INK 25: 10 Things to Know About Being a NFP Board Member
{01} Not For Profit Organizations
• Most Rotary clubs are incorporated as “Not for Profit” (NFP) organizations
• This status has some legal advantages, but also involves responsibilities to the law
• These responsibilities sit alongside our Rotary Obligations
{02} Role of the NFP Board
• Makes decisions about strategic directions, goals and activities of the organization
• Monitors the performance of the organization in relation to its goals
• Oversees Risk Management
• Oversees the financial sustainability of the club
• Makes decisions about disciplinary actions
• Reports to members
• Ensures the organization operates within the law
{03} Role of Each NFP Board Member
• Understand the business of the club
• Attend Board meetings
• Be active in the organization e.g. attend events
• Attend the Annual General Meeting
• Provide advice to inform Board decisions
• Declare actual or perceived conflict of interest
• Govern & oversee the club’s operations
{04} Board Role C/F Other Roles
• Board member role is strategic
• Has to do with Governing the Club
• NOT the management or operations
• Projects and activities are run by committees, chairs and co-ordinators - NOT the Board
• Board NOT involved in day to day running of the club – but it delegates authority to Chairs
{05} 4 Legal Obligations of NFP Board Members - Obligation 1
• 1. Duty to Act in Good Faith and For Proper Purposes
• Act honestly, fairly and loyally
• Put interests of club first – above self interest
• Only act for proper purposes i.e. to benefit the organization
• Be familiar with the Club Constitution
{06} 4 Legal Obligations of NFP Board Members – Obligation 2
• 2. Duty to Act with Care, Skill and Diligence
• Monitor and make decisions about strategic direction of club
• Be serious – give the role sufficient time, thought and energy
• Use your specialized skills to assist the Club
• Be diligent: keep up to date on developments, ask for more information when required, make your own independent decisions after hearing experts
{07} 4 Legal Obligations of NFP Board Members – Obligation 3
• 3. Duty not to dishonestly use your position or information
• Board members have a position of power and trust and access to confidential information
• Board members must not use their position to gain advantage for themselves
• Every decision must benefit the club
• The position cannot be used to benefit yourself or to in any way harm the club.
{08} 4 Legal Obligations of NFP Board Members – Obligation 4
• 4. Duty to avoid conflicts of interest
• Conflicts of interest are common – having one is not the problem
• The problem arises when the Board member prefers their own interests (or family interests) above the interests of the club
• ALL Conflicts of interest must be disclosed as soon as you are aware of them – the Club Board must then decide whether you can continue in the decision making process
{09} Liability of Board Members
• Board members are typically NOT personally liable (i.e. legally responsible) for the debts or consequences of the organization
• Personal liability MAY apply when:
• a Board member doesn’t take reasonable care to minimize risk of harm
• A member knew, or is reckless about, and could have prevented contravening of environment laws
{10} More Information
• www.nfplaw.org.au (Not for Profit law resources)
• www.acnc.gov.au (Australian Charities and Not For profits Commission)
• Associations Incorporation Act 1964, 1981, 1985, 1991, 2001, 2009, 2012, 2015,)
• A Document with all this information and more will be sent to all Board members
• Most Rotary clubs are incorporated as “Not for Profit” (NFP) organizations
• This status has some legal advantages, but also involves responsibilities to the law
• These responsibilities sit alongside our Rotary Obligations
{02} Role of the NFP Board
• Makes decisions about strategic directions, goals and activities of the organization
• Monitors the performance of the organization in relation to its goals
• Oversees Risk Management
• Oversees the financial sustainability of the club
• Makes decisions about disciplinary actions
• Reports to members
• Ensures the organization operates within the law
{03} Role of Each NFP Board Member
• Understand the business of the club
• Attend Board meetings
• Be active in the organization e.g. attend events
• Attend the Annual General Meeting
• Provide advice to inform Board decisions
• Declare actual or perceived conflict of interest
• Govern & oversee the club’s operations
{04} Board Role C/F Other Roles
• Board member role is strategic
• Has to do with Governing the Club
• NOT the management or operations
• Projects and activities are run by committees, chairs and co-ordinators - NOT the Board
• Board NOT involved in day to day running of the club – but it delegates authority to Chairs
{05} 4 Legal Obligations of NFP Board Members - Obligation 1
• 1. Duty to Act in Good Faith and For Proper Purposes
• Act honestly, fairly and loyally
• Put interests of club first – above self interest
• Only act for proper purposes i.e. to benefit the organization
• Be familiar with the Club Constitution
{06} 4 Legal Obligations of NFP Board Members – Obligation 2
• 2. Duty to Act with Care, Skill and Diligence
• Monitor and make decisions about strategic direction of club
• Be serious – give the role sufficient time, thought and energy
• Use your specialized skills to assist the Club
• Be diligent: keep up to date on developments, ask for more information when required, make your own independent decisions after hearing experts
{07} 4 Legal Obligations of NFP Board Members – Obligation 3
• 3. Duty not to dishonestly use your position or information
• Board members have a position of power and trust and access to confidential information
• Board members must not use their position to gain advantage for themselves
• Every decision must benefit the club
• The position cannot be used to benefit yourself or to in any way harm the club.
{08} 4 Legal Obligations of NFP Board Members – Obligation 4
• 4. Duty to avoid conflicts of interest
• Conflicts of interest are common – having one is not the problem
• The problem arises when the Board member prefers their own interests (or family interests) above the interests of the club
• ALL Conflicts of interest must be disclosed as soon as you are aware of them – the Club Board must then decide whether you can continue in the decision making process
{09} Liability of Board Members
• Board members are typically NOT personally liable (i.e. legally responsible) for the debts or consequences of the organization
• Personal liability MAY apply when:
• a Board member doesn’t take reasonable care to minimize risk of harm
• A member knew, or is reckless about, and could have prevented contravening of environment laws
{10} More Information
• www.nfplaw.org.au (Not for Profit law resources)
• www.acnc.gov.au (Australian Charities and Not For profits Commission)
• Associations Incorporation Act 1964, 1981, 1985, 1991, 2001, 2009, 2012, 2015,)
• A Document with all this information and more will be sent to all Board members