Newly Appointed as a Director or Officer for your Association, Society, or Non-Profit Organisation

Newly Appointed as a Director or Officer for your Association, Society, or Non-Profit Organisation

By Nick Koerbin

Taking on a new role as a director or officer in an association, society, or non-profit organisation is an honour and a responsibility. Here are essential considerations to ensure effective and accountable governance from day one:

1. Financial Sustainability:  As a newly appointed director, your first and foremost responsibility is to ensure the financial sustainability of the association. This involves confirming that the organisation is not trading while insolvent or at immediate risk of insolvency. Request access to financial documents such as the balance sheet, profit and loss statement, and the annual report. Obtaining a copy of the latest audit report (if an audit has been completed) from an independent auditor, is also advisable to clearly understand the organisation's financial standing.
2. Where is the Strategic Plan? Another crucial aspect of your role is ensuring there is an active and robust strategic planning process in place. This is important as it guides the association's decisions and actions. Directors must ensure that their choices align with the strategic plan, demonstrating a thoughtful and informed approach to organisational growth. A lack of a clear strategic plan often indicates decisions are being made without a thorough review, potentially leading to uninformed risks.
3. Ensure adequate insurance coverage.
   Review the association's insurance policies to confirm they are comprehensive and up to date. Standard policies may not provide sufficient coverage for all operational risks. Assess whether the insurance includes coverage for regulatory fines, determine the total coverage amounts, and check for recent claims. An annual review of insurance is essential to managing any emerging risks effectively.

• What are the Board Policies? An association board should have updated policies that govern delegation, board conduct, grievance handling, privacy, and more. As a new director, it's crucial to familiarise yourself with these policies, as adherence is critical for effective governance and to mitigate personal liability. If these policies are outdated or not reviewed regularly, they could expose the association—and directors—to unnecessary risk.

•  Ensure Compliance with the Constitution As a new director, understanding and adhering to the Constitution is a primary responsibility. Access the latest version of the Constitution and confirm that it aligns with the one lodged with ASIC or the relevant state regulator. The board or committee must operate within the framework of the Constitution. Non-compliance could lead to serious legal ramifications for the association and its directors.

In Summary

Becoming a director on a board offers a unique chance to serve the members of your professional or business community while gaining invaluable insights into board operations. The experience and skills acquired in this role will support your association's mission and contribute to your growth as a knowledgeable, capable leader in the non-profit sector.

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