ACNC releases new guidance on board remuneration
Should NFPs pay board members?
The Australian Charities and Not-for-profits Commission (ACNC) has published new guidance aimed at providing charities with practical advice on paying their board members.
The guidance – Remunerating Charity Board Members – provides an overview of issues relating to board remuneration, as well as some of the factors charities need to properly consider when making a decision on paying board members for their duties.
ACNC Commissioner, Susan Pascoe, introduced the guide, saying it provided important points around which charities could base discussions.
“Most board members of charities are unpaid and give their time freely as volunteers,” Pascoe said.
“However, all charities are different and there are diverse views on the appropriateness of paying board members. At the end of the day the key question to ask is: is paying board members in the best interests of the charity?
“There will be different answers according to the nature and complexity of the charity, the skills and time required of board members, as well as issues of diversity of the board.
“There is no one size fits all answer to this question.”
Pascoe confirmed that registered charities are able to pay their board members under certain circumstances.
“Our new guidance states that board members can be paid as long as this remuneration helps further the organisation’s charitable purpose, is allowed under the charity’s governing rules, is properly authorised, and is conducted in a transparent and robust way,” Pascoe said.
“In addition to meeting reporting obligations, registered charities must also comply with the ACNC’s Governance Standards. This includes the requirement that charity board members act in the best interests of the organisation, and that they manage its finances in a responsible way.
“Charities also need to be mindful of community expectations as well as the views of their members, supporters and the users of their services. If a charity feels uncomfortable disclosing and publicly justifying the level and nature of the remuneration, then this should be an alarm bell.”
Pascoe reminded charities that their finances should be managed with care and diligence.
“Board members are custodians of a charity’s funds and these need to be applied for the benefit of the public,” Pascoe said.
“We hope this guidance will help charities make proper and sensible decisions in relation to paying their board members.”
The Australian Institute of Company Directors’ NFP Sector Lead, Phil Butler, welcomed the ACNC’s guidance.
“The decision whether or not to remunerate directors is a significant one, so it is vital that there are strong governance processes that support this,” Butler said.
“This guidance will help boards consider what the benefit to the organisation will be in the decision to pay directors, and balance this with the need to be open and transparent with members, funders and other stakeholders.”