HON DR BOB SUCH MP JP
Member for Fisher

Fisher Electorate Office
Shop 11, Aberfoyle Hub Shopping Centre
ABERFOYLE PARK  SA  5159

Telephone:  (08) 8270 5122
Facsimile:    (08) 8270 1874

11 January 2012 

Mr Christopher Leggett
Manager
Philanthropy and Exemptions Unit
Personal and Retirement Income Division
The Treasury
Langton Crescent 
PARKES  ACT  2600
NFPreform@treasury.gov.au 

Dear Mr Leggett

Review of not-for-profit governance arrangements

I respond to the invitation to provide a submission to the Review and offer the following comments in relation to the Consultation Questions.  

Responsible Individuals’ Duties
1.	Should it be clear in the legislation who responsible individuals must consider when exercising their duties, and to whom they owe duties to?

	Yes.  

2.	Who do the responsible individuals of NFPs need to consider when exercising their duties? Donors?  Beneficiaries?  The public?  The entity, or mission and purpose of the entity?

	Responsible individuals have a responsibility to those they serve and those who fund the registered entity.  They should spend wisely and appropriately, however, and not become agents of donors.

3.	What should the duties of responsible individuals be, and what core duties should be outlined in the Australian Charities and Not-for-profits Commission (ACNC) legislation?  

	Responsible individuals should be accountable and transparent.  
4.	What should be the minimum standard of care required to comply with any duties?  Should the standard of care be higher for paid employees than volunteers?  For professionals than lay persons?  
	
	The standard of care should apply to all, as set down on pages 16 and 17 of the Consultation Paper, plus my two additional recommendations:  
•	A duty of care and diligence;
•	A duty to act in good faith in the best interests of the entity;
•	A duty to not misuse their position;
•	A duty to not misuse information; 
•	A duty to disclose material personal interests;
AND
•	A duty to act in the best interests of the public and donors;
•	A duty of financial and public accountability and disclosure.  

5.	Should responsible individuals be required to hold particular qualifications or have particular experience or skills (tiered depending on size of the NFP entity or amount of funding it administers)?

	The qualifications and skills should match the standards and skills level of the job.  

6.	Should these minimum standards be only applied to a portion of the responsible individuals of a registered entity?  

	No.  All responsible individuals should possess the qualifications and skills to match the responsibilities of the job.  

7.	Are there any issues with standardising the duties required of responsible individuals across all entity structures and sectors registered with the ACNC?

	Responsible individuals should be required to assume the same responsibilities across all entity structures and sectors, but not the same ‘duties’.  

10.	Is there a preference for the core duties to be based on the Corporations Act, the Corporations (Aboriginal and Torres Strait Islander) Act (CATSI Act), the office holder requirements applying to incorporated associations, the requirements applying to trustees of charitable trusts, or another model?

	The core duties should be dealt with in the ACNC legislation.  

Disclosure Requirements and Managing Conflicts of Interest
11.	What information should registered entities be required to disclose to ensure 	good governance procedures are in place?  

Registered entities should disclose sufficient information so as to ensure transparency and accountability.  Financial records and details of donated and public funds should be openly available each year for public examination and scrutiny for each fund.

12.	Should the remuneration (if any) of responsible individuals be required to be 	disclosed?

Yes.  Remuneration should be disclosed, especially if government/ taxpayers’ money is involved.  

13.	Are the suggested criteria in relation to conflicts of interest appropriate?  If 	not, why not?

	The suggested principles should meet ‘standard’ conflict of interest 	criteria in that transparency and accountability will discourage personal 	benefit.  

Risk Management
17.	Should particular requirements (for example, an investment strategy) be 	mandated or broad requirements for NFPs to ensure they have adequate 	procedures in place?

	Yes.  Certainly an investment strategy should be mandated.  

18.	Is it appropriate to mandate minimum insurance requirements to cover NFP 	entities in the event of unforeseen circumstances?  

	Yes.  

19.	Should responsible individuals generally be required to have indemnity 	insurance?

	Yes.  

Internal and External Reviews
20.	What internal review procedures should be mandated?

	Internal review processes and practices should be required to be 	undertaken from time to time.  

Minimum Requirements for an Entity’s Governing Rules
22.	Should the ACNC have a role in mandating requirements of the governing 	rules, to protect the mission of the entity and the interests of the public?

	Yes.  The ACNC should mandate minimum requirements.  

Relationships with Members
26.	What governance rules should be mandated relating to an entity’s relationship 	with its members?

	Governance rules are needed so that members can participate regularly 	and effectively in the workings of these organisations.  

28.	Is it appropriate to have compulsory meeting requirements for all 	(membership based) entities registered with the ACNC?

	Yes.  Meetings allow members to raise issues.  

Summary
33.	Do you have any recommendations for NFP governance reform that have not 	been covered through previous questions that you would like the Government 	to consider?

	Rules should be kept simple and concise, especially since non-	professionals and volunteers may take on some of the responsibilities 	and roles in registered entities.  Straightforward and succinct 	regulations will promote participation.  

Yours sincerely 

Bob Such MP JP
Member for Fisher