A practical problem, and not uncommon
We are quite frequently asked by members of incorporated societies for advice about a problem which is not uncommon – a society which is unable to find anyone willing to stand for office as chairperson, secretary or treasurer, and where the constitution does not outline what should be done in those circumstances (and few society constitution do so). Most society constitutions provide that these positions are to be filled by people elected from the membership and may provide for the co-option of people to fill vacancies. However, finding volunteers to stand for election or for co-opted appointment is often difficult, and few society constitutions provide any solution in the absence of volunteers willing to take office. In addition, of course, it is sometimes difficult even to find enough people to form the size of committee prescribed in a society constitution.
If an incorporated society fails to comply with its constitution by failing to elect officers (or the number of people required to form its committee) as prescribed under the constitution then High Court proceedings could be commenced (at considerable expense) to try to find a remedy, and if the society is a charity the failure to comply with the constitution could be the subject of a complaint to Charities Services.
Is there a sensible answer to the problem?
If a society is unable to elect or appoint enough officers or committee members as required by its constitution and the issue came before the High Court, the presiding judge is likely to look for a practical solution, particularly as ordering the society to hold election in the absence of volunteers is unlikely to be a very productive solution! Similarly, while Charities Services, when considering a complaint, might be critical of the failure of a charitable society to elect officers or committee members, such criticism would not resolve the problem.
The academic response to the problem might be that the constitution had to be followed and in the absence of volunteers standing for office the society should cease operations. That would result in the fundamental purposes of the society being frustrated by legal technicalities. In reality, the problem should be looked at in a practical rather than academic way.
If it is impossible to find volunteers to govern a society then a practical solution would be to change the constitution to reflect the realities and remove reference to officers and a minimum committee size. However, of course, that will not remedy the underlying problem as the duties of officers (chairing or controlling meetings, keeping minutes and dealing with correspondence, paying accounts, issuing receipts, banking money and keeping financial records) still need to be undertaken by someone, so how those functions will be fulfilled would have to be dealt with by changing the society’s constitution.
There may be other alternative and potentially more enduring solutions:
- To widen the search for volunteers beyond the membership into the wider community,
- To join forces (i.e. to merge) with another similar organisation, or
- To cease operations and wind up, and transfer remaining net assets to a similar organisation
Results of some crystal ball gazing
In recent years, some commentators have suggested that New Zealand has too many community organisations. Whether or not that is true, there are a number of reasons why community organisations should be re-considering their future:
- People may be more likely to volunteer their services to help govern a community organisation if the organisation is in a “healthy” state (in terms of finances, activities and membership) and if it serves a wide cross-section within the community. The real problem may not be the lack of volunteers but, rather, the health of the organisation itself.
- In times past where travel was more difficult and the means of communication were less sophisticated similar organisations may have been formed to serve communities which were close to each other. With readier access to passenger transport and cars and with cheaper and easier means of communication the rationale for having several similar organisations in communities that are close to each other may need to be reconsidered.
- Logically, where organisations are effectively competing within the same community for members, money, resources and volunteers, there may often be a compelling case to consider amalgamation:
- Where there are several organisations performing similar functions they are all likely to find it difficult to find officers and committees, and they will also all be meeting the cost of having similar equipment, premises, and other overheads,
- Where an organisation has premises (whether owned or rented) those premises and the equipment within them are likely to be unused for much of the time, so amalgamation should result in better utilisation of premises and equipment,
- Amalgamation is likely to reduce overhead costs per head, possibly resulting in lower membership fees or enabling members to receive greater value for their membership fees,
- If organisations have contracts to provide services (such as health, social services or education), those with whom they contract are likely to find it more efficient and cost-effective to deal with just one organisation than with several, and
- Potential funders (such as charities, community trusts, councils and corporates) are less likely to be willing to fund an organisation when the benefits of their funding are dissipated by duplication of activities.
- The new Incorporated Societies Act will impose clear statutory duties on the officers and committee members of an incorporated society. That change will make explicit what is, in fact already the law (because a Court should already hold that officers owe those duties, and on a liquidation a liquidator can apply provisions of the Companies Act to the officers of a liquidated incorporated society). Having those duties made explicit in the new Incorporated Societies Act will inevitably result in a number of incorporated societies questioning the benefits of remaining incorporated under the statute.
Especially when a community organisation is struggling to find volunteers it may find it useful to re-examine why it exists and how it operates to ensure that what it is doing remains relevant to its community and membership. The result of such a process can bring some clarity, and:
- Can reinvigorate an organisation,
- May identify new activities in which the organisation can engage,
- Can reinforce the relevance of the organisation to its community and its members,
- Can enthuse more members to become involved in the governance of the organisation, and
- May open up opportunities for co-operation with other similar organisations (for instance, with shared use of premises and equipment) or, possibly, opportunities for amalgamation.