Good Governance of a Society

2010 Article updated October 2017

 

Governance and management

There are clear differences between governance and management, and if that distinction is understood by societies and their members potential disagreements can be avoided or handled better. What is best for a particular entity will depend on the type of organisation, what it does (and how), the way it has evolved, and the abilities of the people belonging to it. Typically, the larger the membership of an entity or the more complex its activities the less its governance, management and administration will be directly handled by the members at large.  Where control is vested in an executive committee and especially in employed staff, the risk is that members are left in the dark and become alienated.

Too many entities are governed and administered by people who fail to read and understand the entities’ constitutional documents, and who are simply incapable of doing a competent job.  This is no new phenomenon, but in recent years a number of scandals in the voluntary sector in New Zealand have become very public, most of which can be traced back to poor governance or administration by people without the skills, training, aptitude and/or mental attitude to do a proper job; all too frequently leading to misappropriation or misuse of (often taxpayer) funds.  The article, “Lessons from a Polytechnic?” highlighted these issues, and other examples of the mis-use of funds regularly appear in the media.

As mentioned in the “Lessons from a Polytechnic?” article, the New Zealand Rugby League, over some years had major governance and organisational problems, and SPARC (Sport & Recreation New Zealand) as a Government funding body intervened.  SPARC’s report, “Rugby League – Contributing to New Zealand’s Future,” was discussed in my previous article.  In the present context, I note its assertions that “The success of any organisation is dependent upon strong governance” and that “Effective governance ensures the Board of Directors provide leadership, direction and oversight to the Chief Executive and management with respect to defining, resourcing and securing the strategic goals and agreed outcomes which will underpin the success of the sport.” SPARC has produced a useful and comprehensive guide to effective governance for sports and recreational organisations, which is applicable to any society or trust, “Nine Steps to Effective Governance; Building High Performing Organisations.”

 

Record-keeping

Apart from any personal records kept by officers, the organisation’s secretarial and financial records should always be carefully maintained in chronological order in a permanent filing system.  Such records are important in maintaining the continuity of any organisation.  In addition, the Registrar of Incorporated Societies (but not of Charitable Trusts) has powers of inspection, but an organisation’s auditor may need to inspect these records, and members, too, may be entitled to inspect records.  If the entity is a charity Charities Services have monitoring and compliance functions, and will investigate complaints (which I will discuss in another article).

 

Recurrent requirements

Every registered society must hold an annual general meeting of its members, and at that meeting the society’s officers are normally elected and annual reports (including financial statements) are usually presented and adopted.  Charitable societies and trusts registered with the Charities commission must file annual returns with the Commission, and societies registered under the Incorporated Societies Act 1908 (but not under the Charitable Trusts Act 1957) must lodge annual financial statements with the Registrar unless they are charitable and file them with the Commission.  Apart from those minimum requirements:

  • Legislation such as the Income Tax Act 2007, the Goods and Services Act 1985, and the Sale of Liquor Act 1989 contain requirements for the filing of applications and returns.
  • The society’s rules or a Trust deed may provide for other regular events.

Meetings

Meetings should be run efficiently and in accordance with proper meeting procedure (also to be the subject of future articles).

 

The secrets for success

A club or society will thrive if it meets its members’ needs and wants, if it is well-run, and if it complies with its obligations. As most clubs or societies are run by volunteers, much depends on the enthusiasm and ability of the officers and committee.

This is one of a series of articles on societies and charitable trusts (originally published in the NZ Lawyer magazine) by Mark von Dadelszen, a Hastings lawyer and author of Law of Societies, 3rd Edition, 2013. If any reader has examples of issues that have arisen or questions about societies or charitable trusts that might be a suitable subject for one of these articles please contact Mark at mark.vondadelszen@bvond.co.nz.