When running a registered charity, it is crucial to ensure that you are aware of your reporting obligations to the Australian Charities and Not-for-profits Commission (ACNC). As a Board Member, your charity will also have governing documents in place that set out the board’s role and obligations in more detail. The consequences of not meeting your financial and operational record-keeping and reporting obligations can be severe. This article will explain the various charity reporting and board member obligations.
Financial Records and Operation Records
Do you have these readily available and up to date? For example, is it obvious where payments and transactions have come from? Do they follow standard accounting policies? Are the records secure?
Do you have a system in place that defines record-keeping? For example, are particular software, naming conventions and other documents accessible to those who require access? Has this been discussed and passed on to your staff members?
Another way to ensure that records are properly kept is to provide up-to-date financial reports to your charity’s Board at regular intervals as required.
Security and Personal Information
You should be sure you understand how the personal details of donors, people on your mailing list and others are stored, that you comply with the Privacy Principles and that you have a privacy policy in place.
Regarding technical systems, you should be sure that your reports are secure and password protected. For example, do you have backup systems so that records are kept in more than one place?
Continue reading this article below the formRecord Storage
Records are typically stored for seven years. You should ensure they are correctly labelled, kept for the appropriate period, and destroyed when required.
Financial controls
As a charity board member, it is important to understand your charity’s financial issues. This includes understanding fundraising compliance and what your charity can and can’t do.
Financial controls are also useful ways to oversee money spending and its use in an organisation. For example, the Shane Warne Foundation provided a good example of an organisation without strong financial controls over where donations originated. Financial controls also reduce the risk that funds can go missing or be misused.
Standards and Information Obligations to the ACNC
Board Members should also be up to date with the requirements of a registered charity. For example, ensure that the work the charity is undertaking is for charitable purposes. Registered charities must also keep the ACNC updated on any changes and ensure that the charity meets the relevant governance standards.
You should also understand and be aware of your charity’s reporting obligations, including the type of charity and its particular reporting obligations to the ACNC. You should ensure that you have accounting practices in place so that annual reports are correctly submitted. Moreover, if your charity is required to be audited, you will have the necessary practices to handle the audit.
Other reporting requirements include maintaining specific records, including those of ASIC, ATO, and other regulatory bodies in your state or territory. You should ensure that policies are in place for each relevant organisation to ensure compliance.
What if my Charity Does Not Have a Board?
As an unincorporated association, there are still many measures your not-for-profit can implement to ensure that you have appropriate financial reporting and keep correct and up-to-date records. In this case, committee members have an oversight role in ensuring the charity is properly run. A set of rules can also ensure the proper governance of the non-profit and that the charity meets its obligations as required.
This Board Reporting Toolkit can help you meet your compliance needs, by explaining your obligations as a director and providing you with a series of tools and templates to ensure you can correctly undertake your key obligations.
Key Takeaway
Although directors’ duties and liabilities in each type of formal legal structure are generally similar in nature, for-profit and not-for-profit groups and the boards that serve them are not the same. They operate under different pressures and have different purposes. As such, you should understand the many different phases in this process, such as:
- analysing financial and operation records;
- reviewing security and personal information;
- organising record storage;
- managing financial control;
- maintaining standards and information obligations to the ACNC; and
- understanding what to do if your charity does not have a board.
If you are unsure whether your registered charity is meeting its obligations, our experienced charity lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
The Australian Institute of Community Directors is a great place to start for charities looking for or seeking to build a board. This is especially useful if the charity is looking for independent members.
The Institute of Company Directors provides useful information to directors. This includes not-for-profit board members, on their obligations and the obligations of charities under the ACNC. The ACNC’s website is another avenue for seeking additional advice.
For-profits make money, and not-for-profit organisations do not. Not-for-profit organisations may also generate profits—i.e., make more money than they spend. The difference between for-profit and not-for-profit organisations is how profits are handled. Not-for-profit organisations may not distribute surpluses to members – profits must be held and/or invested back into the organisation.
Another key difference concerns taxation. Most not-for-profit organisations receive tax breaks in some form. The sort of tax break will depend on the type of organisation and its function.
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