A charity may be established using any one of a number of different legal structures. The structure used depends on things like the purpose, activity, membership, governance required. There are a number of elements required for an organisation to be charitable and to be eligible for registration as a charity under commonwealth and state laws to attract relevant tax and other concessions.
Many charities have existed for some time and have grown from a small organisation with a few generous individuals helping a needy few to a large commercial operation with staff providing services grappling with the need to remain sustainable whilst pursuing the altruistic purpose.
Some charities have not recently reviewed the law affecting charities and that this might mean they need to review their purpose, activity, governance or governance documents.
Some charities are unaware of the criteria around what is a private benefit which is inappropriate.
Some charities have members who are not interested in their operation or governance. These members may have joined to use the service or to support its cause but are no longer interested in participating. Some struggle to get a quorum at an AGM and struggle for board members.
Some charities do not have the best corporate governance practices despite the fact that they are operating in more sophisticated, commercial and complicated environment.
Issues which might arise include:
- If your organisation is an incorporated association which trades interstate or has a disengaged membership – is the association structure the optimum structure for your organisation?
- Is your organisation a Letters Patent with a very old governance document with confusion amongst the governance team about roles and responsibilities
- Is your board as effective as it could be – does it have rules which require the directors to self-evaluate and for there to be a healthy turnover after fixed terms and independence in the process of recruitment and selection, is there regular training and induction process?
- Has your organisation expanded its services to include activity which is not charitable – is it at risk of non – compliance with the ACNC’s requirements?
- Does the board need some assistance to resolve issues created by the tensions or dynamics of human relationships
- How long is it since you reviewed the organisation’s constitution or rules and other governance documents to ensure they are relevant, up to date and comply with the law?
- Is there confusion about the difference between the role of the Chair and the Chief Executive
- Could conflicts of interest be managed better having regard to the fiduciary duties of board members or management committee members
- How long is it since the board updated on the law relating to charities including fiduciary duties, competition and consumer law, fund-raising
- Do your board members know when they may be personally liable for decisions
- Is there an understanding of what can be delegated and who is responsible for delegated decisions
- Is there a risk that the not-for-profit rules have been breached and that certain people are receiving an inappropriate private benefit
Lesleigh has extensive knowledge and experience working with charities to facilitate the identification of issues and to help the organisation develop strategies, relationships, frameworks, processes and documents to resolve those issues.
