AICD updates governance principles
At a time when governance is in the spotlight, the Australian Institute of Company Directors has updated its Not-for-profit Governance Principles. The second edition of the Principles provides a practical framework to help NFPs – big and small – understand and achieve good governance.
It’s a benchmark resource for NFP leaders.
The document has three components: 10 individual principles, supporting practices, and guidance.
|
Topic |
Principle |
|
Purpose and strategy |
The organisation has a clear purpose and a strategy, which aligns its activities to its purpose |
|
Roles and responsibilities |
There is clarity about the roles, responsibilities and relationships of the board |
|
Board composition |
The board’s structure and composition enable it to fulfil its role effectively |
|
Board effectiveness |
The board is run effectively and its performance is periodically evaluated |
|
Risk management |
Board decision-making is informed by an understanding of risk and how it is managed |
|
Performance |
The organisation uses its resources appropriately and evaluates its performance |
|
Accountability and transparency |
The board demonstrates accountability by providing information to stakeholders about the organisation and its performance |
|
Stakeholder engagement |
There is meaningful engagement of stakeholders and their interests are understood and considered by the board |
|
Conduct and compliance |
The expectations of behaviour for the people involved in the organisation are clear and understood |
|
Culture |
The board models and works to instil a culture that supports the organisation’s purpose and strategy |
AICD managing director and CEO Angus Armour said good governance of NFP organisations had never been more important. “Australians expect NFPs to be governed to the highest of standards, and the way they are run is increasingly being scrutinised,” he said.
The Principles are primarily for directors and executives but will be valuable to others involved in NFP governance such as managers, staff and volunteers. The document complements the Australian Charities and Not-for-profits Commission’s Governance Standards and is intended to be applied voluntarily.
The revised Principles provide a framework for NFPs and charities to consider good governance practices, including the board’s roles and responsibilities, managing conflicts of interest, organisational culture, stakeholder engagement and risk management.
New supporting practices provide greater clarity for NFP directors on what good governance looks like to help support and strengthen governance practice.
The AICD encourages users to conduct regular assessments of their performance and to report them to members and stakeholders, preferably on an annual basis. The institute suggests that users adopt an “if not, why not” approach to reporting. This means that, where an organisation is failing to meet the Principles’ standards, it outlines to stakeholders why this is so.