Codes of Conduct in Not-for-Profit Governance

Introduction

Those involved in the governance of a not-for-profit entity (incorporated society or charity, whether or not incorporated under any statute) have duties and responsibilities:

  • These may be specified in the constitution of the not-for-profit entity,
  • They may be specified in any legislation under which the not-for-profit entity may be incorporated or which applies to the entity,
  • Such duties may have been recognised by a Court, and
  • Some such duties may be ethical.

In summary, those in governance need to comply with the law, be totally honest, and apply themselves diligently to their duties.

This article does not discuss the details of duties found in statutes, constitutions or Court decisions but, rather, obligations relating to the processes and behaviours usually required of those governing entities.

 

Compliance with duties in statutes, constitutions or Court decisions

Consistent with the previous sentence, no reference is made to specific legal duties owed under any statute, constitution or Court decisions, but those in governance are obliged, in good conscience, to comply with their legal obligations.

 

Conduct related to being a “good steward”

Collectively, those in governance of any organisation are the temporary custodians of the organisation and are, collectively, expected (by the organisation’s members, but often by others in the community, and by law) to:

  • Comply with their legal obligations and duties,
  • Maintain and improve the good reputation of an entity, and
  • Mostly importantly, advance the attainment of the entity’s purposes.

Conduct related to compliance with the law and ethics

Individually, those in governance need to comply with their legal obligations (found in the organisation’s constitution and relevant statutes) and their ethical responsibilities to:

  • Comply with the law and ensure that those in governance with them do likewise,
  • Prepare thoroughly for, attend and participate in governance meetings,
  • Identify and declare personal conflicts of interest and avoid taking part in or influencing decision-making relating to such conflicts of interest,
  • If anyone in governance believes someone else may have a potential conflict of interest that possibility should be politely raised (to preserve the integrity of the entity and to avoid possible problems for the other person),
  • Preserve and enhance the value of the entity’s reputation and financial assets,
  • Look into and plan for the short, medium and long-term future,
  • Be alert to identify observe unlawful or unethical conduct at all levels of the organisation, and then to take remedial action,
  • Avoid breaching obligations of confidentiality in relation to the entity’s governance meetings and affairs,
  • Accept with good grace the decisions of the majority, irrespective of the possibility of convincing the majority to reverse or modify its decisions,
  • Leave disagreements and emotions at the governance table,
  • Avoid actions or statements that detract from the entity’s reputation, and
  • At all times, act lawfully, honestly and ethically.

Bearing those precepts in mind, a Code of Conduct for those in governance might be adopted along the following lines:

Governance Code of Conduct

Every person involved in governance is committed to acting and behaving ethically and legally in all areas of the entity’s responsibilities and authority, and agrees to the following commitments:

  1. To have a thorough understanding of the organisation’s constitution and of the law under which it is established.
  2. Individually (and collectively with others in governance) to comply with the organisation’s constitution and the law under which it is established.
  3. To prepare thoroughly for, to attend and, to participate actively in governance meetings,
  4. To identify and declare personal conflicts of interest, and to avoid taking part in or influencing decision-making relating to such conflicts of interest,
  5. To take remedial action is respect of any unlawful or unethical conduct within the organisation,
  6. To respect and honour the different roles of those in governance and management,
  7. To treat the organisation’s employees and contractors with proper respect, and ensure that the organisation has and follows adequate and lawful health and safety policies and procedures,
  8. To preserve and enhance the value of the organisation’s reputation and financial assets,
  9. To consider strategically and plan for the short, medium and long-term future of the organisation,
  10. To observe obligations of confidentiality in relation to the entity’s governance meetings and affairs,
  11. To accept the will of the majority (even if there is a possibility of convincing the majority to reverse or modify its decision), and to leave disagreements and emotions at the governance table , and
  12. At all times, to act lawfully, honestly and ethically.