Ultimately, the board has legal responsibility for the organisation it governs.
All directors, even volunteers in tiny not-for-profit organisations, must comply with the relevant state and national laws. If you are a director of an organisation that is not compliant with these laws, you could be legally responsible and may be penalised.
The board must ensure that the organisation is governed according to its constitution and complies with the laws in relation to its operations, finances and reporting including ensuring the safety and wellbeing of its people.
While the board will appoint a senior staff person (usually called an executive officer or similar title) to manage the organisation, the board remains responsible for ensuring that the executive officer is complying with all relevant laws and standards.
Learn and understand your legal responsibilities
There are national and state laws relevant to directors. Individual directors must actively learn and understand their legal responsibilities as directors. Some will be mentioned in this How to – but not all of them.
See The Not for Profit Law Guide for more.
You might need to learn about incorporation
Is your organisation incorporated? Incorporation refers to the process of making your organisation a legal association, so that it is recognised by law as having existence in its own name. While there is no legal necessity for an organisation to become incorporated if it remains a voluntary organisation, incorporation is recommended because it allows an organisation to:
- have its own ‘corporate’ identity
- protect individual members of the organisation, club or association from personal legal liability
- enter into enforceable contracts
- purchase and own real estate
- enter into tenancy and lease agreements
- sue or be sued
- accept bequests or gifts
- apply for government, corporate and philanthropic grants
- seek charity tax concessions including deductible gift recipient status
- continue to exist until it is disbanded by direct operation of the law.
Associations incorporation legislation is governed by state governments and requirements vary between states. In Tasmania it is Consumer Affairs & Fair Trading (CAFT), part of the Department of Justice, that is responsible for incorporated associations. The Consumer Affairs and Fair Trading website has an excellent range of fact sheets and other information. You can also phone them on 1300 654 499.
The Australian Charities and Not-for-Profits Commission (ACNC) website provides information on how to register and manage your organisation.
If you want to receive charity tax concessions from the Australian Tax Office you must register with the ACNC. Organisations must be able to demonstrate that they are compliant with Australian laws and have directors who are not disqualified under the Corporations Act or by the ACNC Commissioner.