Governance for good: A guide for Responsible People

All charities need to have a governing document, which sets out a charity’s powers, objects and processes. It may also be known as a charity’s rules, constitution or trust deed.

Your charity’s governing document contains the rules the define how your charity should be governed.

Your charity’s governing rules might be kept in more than one document. For example, your charity might have both a constitution that sets out how it will be run, and a mission statement that sets out its purpose.

When you apply to register your organisation as a charity, the ACNC looks at your governing document to see if it meets the eligibility criteria for charity registration.

Your charity's governing document should set out:

• its not-for-profit character
• that is has charitable purposes for the public benefit
• information about Responsible People, including:
  • their powers
  • how they are appointed
  • the number of Responsible People the charity should have
  • information about any specific roles (such as chair or treasurer) that need to be filled
• how to become a member, as well as the rights and obligations of members
• how meetings are called and held
• how authority is delegated to the Responsible People, staff or volunteers
• the process for winding up the charity.

There may be certain requirements for your governing document based on its regulators and legal structure.

When you are preparing your organisation’s governing document, you may need to seek professional advice, and you may be able to use a governing document template or model rules as a starting point.

It is important that your charity’s governing document accurately reflects how it operates. If the governing document isn’t followed, the charity will not be able to rely on it when there is uncertainty, which is when you need them most.

Your governing document will be publicly available on the Charity Register.

If your charity changes its governing document, you must notify the ACNC. You may also be required to notify other regulators.

Registered charities have governance obligations to the ACNC that they must meet.

All charities (except for Basic Religious Charities) need to comply with the ACNC Governance Standards. The Governance Standards are a set of six core, minimum standards that deal with how a charity is run.

The Governance Standards are:

Charities that operate overseas are also required to comply with the ACNC External Conduct Standards, which govern how a charity must manage its activities and resources outside of Australia.

Operating overseas is not limited to major programs or projects. A charity is generally considered to operate outside Australia even if its overseas activities are just a minor part of its work or if it only sends a small amount of money overseas. This is true even when such activities are conducted through a third party.

The External Conduct Standards are:

Responsible People will often delegate work to staff and volunteers, although there are some tasks that are usually reserved for them, including:

• appointing most senior staff members (for example, the chief executive officer)
• developing (or approving) a strategic plan
• managing organisational risks
• calling meetings of members.

Because Responsible People are in change of governing their charity, they are generally in change of:

• accountability – ensuring the charity meets its obligations, manages its finances and operates transparently
• strategy – setting the charity’s long-term goals and ensuring it pursues its charitable purposes
• resourcing – securing funding and other resources to support the work of the charity
• advocacy – representing the charity to the community and to its members and stakeholders
• monitoring – ensuring the charity is run in line with its governing document and any relevant laws.

It is important to remember that all charities are different – the roles of Responsible People may vary based on the charity's size, the type of work it undertakes, and its structure.

However, it is important that charities have clearly defined roles and responsibilities for Responsible People, as well as staff.

It is also recommended that your charity has bylaws and other policies to ensure that term limits for Responsible People are established and respected.

Under Governance Standard 5, charities must take reasonable steps to ensure their Responsible People are complying with their duties to:

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

See our guidance about duties of Responsible People for more details.

You need to check your charity’s governing document to see who is eligible to be a Responsible Person for your charity.

If the ACNC has suspended or removed a Responsible Person, we can also disqualify them from being eligible to be on the governing body of any other registered charity.

You can check our disqualified person register to see the names of people disqualified by the ACNC.

You will also need to check any legislation or rules from other regulators that may apply to your charity. For example, you cannot be a board member of a charity that is a company registered with the Australian Securities and Investments Commission (ASIC) if ASIC has disqualified you from directing companies.

See our factsheet on choosing new Responsible People for tips if your charity is looking to appoint a new Responsible Person.

Although Responsible People act as a group, some may have specific roles with additional responsibilities.

For example, most charities will appoint a chair or president, who will be responsible for running meetings and may act as the charity’s spokesperson.

Your charity may also have a treasurer, who is responsible for looking at the charity’s finances in more detail and to help provide them with information they need to make financial decisions.

Your charity’s governing document may outline specific roles that your charity must have, including their responsibilities and the appointment process.

Generally speaking, Responsible People should ensure that the charity’s board or committee is diverse and made up of people who understand their duties, and also understand that their fiduciary duty of loyalty is to the organisation as a whole.

Your charity’s Responsible People will hold regular meetings (often called board or committee meetings) to discuss the charity’s operations, review its financial position, plan for future projects, and make other decisions about governing the charity.

There may be specific rules in your governing document about the procedures that your Responsible People need to follow at a board meeting, as well as how often such meetings must be held and who can attend.

In some cases, people other than Responsible People may attend a board meeting, such as senior staff (the CEO, for example). Your charity may also have a secretary, whose role includes keeping a written record of the decisions in the minutes.

Other staff, volunteers, consultants or your charity’s auditor may attend board meetings if they are invited – perhaps to discuss a particular issue.

It’s important to remember that just because someone attends a board meeting, it doesn’t mean they are able to vote and make decisions. You will need to follow the rules in your charity’s governing document about decision-making.

Responsible People should also ensure their charity has appropriate checks and balances in place when it comes to decision-making and that decisions are arrived at through appropriate processes.

Your charity may also have sub-committees with a certain focus (such as overseeing charity finances) or to oversee a particular project.

These committees or sub-committees may make recommendations to the board, but they generally do not make decisions for the charity on their own behalf.

Your charity may have rules about how to establish committees and sub-committees, what they can be used for and who can be a member. Ensure you check your governing document before establishing one.

Can Responsible People resign?

Yes, Responsible People can resign at any time.

If you are thinking about resigning from your role as a Responsible Person, you should check your charity’s governing document to find out if there are any steps you need to take, such as notifying the chair or secretary in writing.

Your charity must notify the ACNC of any changes to Responsible People. You may also be required to notify other regulators.

If you are thinking about stepping down from your position as a Responsible Person, consider the impact your resignation will have on the charity. If possible, try to give a notice period.

If you are also employed by your charity, you need to check the terms in your employment contract to see if there will be an impact of you stepping down as a Responsible Person.

Can Responsible People be paid?

Most Responsible People are unpaid. They volunteer their time, experience and expertise to their charity without taking payment for their service.

In some charities however Responsible People are remunerated for their work. A charity may choose to do this for several reasons.

Whether to pay Responsible People or not is an important consideration for charities, and one that depends on the unique circumstances of each charity.

You should check your charity’s governing document to see if you have specific rules about paying Responsible People.

For more information, see our guide on remunerating charity Responsible People.

Can Responsible People be personally liable?

In most cases, if you are complying with your legal duties, you will not be personally liable as a Responsible Person.

However, this can change depending on the type of charity you are a Responsible Person for, or the particular action being taken. For example, Responsible People may be personally liable for criminal or serious misconduct, or legal action taken against an unincorporated charity.

Under the Australian Charities and Not-for-profits Commission Act 2012 (Cth) (the ACNC Act), Responsible People of registered incorporated charities may be personally liable for deliberate actions or omissions that breach the Act if they have acted dishonestly, with gross negligence, or are reckless.

The ACNC Act treats the Responsible People of different types of charities in different ways.

For registered unincorporated associations, the obligations and liabilities are on each individual who is a director at the time.

For trusts, the obligations and liabilities are imposed on the trustees. If the trustee is a body corporate (an incorporated organisation) then the obligation and liabilities are imposed on the individuals who were the directors of the company at the time.

Can Responsible People be employees of their charity?

Yes, as long as your charity’s rules and governing document do not prohibit it.

However, be aware that this situation can give rise to conflicts of interest that must be managed correctly.

For more information, see our guide on managing conflicts of interest.

How long does a Responsible Person's term last?

The terms of appointment for Responsible People vary between charities, and will generally be set out in a charity’s governing document.

Can a Responsible Person tell a staff or volunteer member what to do?

No. If your charity has staff or volunteers, individual Responsible People cannot direct their work unless they have been given authority to do so.

Generally, Responsible People can only direct the charity’s CEO as a collective, but individual Responsible People may also be authorised to do so.

Can a member tell a Responsible Person what to do?

In most cases, no. Responsible People are independent and usually cannot be directed by any general charity member.

Can Responsible People delegate their responsibilities?

Some responsibilities of Responsible People may be delegated to others, although this depends on a charity’s rules and any legislation that applies to the charity.

Remember, even if some responsibilities can be delegated, the Responsible People still bears ultimate legal responsibility for any decisions.

In charities with paid staff, most Responsible People will delegate responsibilities to a CEO. In others, the delegation can be to a particular volunteer or sub-committee of volunteers.

Whatever the case, it is important to set out in writing what the delegation is, especially if powers of the Responsible People are being delegated.

Can a Responsible Person be removed?

A charity may have rules that set out if a Responsible Person can be removed before the end of their term of appointment, and how that may be done. Some rules allow for a Responsible Person to be removed by a majority vote at a meeting of the members.

A charity’s governing document will often set out certain situations where a Responsible Person automatically stops being a Responsible Person. For example, if they fail to attend a certain number of meetings throughout the year, or if they become bankrupt.

The ACNC Act also gives the ACNC the power to suspend or remove Responsible People of a registered charity in certain serious and specific situations, and also to appoint an ‘acting responsible entity’ to act in the place of the removed Responsible People.

We will generally only take this step in very exceptional circumstances.

What happens if Responsible People cannot agree on charity decisions?

Your charity’s governing document should outline the decision-making process that must be followed.

There may be situations where the Responsible People cannot agree on how the charity should be run, and this may result in an internal dispute.

See our guidance about internal disputes for more information, including tips on how to manage a dispute.