Not For Profit Organisations and Good Governance

Even though many directors and board members participation is of a voluntary nature they must still ensure good governance of the organisation.

What Is Good Governance?
Governance is made up of the structure, systems and understandings that exist that guide the NFP to make decisions to achieve its objectives.
This helps to achieve and maintain value in the organisation and helps board members to make good judgements and act ethically and in good faith.
The NFP own constitution is of curse a good starting point to ensure basic governance requirements.

Available Guidance
ASX Corporate Governance Council's Principles and Recommendations (asxgroup.com.au) may be used as a model of governance requirements.
Charities registered with the Australian Charities and Not-for-profits Commission (ACNC) must now look to the ACNC standards for the minimum governance requirements (acnc.gov.au).
Australian Institute of Company Directors website companydirectors.com.au
Institute of Chartered Accountants website chartered accountants.com.au/NFPgovernance

Principles of Good Governance
The Australian Institute of Company Directors has issued a guidance of 10 principles for good governance.
1) Roles and Responsibilities
    Roles and responsibilities need of individual board members need to be clearly defined.
2) Board Composition
    The right mix of backgrounds, skills and experience is essential.
3) Purpose and Strategy
    These should be set by the board and reviewed periodically.
4) Risk Management
    These must be identified and include compliance, financial, governance, operational, environmental, reputation and strategy.
    Risk management should be supported by appropriate internal controls and structure.
5) Organisational Performance
    Appropriate financial and non-financial measures need to be used to monitor performance.
6) Board Effectiveness
    The board needs to evaluate its own performance, conduct meetings efficiently, leverage sub-committees and have a succession plan.
7) Integrity and Accountability
    Transparency to all stakeholders is essential. A well informed board needs regular reporting to ensure timely compliance, good governance and decision making.
8) Organisation Building
    Enhancing the capacity and capabilities of the organisation is a key objective as well as identifying skill gaps and addressing them appropriately.
9) Culture and Ethics
    The board sets the tone for ethical and responsible decision making. A code of conduct and policies on managing potential conflicts of interest can be useful.
10) Engagement
      Effective engagement with stakeholders is an essential activity of the board. At a minimum the annual report produced in an easy to understand format should be used to communicate with stakeholders.