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Governance refers to the practices and procedures put in place to ensure that a charity is run correctly. Good governance enables the day-to-day work of a charity to align with its purpose, and includes issues such as management requirements, governing instruments, internal controls, conflicts of interest and dispute resolution.
If the authorised fundraiser is an organisation, then in relation to its fundraising activities, it must ensure that:
The following requirements must be adhered to if the authorised fundraiser has individuals acting as trustees for a trust in relation to its fundraising activities:
A governing instrument is a formal document that contains information about the objectives of an organisation and helps ensure that fundraising appeals are conducted in accordance with the organisation’s charitable purpose. If the governing instrument is not clearly defined and aligned, it can affect an organisation’s application for an authority to fundraise.
Governing instruments of organisations may vary depending on whether the organisation is an incorporated association, unincorporated association, company limited by guarantee, or co-operative.
There are four main types of governing instruments:
It is important that the constitution fits with the objectives of the organisation. If the governing instrument is not clearly defined and aligned, it might affect the organisation’s application for an authority. Fair Trading recommends that organisations seek professional assistance in preparing governing instrument documents.
An association incorporated under the Associations Incorporation Act is required to have a constitution, being a set of rules governing the affairs of the association, which must address matters referred to in Schedule 1 of the Associations Incorporation Act. Incorporated associations can adopt the Model Constitution developed by NSW Fair Trading to cover all matters outlined in Schedule 1 of the Association Incorporation Act, or create their own so long as it complies with the requirements of that Act.
A company limited by guarantee registered under the Corporations Act will have either a single constitution (for newer organisations) or two separate documents: a 'memorandum of association' and 'articles of association' (for older organisations that have not updated their constitution).
A co-operative registered under the Co-operatives (Adoption of National Law) Act 2012 (NSW) must have a set of 'rules' that make up its constitution. Usually the aims or purposes of a co-operative are expressed by specifying its ‘primary activity’ in its rules. The rules may also include objects.
Charitable trusts can be set up to support a variety of charitable purposes and are governed by the deed that establishes the trust. Generally a trust is set up to hold funds and distribute those funds in line with the rules found in the trust deed.
An authorised fundraiser, in relation to its fundraising activities, must maintain an effective internal control structure over its fundraising activities. These include accountability for the gross income and all articles obtained from any appeal and expenditure incurred.
Under section 48 of the Act, Ministerial approval is required for a person to serve on a governing body if in receipt of remuneration or other benefit from the organisation.
An application for approval must be made in writing and sent to NSW Fair Trading prior to the appointment of a board member if the appointment is to include remuneration.
Details of the amount of remuneration of benefit is only required to be disclosed if it is received as a direct result of holding office as a member of the governing body of the authorised fundraiser. For example, the remuneration or benefit is received by payment of a director’s fee, salary or allowance, or by the provision of free accommodation, a car, etc.
Ministerial approval is not required if the board member serves on the board by virtue of being a minister of religion or a member of a religious order.
Appropriate insurance must be maintained by an authority holder for any appeal that involves children as participants. This insurance must protect both the child and the interests of the child against any claim which could be brought against the child for property damage, public liability or other such risks.
Other insurance may be required under other legislation, for example public and products liability insurance, workers compensation insurance, protection and association liability, volunteer personal accident insurance for volunteers and third party property insurance on motor vehicles. This requirement will depend on the organisational structure and how the charity operates.
Further to this, authority holders engaging with traders should include details of the insurance risks to be covered by each party in the written agreement between the authority holder and trader.
The authorised fundraiser must provide a mechanism that will properly and effectively deal with complaints made by members of the public and grievances from employees in relation to its fundraising activities.
If the authorised fundraiser is an organisation, its governing instrument must establish a mechanism for resolving internal disputes within the membership of the organisation in relation to its fundraising activities.
An authority holder should have mechanisms for dealing with any conflicts of interest that may occur involving a member of the governing body, office-holder, volunteers or employee of the authorised fundraiser, in relation to its fundraising activities.
Steps should be implemented to manage potential conflicts of interests, such as:
If the appointment, conditions of service, remuneration or the supply of goods or services by, a member of the governing body (or the member’s immediate family) is being considered at a meeting:
To find out more about managing conflicts of interest policies visit under ‘Managing conflicts of interest guide’ at www.acnc.gov.au.
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