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NZARC Blog

The New Zealand Association Resource Centre Trust (NZARC) blog is a place for board members, partner organisations, and subscribers to contribute articles and discuss issues of relevance to the non-profit sector. Contributions are welcome and encouraged.

Charities need Trustees

Friday, April 27, 2012
Did you know there are still charities out there struggling to find good Trustees? We talk with charities regularly and although we are not surprised that many of them are struggling to find any trustees to supplement their Boards, we are still disappointed to find that they are struggling to get existing Trustees to keep up the energy to drive the Charity or Association forward. 

And, to provide a New Zealand context, the Charities Commission Forums in 2011 identified “Finding suitably qualified people to take up places on the board.” as a key issue for some non-profits within the next 12 months. 

This makes it even more critical for charities and associations to find a way to ensure that their governance of the organization fits with the organizations strategy for its future. Bice Awan from Skylight Trust will be exploring this issue in her workshop at the Human Resources Conference June 19. She will be exploring how to develop a governance model that fits your organization. How can you attract Board Members – allowing them to self-select how to balance their ability to give back (in the form of being a Trustee) in a way that fits their need to also continue with a busy life of work, family and leisure pursuits. 


As a charity or association changes over a period of years, it is critical that existing Trustees provide a good platform for stability, with new Trustees bringing in fresh ideas and new ways of doing things. As our charities and associations are faced with issues ranging from finding new ways of funding to retaining volunteers and raising their profile with their key stakeholders, the role of a Trustee is becoming more critical. In a March 2012 report from Philanthropy Capital in the UK, they observe that “there is a demand for charities’ services rising: over half (54%) of charities surveyed in 2011 had seen increased need for their services in the current environment. 

At the same time, funding is being squeezed. Statutory funding for charities is being cut by local authorities and other public bodies looking to make savings. Voluntary donations from the public are falling, and donations and grants made from investment income are under pressure as markets see-saw and interest rates remain low. “ I bet this sounds familiar to you – it certainly does to us!

For a full copy of the Philanthropy Capital UK report click here


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New Association rules for the Victorian State Aussies – will similar happen in NZ?

Wednesday, April 04, 2012
Australian associations based and operating in Victoria are facing a substantial shake up with regards to legislation which will expose board and committee members financially. The Associations Incorporation Amendment Act (2010) which comes into force from 1 July 2012 will cause board and committee members of incorporated associations to face penalties of up to $20,000 if they breach new legal duties. As reported in Third Sector magazine, Board or Committee members will have new duties, which include: 
  • Exercising powers and discharge duties with care and diligence
  • Acting in good faith, in the best interests of the association and for a proper purpose
  • Preventing the organisation from trading while it is insolvent.
  • Breaches of these duties will result in new fines, with the main defences being: 
  • Business judgement - informed decisions were made in good faith in the interests of the association
  • Reliance on information - a decision relied on information provided by a competent person.

With the major change being the addition of the above duties, the reach is also extended beyond the reach of committee members to the public officer/secretary and even an employee who makes decisions affecting the whole or substantial part of the association. 
Changes also include the introduction of civil penalties – fines of up to $20,000. Risk of this will apply to Committee or Board Members who fall short of these duties. 

You may recall there are possible changes afoot with our own Incorporated Societies Act review, with submissions closing late last year. We will keep abreast of any changes this may bring. Although the Australian changes do not apply to those incorporated associations in New Zealand, we recommend using these duties as a guide of good practice.

There are other developments with the Victorian State of Australia also: 
  • Indemnify Committee or Board members: An incorporated association’s funds may be used to pay for the fines or other penalties personally incurred by a committee member when they have acted in good faith. However it will not extend to indemnify Committee members where their actions are deemed to be reckless or negligent.
  • Annual reporting obligations: New three-tiered reporting scheme based upon the annual revenue of the Incorporated Association.
  • Prohibition on trading to be removed: Allowing incorporated associations to engage in trade or trading activities in pursuance of, and in support of, its purposes. Distribution of profit or surplus assets to members (or former members) of the organisation will remain prohibited under the reforms.
  • Clarification of the rights of members: Including provisions that relate to the circumstances in which members can inspect or get a copy of the Rules, the membership register and the minutes of general meetings. 
  • Grievance and disciplinary procedures: Clarify the requirements for an association's grievance procedures, and introduce new requirements for disciplinary procedures.

For those of you who would like to review the entire legislative change, you can click here

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“No place around the Board table for seat warmers....”

Tuesday, February 28, 2012

The above statement was made by the New Zealand Shareholders Association Chairman, John Hawkins. Mr Hawkins was responding to the ‘guilty verdict’ against four former Lombard Finance directors.

Hawkins continued that “Directors must have proper oversight and make sufficient enquiries before signing matters off. We hope the message finally gets through.” We applaud Mr Hawkins’ stance in the lead the NZ Shareholders Association is taking with this matter. On the website home page the Associations states  - "New Zealand Shareholders Association (NZSA) stands up for you and represents your interests as investors and shareholders."

We also believe this particular case highlights the need for a board to understand its’ collective and individual obligations and responsibilities to all stakeholders.

http://www.nzshareholders.co.nz/


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Non-profit sector lacks Governance skills?

Tuesday, February 28, 2012

Whose responsibility is it to ensure that an association or charity’s board has a good level of governance understanding? We suggest that the Chairman and CEO ensure the board have an understanding of basic board-level issues that concern governance. This ensures the board is aware of any major issues confronting the organisation, with the CEO undertaking to ensure the association or charity complies when implementing the strategy. We suggest:

  • Board-level understanding of policy to avoid financial disaster
  • Board-level understanding of their individual roles and responsibilities
  • Ensure each board member has been correctly inducted and has access to training for any required up-skilling
  • Implementation of board manual and procedures
  • Annual board performance evaluation

You can find out more about this also by attending the upcoming Human Resources conference the NZARCT is holding June 19, 2012. Bice Awan from Skylight Trust will be holding a workshop around ‘Fit for purpose governance’. For more on this click here or email contact @associations.org.nz


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First NFP to release sustainability report

Wednesday, November 30, 2011
Ability Options recently became the first disability, non-profit organisation in Australia to release a sustainability report in line with the international Global Reporting Initiative Guidelines.

Global Reporting Initiative (GRI) is a non-profit organisation that provides a framework for sustainability reporting around the world. Ability Options recently used GRI’s guidelines to release their annual and sustainability report.

Sustainability reporting requires companies and organisations to demonstrate their corporate responsibility by publicly reporting against economic, social and environmental — or people, planet and profit— values or criteria on an annual basis.

Ability Options’ Chief Executive Matt Donnelly says that by taking a proactive role to collect data, measure and track specific issues through sustainability reporting, Ability Options aims to further improve the lives of the people with disability and their families.

“Sustainability reporting gives us a way to ensure we will operate more effectively in this future landscape and helps us create a meaningful dialogue with all our stakeholders in determining Ability Options’ direction and what that future needs to look like,” said Donnelly.

For more information about Ability Options visit 

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Is your constitution registered and up to date?

Thursday, September 15, 2011
There’s one sure way to risk the integrity of an association/charity and that is not to register the constitution or trust deed. As the founding document, and the basis for all compliance decisions, it is critical that your document is registered! It defines who you are, how you operate, who your constituents are and your organisation’s rules and regulations.

We have witnessed a situation recently where an association spent a lot of time and energy ‘overhauling’ their most recent constitution, only then to find out it was not even registered in the first place. The association was acting ‘ultra vires’ – this means:
  • All their decisions, having been based on the most recent constitution were in fact beyond their authority
  • Any decisions could be challenged, leaving the organisation vulnerable to potential legal actions by employees or other parties

The outcome was that members became polarised by the possibilities of two different constitutions, it created a lack of confidence in the Executive Committee and caused a number of member resignations. It meant the Association had some serious ‘fire-fighting’ to do – distracting it from its core activity.

We strongly suggest you ensure your constitution/trust deed is registered and that its contents meet the needs of your association or charity.


Or email Colette on colette@associations.org.nz for more information.


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Corporate Social Responsibility – what’s the return on investment?

Thursday, September 15, 2011
The concept of corporate social responsibility (CSR) can find its roots right back in the late 60s and early 70s. CSR embraces an organisation’s actions and outcomes and how these impact upon its employees, key stakeholders, the environment, consumers and communities.

There are arguments for and against a company having a focus on CSR, however there are opportunities from a number of aspects. If a company chose to embrace CSR, there are ways in which they could approach this without distracting from core activities.

As reported recently in Corporate Secretary, another way of looking at this is by redefining it as Environmental, Social and Governance (ESG) – this defines the basic areas that are affected.

Taking that further - the opportunity for a company and a non-profit organisation is to partner up, finding common ground where they can assist each other to gain return on investment. Social partnerships between business and non-profits can be seen as important new strategies which could bring significant benefits to wider stakeholders

There are already great examples of this working effectively in more high profile partnerships, for example:

These opportunities need not be just for the high-profile, larger operators. A smaller non-profit with a good sense of organisational self can realistically partner with a business that has a good ‘fit’ – creating a win-win for both parties. For more information please contact Rosemary Mahoney Ph: 09 419 0042.

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Managing risk for a governing board

Thursday, June 30, 2011
How has your board of trustees managed with the generally greater pressure for tighter controls and a sharper focus on risk management. Is this producing a more effectively run board and should they in fact be managing or governing risk? This question is posed by David Anderson, president of Anderson Governance group (Toronto based). 

We agree with David – proper risk management is shared across the principles of:
  • Leadership
  • Accountability
  • Remuneration
  • Internet technology

In doing this there is recognition of the many faces of risk management – balancing a more widely accepted management function with a generally less-understood governance function. This is in turn balanced with the ability to achieve objectives, while managing the risk of doing so.
  • Candidly reporting risk
  • Make an effort to understand risk and reduce liability
  • Focus on collective outputs rather than personal interest

We characterise good governance as the following:
  • Accountability – who is affected by the organisation’s decisions or actions
  • Consensus-oriented – mediation of different interests to reach consensus on best interests
  • Effective and efficient – processes produce results with sustainable use of resources
  • Equity and inclusiveness – all groups have opportunities to improve or maintain their well being
  • Participation – democratic representation with freedom of association and expression
  • Responsiveness – serving all stakeholders within a reasonable timeframe
  • Rule of law – fair legal frameworks
  • Transparency – decisions are freely available and accessible to those affected by decisions and enforcement

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How to attract well-skilled Board members

Tuesday, May 10, 2011
Following on from an article we published earlier, it is a given that most Board members serve for the purpose of supporting a cause they feel connected with, or passionately about. There are presently no restrictions on paying elected office bearers of incorporated societies honoraria or director’s fees. On the other hand, charity trustees are precluded from being paid for their Board services

However, there are exceptions and they apply where a trustee is a qualified practitioner, who can provide services which are essential to the trust and under normal circumstances would have to be bought in from outside the organisation. There is a way for a suitably qualified board member to be rewarded for their efforts and time commitment to the NFP organisation. This could overcome the scenario whereby many skilled professionals run scared of pro bono work and for that reason are reluctant to volunteer their services.

This goes part of the way to overcoming the resistance in attracting the right combination of expertise around the boardroom table. Enabling them to accept paid assignments and donating the cost of their services back to the charitable trusts is a legitimate device. 

Affordability is a constant worry for associations and charities and there is ample evidence of the wrong decisions being taken in the absence of competent advice. For more information about this please contact Rosemary Mahoney 09 419 0042

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How effective is your Board?

Tuesday, May 10, 2011
The days when Boards were a cosy space are gone. Boards are often a target for blame and good governance is not an optional extra!

As confirmed in the latest Chartered Secretary, making the right choices comes from being able to attract suitably qualified and committed individuals to direct a NFP organisation. It is just as important in the NFP sector as we see exhibited in corporate decision making. Every governing Board or committee needs to contain a good balance of industry or sector experience, as well as suitably qualified individuals, who are able to work effectively as a team. 

Although it may seem obvious, start by reviewing current Board members to see what skills and experience is collectively available right now. Then gain agreement from current Board members about what is important to move the organisation forward. Once there is an agreed list of skills and experience, identify and screen promising talent before approaching them.

One way to do this is to also look to current or potential members of your organisation – there may be someone who you think may be an ideal candidate for the future. This then gives you the opportunity to plan for future requirements. This approach encourages younger Board contributors and more diversity with regards to male and female representation. The opportunity is potential new ideas and enthusiasm which is often lacking in long-serving executive members. 

The selection process should closely follow that adopted in personnel recruitment at senior level in for-profit companies. This involves briefing the prospect on all aspects of the association or trust and making sure they realise what they are committing to before inviting them to join the Board. Of course the final requirement is the paper work - the newly elected or appointed member will require a document supporting their induction.

The right choice of ‘chair’ is even more important. Familiarity with meeting procedure and the ability to chair with impartiality and firmness are essential qualities. A good public image and inter-personal skills are other qualities to look for. 

NZARC is able to provide advice and guidance in this regard, as well as providing half-day interactive training sessions on Building Effective Boards. These seminars cover topics such as:
  • the variety and types of Board room roles,
  • the crucial role of the chair
  • Board support
  • the role of the secretary or executive trustee
  • Board or committee composition and evaluation,
  • Board or committee decision taking
  • role of committees.

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