Defining a Not-for-Profit Society

The Conundrum With over 25,000 incorporated societies in New Zealand, and probably a similar number of unincorporated societies, one might think we know what a “society” (not-for-profit) is. The website of the Registrar of Incorporated Societies: Tells us that “An incorporated society is a group or organisation that has been registered under the Incorporated Societies Act 1908 and, when incorporated, is authorised by law to run its affairs as though it were an individual person,” Advises on the consequences of registration, and Also notes that “There are a wide range of groups and organisations that have become incorporated societies. These include sports clubs, social clubs, music and cultural groups, special interest and activist organisations.” The sheer range of groups and organisations that can become incorporated societies and the number that have are, in themselves, clues to the inherent problems of definition. Evolution of Societies As a means of connecting people with common interests, societies have existed for millennia, at least as social and political organisations. In the last few centuries they have, perhaps, been more often associated with recreational activities, with partnerships and companies mainly fulfilling the need for business-related co-operation. As a result of greater leisure time (has Alvin Toffler’s 1970 Future Shock prediction come true?), the number of purely recreational activities and associated societies has grown. The coverage is wide-ranging, and societies are associated with sports and games, cultural activities, arts, crafts, and other recreational and occupational activities. In recent articles I discussed “The ‘Pecuniary Gain’ Conundrum in Society Law” (Issue 197, 16-11-2012) and “What is a non-profit organisation?” (Issue 195, 5-10-2012). However, a charitable entity (therefore...

Governance Propriety – mixing governance and management

Mixing Governance and Management In many voluntary organisations those who direct or manage the actual activities of the entity may attend meetings of those who govern it on an ex officio basis.  In the balance of this article I will refer to that person as a “manager,” to cover managers, coaches, directors, conductors, and any similar person, and to the governance body as the “committee.”  Some problems can arise as a result: The manager may start being treated as, or may start acting as, a member of the committee. The manager may prepare agendas and minutes, to a degree controlling what the committee discusses and how its discussions and decisions are recorded, If the manager is sent all agendas and minutes it may become difficult for those governing to deal with issues involving the manager without some embarrassment and subterfuge. Those dealing with the manager may make incorrect assumptions about that person’s authority. Where those governing insist on being involved (for instance in deciding who gets awards) those in management are likely to say “don’t they trust” us, when the issue is not trust but protecting those in both governance and management from criticism (for instance, of cronyism). Where the manager is either deemed to be, or is elected as, a member of the committee those problems are compounded, and the manager cannot bring to the committee the necessary degree of independence expected of committee members.  If those in governance are also paid employees of, or contractors to, the entity individuals can then, effectively, be employing or engaging themselves, determining their own performance indicators, remuneration and perks (an example...