Last updated 30 September 2025
Not-for-profit organisations often struggle to decide who should sit on their boards, raising issues of values, governance, representation, and law. This article explains when a not-for-profit can lawfully limit board membership by sex, race or other protected attributes, and sets out practical steps for not-for-profit boards to manage legal risk while continuing with their mission.
Not-for-profit Exemptions Under New South Wales Law
The Anti-Discrimination Act 1977 (NSW) permits not-for-profits, in limited cases, to rely on exemptions when recruiting members. Voluntary bodies and many non-profits may access tailored rules, but exemptions are narrow, exclude registered clubs, and require written explanation. For guidance on applying for or relying on state exemptions, boards should consult the Anti‑Discrimination Board NSW and consider whether the organisation’s constitution or membership rules have the effect of limiting board eligibility.
How Does National Statutes Affect NFP Boards?
Federal anti‑discrimination laws operate alongside state regimes and sometimes differently. The Sex Discrimination Act 1984 (Cth) contains limited exemptions (including temporary exemptions the Australian Human Rights Commission may grant). Meanwhile, the Racial Discrimination Act 1975 (Cth) has a generally broader prohibition on racial discrimination. It also does not provide a blanket voluntary‑body exemption. If a not-for-profit operates nationally, receives federal funding, or deals with federal agencies, trustees should seek specialist legal advice. The Australian Human Rights Commission provides guidance on religious and other exemptions that can be relevant to not-for-profit bodies.
Practical Steps For Not-For-Profit Boards to Manage Risk and Promote Diversity
To reduce legal and reputational risk while supporting a diverse and effective board, not-for-profit organisations should adopt a proactive compliance and governance approach:
- Review the constitution and membership rules. If board membership is tied to general membership, any restrictions on membership will often determine who can be appointed to the board. For practical governance guidance see the ACNC’s Governance for Good guide.
- Check eligibility for statutory exemptions. Determine whether the not-for-profit qualifies as a volunteer or religious body, or another exempt category, and document reasons in writing.
The Anti‑Discrimination Board NSW explains exemptions and certifications in detail. - Adopt objective, competency-based selection criteria. Focus on skills and the duties of directors rather than protected attributes; this both reduces legal risk and improves board effectiveness. The ACNC factsheet for responsible people provides useful prompts on director duties and selection.
- Document special measures and timeframes. If adopting measures to address under-representation, the not-for-profit should set clear goals, review periods, and keep written justification records.
- Seek independent legal and governance advice. Because state exemptions and federal obligations interact in complex ways for not-for-profit entities, external advice will often prevent disputes and ensure decisions align with your organisation’s charitable purpose.
Get Tailored Governance Advice from Birchgrove Legal
A not-for-profit may restrict board appointments in limited cases, but rules differ under NSW and federal law. If your not-for-profit is considering membership or board eligibility rules, or you want a governance health‑check to ensure compliance while meeting your community objectives, Birchgrove Legal can help.
Contact Birchgrove Legal for a tailored review of your constitution, policies and board appointment processes—we help not-for-profit organisations meet their legal obligations while achieving their mission.
