BEFORE ENGAGING IN GOVERNANCE – A CHECKLIST

Before becoming a member of a not-for-profit board or committee, we recommend that you should do some serious homework, because being in governance is not a prize for good behaviour or beauty, but involves serious responsibilities and potential personal liabilities.  You need to have a thorough understanding of the organisation’s purposes and activities, and whether or not you will be able to work with the organisation and those who govern and manage it. The following checklist should assist if you are assessing whether you should become involved in a not-for-profit’s governance.  Some issues are repeated under different headings, and it is generic rather than specific, so it may not be exhaustive.  You need to consider the following issues when considering taking on the responsibilities of not-for-profit governance: 1.  Check the organisation’s legal and reputational status What kind of legal entity is the organisation? If the organisation is an incorporated society, it may be registered under one of several statutes; but most common are societies incorporated under the Incorporated Societies Act 1908 or Charitable Trusts Act 1957. (N.B. If the current proposed Incorporated Societies Bill is enacted there will be a new modern statute, and societies currently incorporated under the Charitable Trusts Act will transfer to the new statutory regime, and those in governance of societies will need to comply with new and significantly greater statutory obligations). If the organisation is a trust or other entity, there are different legal obligations (and if the entity is a charitable society or trust, the charitable purposes are paramount). If the organisation is a company, it and you will have to comply with...
Updating (Replacing) the Trustee Act 1956

Updating (Replacing) the Trustee Act 1956

Revamp to 60-year old trust law On 14 November 2016 the Justice Minister, Amy Adams, released draft legislation to update our trust law and improve the administration of trusts. It is important to appreciate that this change will have implications for all trusts; individuals may be most interested in family trusts and trusts established under Wills, but the changes will also affect (in particular) charitable trusts. The Minister highlighted that: Trusts play an important role in New Zealand.  Between 300,000 and 500,000 trusts are operating today.  Every day, ordinary New Zealanders use them to manage their finances, with an estimated 15 per cent of private houses held in a trust.  They also form part of the economic backbone of the commercial and social sectors. Our 60-year old trust law is complex and hard to navigate, partly because it is scattered across the Trustee Act and a variety of decisions made by courts over many years.  That’s why in 2009, the Government asked the Law Commission to have a look at how the laws could be modernised and made clearer. Given their importance to our society and economy, trust law should be simple to understand so that families and businesses can manage their affairs with confidence. The draft Trusts Bill aims to update and improve upon the Trustee Act 1956. The proposed improvements are intended to: Make it easier for people to understand how to use (primarily, family) trusts appropriately to manage their affairs, Set out clear mandatory and default trustee duties so people know what their obligations are if they’re involved in governing or managing any type of trust,...
Proposed New Trusts Legislation will affect Charities

Proposed New Trusts Legislation will affect Charities

Updating (Replacing) the Trustee Act 1956 – revamping 60-year old trust law On 14 November 2016 the Justice Minister, Amy Adams, released draft legislation to update our trust law and improve the administration of trusts. It is important to appreciate that this change will have implications for all trusts in New Zealand, including charitable trusts. The Minister highlighted that: Trusts … form part of the economic backbone of the commercial and social sectors. Our 60-year old trust law is complex and hard to navigate, partly because it is scattered across the Trustee Act and a variety of decisions made by courts over many years.  That’s why in 2009, the Government asked the Law Commission to have a look at how the laws could be modernised and made clearer. Given their importance to our society and economy, trust law should be simple to understand so that families and businesses can manage their affairs with confidence. The draft Trusts Bill aims to update and improve upon the Trustee Act 1956, and in relation to charities, the proposed improvements should: Make it easier for people to understand how to use, govern and manage charitable trusts, Set out clear mandatory and default trustee duties so people know what their obligations are if they’re involved in governing or managing a charitable trust, Give charitable trustees flexible powers and updated rules, Reduce risks for charitable trustees and disputes about charitable trusts as well-informed trustees are less likely to act contrary to the law, Clarify rules relating to changes to charitable trusts and winding trusts up charitable trusts, and Provide more options to remove and appoint...

Wildflower Sculpture Exhibition 2016

      BvonD is again supporting the Wildflower Sculpture Exhibition which is run in association with the Hospice Holly Trail with proceeds going to Cranford Hospice in Hastings. The exhibition will run from 9 – 13 November, 2016. Over the four previous exhibitions in 2008, 2010, 2012 and 2014, around 15,000 visitors have been welcomed to Round Pond Garden to view and purchase works from Hawke’s Bay and New Zealand artists with $151,000 donated to Cranford Hospice. To find out more information about this great event, check out their website Wildflower Sculpture Exhibition....

Risks for those in Not-for-Profit Governance in 2016

A “perfect storm” confronting those governing not-for-profits? Several items of legislative reform, some already enacted, and one proposed, have created real concerns for those governing not-for-profits. This article discusses some of those issues, and seeks to provide some reassurance to those governing not-for-profits.   Not-for-profit organisations are essential for strong communities The 2013 Law Commission Report, “A New Act for Incorporated Societies,” confirmed that a strong not-for-profit sector is important to the health of a mature and civilised society. The Commission asserted that “community organisations play a very important role in New Zealand society” and that they have “a direct impact on New Zealand’s social and economic development through the provision of services not provided by the other sectors and the development of strong communities.” The Law Commission noted that New Zealand has over 23,000 incorporated societies spanning a diverse range of interests and purposes, with approximately 45 per cent being cultural, sporting and recreational bodies, and the remaining 55 per cent covering a broad range of community activities, including social service providers, religious groups, development and housing bodies, educational and environmental interest groups, and business and professional groups. The Commission also argued that largely voluntary space in which incorporated societies operate is an important part of New Zealand society and of the economy (and Commission’s observations would also apply to charitable trusts).   Legislative reform threatening the essential role of community organisations? The Vulnerable Children Act 2014 (see Protection of Vulnerable Children) and Health and Safety at Work Act 2015 (see Health and Safety Issues) have caused significant disquiet amongst not-for-profit organisations (and the 2014 Act in schools),...

ADEQUATE NOTICE OF MEETINGS

Who cares? Those governing societies and charities are, generally, not too worried about what’s in the organisation’s constitution.  However, they should be, as the proceedings of meetings called without adequate notice to members can be declared to be invalid.  In reality, most people do not know the meaning of the expressions “clear days” or “at least ‘x’ days” used in the rules dealing with notices of meeting, the lodgement of notices of motion for business at meetings, or the election of officers.  If they started considering what the phrases “clear days” or “at least ‘x’ days” mean, they would almost certainly discuss whether it meant that you should ignore non-working days and parts of a day.   What is the problem with “clear days” or “at least ‘x’ days”? A farmer, agricultural contractor, home gardener or outdoors sportsperson might assume that “clear days” refers to the lack of clouds and therefore the lack of rain, or other precipitation.  If they come across the phrase in a constitution, they will sensibly conclude that the expression was being used in an unfamiliar way.  Search in MSWord for the phrase “clear days” and you will be referred to the Encarta Dictionary which gives 19 definitions of the adjective “clear” – “free from what dims,” “transparent,” “free from clouds,” “pure in hue,” perfect and unblemished,” distinct,” “sounding pleasant,” out-and-out,” “unambiguous,” “understood precisely,” “evident,” “mentally sharp and discerning,” “without guilt,” unobstructed,” “empty,” “not attached to or touching anything,” “net,” “not financially obligated,” and “un-penalized;” none of which is very helpful in the present context.  The issues are no clearer if the formula of “at...