Centium outlines key steps to tackle misconduct in NFPs.
The reality of misconduct in most organisations, including NFPs, is that it’s not a question of if it will occur but when. Whether you’re a large charity or a small community group, providing highly regulated assistance or raising awareness around social issues, the risk of misconduct is always present. When your organisation’s mission and hard-earned reputation are potentially at risk, learning how to navigate this inevitability is a must.
As we understand the importance of our NFP sector to the Australian community, we’ve created the ‘Guide to Investigating Misconduct in Australian Not-for-Profit (NFP) Organisations’. Having undertaken in excess of 2,000 workplace misconduct investigations since 1985, we know what good practice looks like.
In this article, we’ll touch on the 12 key steps outlined in the guide. If, at any point, you’re looking for more detail on any of the steps, we recommend downloading the guide by clicking the link above. If you’re still looking for more guidance after reading that, please get in touch with us via the contact details at the end of this article.
Step 1. Define misconduct
Misconduct can take many forms, and defining what it could look like inside your organisation is a critical first step. We’ve listed several of these in the guide, and also in a previous article about ‘Creating a Proactive Risk and Conduct Culture’, but some key examples include:
- Financial impropriety, such as fraud or misuse of funds
- Governance failures
- Inequitable recruitment practices
- Harassment, bullying, abuse or neglect of clientele or staff
- Unethical or illegal behaviour, including conflicts of interest
Each of these issues poses significant legal, reputational and cultural risks for NFPs. Having a code of conduct based on your organisation’s values to present to new staff at induction is a good start, but you must also define how misconduct could occur in your line of work. You can’t identify it if you don’t know what you’re looking for.
Step 2. Build a misconduct investigation policy
Preparation is your best defence. Ideally, your NFP should have a clearly defined Misconduct Investigation Policy that outlines far more than the definitions of misconduct from step 1. The policy should also define the:
- Reporting mechanisms (including whistleblower protections)
- Investigation procedures
- Roles and responsibilities
- Confidentiality and natural justice principles
- Potential disciplinary outcomes
- Support mechanisms for staff during the investigation process
A robust policy sets the framework for how your organisation will respond to allegations of misconduct. It must ensure procedural and substantive fairness, consistency and compliance with governance obligations. Furthermore, the policy should signal to staff, volunteers and stakeholders that allegations of misconduct will be taken seriously.
The remaining 10 steps relate to the investigation and the required follow-up actions for an effective process. To not repeat what the guide already articulates fully, we will summarise these remaining steps. Again, if you’re looking for more detail, download the guide or contact us via the details at the end of this article.
Step 3. Receive and acknowledge the allegation
Although a seemingly obvious beginning of an investigation, there are important steps to include as part of receiving and acknowledging allegations. From a workplace environmental perspective, it means ensuring there is a culture within your organisation that encourages reporting and creating safe, confidential reporting channels. Once the allegation has been made, it should be acknowledged and logged.
Step 4. Conduct an initial assessment (triage phase)
Here, the allegation should be categorised according to the misconduct type and severity, and reporting obligations or consultation with external bodies (such as ACNC, OCG, SafeWork, Police, etc) should be considered.
Step 5. Appoint an investigator
An internal or independent external investigator should be appointed or engaged. The investigator should be skilled, experienced, impartial, and external if conflicts of interest exist.
Step 6. Plan the investigation
Begin the planning process by defining any relevant details, misconduct timelines and evidence requirements. Risk assessments should also be carried out.
Step 7. Conduct interviews and gather evidence
Procedural and substantive fairness is paramount – and all respondents should be given an opportunity to respond and have fair and unbiased consideration of their response. All interviews and evidence collection should be confidential.
Step 8. Analyse and make findings
Assess the allegations based on the supporting evidence. Make findings on whether or not the allegations are substantiated.
Step 9. Report and recommend
Submit these summaries alongside any recommendations for further action to the relevant senior leadership of the organisation.
Step 10. Take action
Based on the findings and recommendations, take the appropriate level of action. This action can take many different forms, which might be either disciplinary or remedial.
Step 11. Notify the relevant authorities
Depending on the nature and the severity of the misconduct, you may need to notify the relevant authorities, disclosing the relevant information within the limits of confidentiality and privacy.
Step 12. Close the loop
Notify the involved parties of the investigation’s outcomes, again within the limits of confidentiality. Acknowledge the misconduct and support those who are affected.
Challenges: In practice, many NFPs quickly discover the complexity and burden involved, and that investigations need far deeper expertise than a ‘ticking boxes’ exercise. They demand impartiality, legal rigour and emotional sensitivity. A misstep at any stage can expose an organisation to further reputational harm, regulatory action or even litigation.
For many NFPs, three common challenges make going it alone difficult:
- Independence and impartiality: Staff or board members tasked with investigating colleagues or volunteers are often too close to the situation, creating real or perceived conflicts of interest.
- Specialist expertise: Fair Work law, ACNC obligations, whistleblower protections and privacy requirements all intersect during a misconduct investigation. Navigating these correctly requires technical knowledge and experience.
- Emotional and cultural impact: Allegations of misconduct often involve sensitive issues such as harassment, bullying or fraud. Asking internal leaders to investigate peers or subordinates can strain trust, damage morale and create lasting divisions within teams. It is also essential to ensure adequate support mechanisms are in place for staff to access during the investigation process.
By contrast, engaging an external investigator brings credibility, fairness and efficiency. A skilled partner provides an independent lens, ensures compliance with complex regulatory obligations and allows your people to focus on your mission.
Investigating misconduct is one of the most sensitive and high-stakes challenges an NFP can face. By preparing well and engaging independent expertise when needed, you not only protect your people and reputation but also strengthen the integrity of the entire sector.
Centium’s Governance & Investigation Services: At Centium, workplace investigations are just one of the ways we help organisations build resilience and accountability. Beyond investigations, our team supports clients across risk and assurance, cyber and information management, probity and governance, and learning and development. Whether you’re looking to improve governance, safeguard against cyber risks, strengthen decision-making processes or develop the capabilities of your staff and leaders, Centium provides a trusted, independent perspective backed by over 30 years of experience. To explore more ways to safeguard your mission, take a look at our ongoing series of articles focused on Australia’s NFP sector, or get in touch with Centium today at [email protected] or 1300 237 810.
Third Sector provides high-level content and services for professional development and organisational growth to leaders and senior executives from Australia’s NFP sector and its supporting industries.
Trending
Popular
