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Lessons from the CPA saga
If you are part of the leadership team of an association or not for profit organisation you should be looking very closely at the crisis developing within CPA Australia. Here we have a situation where there has been a resignation most of the CPA board to a point where they could not form a quorum. We also have some very unhappy CPA members who believed the CPA Board and the CEO are not acting in the interests of their members. Added to this, according to The Australian (June 6, 2017), ASIC has now launched a full investigation with detailed interviews of members and a review of CPA’s compliance to the Corporations Act.
This is every association manager’s nightmare, here we have members lodging complaints with the regulator, a perceived lack of engagement by the CEO and Board, and the media constantly profiling the crisis both in print and the social media. No matter who is right and wrong in the dispute the real victim is the respected CPA brand and the reputation of the association and members.
What are the lessons from the CPA saga?
Associations come under the not for profit sector and represent most organisations that are described as not for profit organisations. Most do not operate as charities. They are formed by their members and their activities are about supporting their members. These members could be groups of sporting people through to scientists. Associations are born as a small group of people with a common interest and can end up as large organisations generating millions of dollars in revenue.
Despite the size – the major stakeholders are the members and to ensure all the members receive the full benefits of joining the constitution is the rules that all members must comply with.
Most associations are legal entities and are incorporated as a company limited by guarantee or are incorporated under a state act. The regulator for a company limited by guarantee is ASIC and for associations incorporated within their state the regulator may be the state consumer affairs
Most associations in Australia have 20 or less full-time staff and the board of management is normally elected members who are responsible for the management and governance of the association. The board members are required by law to act in the interests of the members and comply with the constitution. Failure of the board to be compliant to the constitution or act outside the roles and responsibilities as board directors opens the opportunity for the lodging of complaints by disgruntled members or suppliers to the regulator.
What we see unfolding with the CPA saga is the regular ASIC and other stakeholders taking a serious look at the activities of the CPA board and CEO to determine if there has been any breach of Corporations Act or any other regulation.
In my experience, no matter how much time you put into ensuring you follow the constitution to the letter, there will always be periods or levels of non compliance. Often the regulators may decide to add further layers of compliance which can be very onerous for small associations. It is important to understand the risk associated with not- compliance either to the constitution or breaches related to tax matters or consumer law.
Here are some tips used by Best Practice Associations in Australia to reduce the risk of being investigated by the regular:
Make sure the constitution is up to date, easy to understand by the board and members and it is the one lodged with the regulator.
Policies & Procedures
Board policies, in particular, relating to risk and the delegation of authority is up to date and reviewed annually.
Board Induction Process
Ensure there is a proper board induction program for all board members including a sign-off by the board member they understand their roles and responsibilities.
Member grievance procedure
To reduce the issue of members feeling aggrieved, make sure that you have a grievance procedure as part of the board policy. This process allows for members to lodge a complaint against their association and through a process of mediation allows the members to voice any concerns they have without creating further stress on the member or association
No doubt every association board and management face daily challenges including covering all the compliance issues or managing the expectations of members. Never lose focus on what is important to the future of your members and ensure all matters are transparent and defendable.