Annual General Meeting (AGM). 

For example:

  • the requirement for public companies limited by guarantee to hold the AGM within 5 months of its financial statements being due
  • notice needs to be given for Special Resolutions etc.
  • an induction meeting for new directors that have been elected after an AGM
  • having a strategic planning session with the Board in the early part of the year
  • the budget for the next financial year should be approved by the Board prior to the end of the current financial year. This budget needs to be established with confidence in the predicted position at the close of the current financial year – based on the financial accounts and projections.

Board meeting templates

By including the items that the Board must regularly consider in a Board meeting Agenda template, the directors can ensure that nothing gets missed and it keeps track of all the important things. 

For example:

  • Welcome and apologies
  • Approval of the minutes of the previous meeting
  • Action items from previous meetings
  • Declarations of interest – allowing for directors to update the declarations of interest register, in accordance with the Conflicts of Interests Policy
  • The financial report – detailing progress tracking of revenue and expenditure against the annual budget, updated revenue and expenditure projections
  • Projects report – providing operational reporting on for instance, fund raising campaigns and distribution projects.
  • The risk management report – providing an opportunity to review the key risks and the strategies in place to manage them, as well as updating the risk management tables if necessary
  • General business

Board paper templates

If the Board adopts a policy that requires every significant project or item of expenditure to have a Board paper – and insists that the paper follows a template – the Board will have assurance that the important things are before them when they make a big decision.

For example, if the template requires the paper to include information on the benefits, costs, and risks of each new charitable distribution project – then the Board is more likely to have the right information before it on issues such as:

  • How does the project address the charitable purposes of the organisation?
  • How will the organisation manage the risks associated with third-party partners required for the project?
  • What resources (human, financial, physical) are required?
  • Is the proposed expenditure within the annual budget or would additional funds need to be raised?
  • Does the proposed expenditure fall within staff delegations or is additional approval required by the directors?
  • What are the project milestones and measures of success? What reporting will be provided to the Board?

Do you want to improve your charity board’s decision-making tools and governance?

We can help you with:

  • Advice on your board timetable and workplan
  • Board Agenda and Minutes template design
  • Board paper template design
  • Policies
  • Registers

Please get in touch with Birchgrove Legal NFP Team today on (02) 9055 8348 for a confidential discussion.

Birchgrove Legal is a boutique Sydney law firm that specialises in the not-for-profit sector. Its market-leading practice is at the cutting edge of innovative approaches to serving NFP sector organisations across the spectrum of entity types. Get in touch with one of our authors to discuss your needs further.

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