AICD updates best practice guide to governance amid sector concern

To address sector-wide concern driven in part by ongoing media scrutiny of governance, the Australian Institute of Company Directors (AICD) has updated its guide of Principles.

The Not-for-profits Governance Principles is a practical framework aimed at helping the leaders of the NFP sector understand and achieve good governance and will consist of 10 individual Principles, accompanied by supporting practices and guidance.

AICD Managing Director and CEO, Angus Armour, said that not-for-profit governance has 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.”

The report highlights governance concerns within the community and around practices, including fears that were born around the Aged Care Royal Commission. It has been made for directors and executives, but it will be a useful resource for others involved in the governance of NFPs, including managers, staff and volunteers.

The P rinciples were made to be complementary to the Australian Charities and Not-for-profits Commission Governance Standards and is intended to be voluntary application.

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Charities and not-for-profits are encouraged to use the resource as a framework around good governance practices, including the Board’s role and responsibilities, managing conflicts, organisational culture, stakeholder engagement and risk management.

AICD said the updated supporting practices will provide greater clarity for NFP directors on what good governance looks like to strengthen perceptions of the sector.

“Over a history of more than 200 years, not-for-profits have been a powerful and positive influence on the development of Australian society,” Armour said.

“It is vital that we support the sector with free resources such as these. We thank all members and stakeholders who contributed to the development of these Principles.”

The AICD has encouraged users to conduct regular assessments of performance and to report the outcome to members and stakeholders on an annual basis. It also suggests adopting an “if not, why not” approach to reporting, meaning an organisation will need to explain to stakeholders why it is not meting any part of the Principles.