IoD submission on the Charities Amendment Bill 2022

The IoD submission notes the considerable benefits of improving governance standards for the charitable/not-for-profit sector, while ensuring the changes don’t overburden organisations and deter people from getting involved in leadership, particularly in governance roles.

We supported proposals to strengthen who can be qualified to be officers of charities, including amending the definition of an officer of a charitable organisation, and the requirement for Tier 1, 2 & 3 reporting entities to report on funds accumulation policy and practice.

Our submission is limited to three key areas:

1. Improving governance standards

• Duty on officers to ensure their charity retains it status
• Clarification of role of officers of a charity
• Duty to review governance procedures annually

The IoD supports each of these proposed changes which will improve the standard of governance of charitable entities, while not unduly overburdening organisations.

2. Officer qualification and definition

• Extension of definition of officer

The IoD supports this proposal to ensure all people who contribute to the direction or decision-making of a charity, regardless of how the charity has organised its governance structure, are accountable. Stakeholders/members, funders and the public are entitled to expect the highest standard of best practice governance for those who lead charitable entities.

• Change to age eligibility for officers of a charity
  

The IoD supports this proposal. Good governance practice includes increasing diversity on boards, including young people.

• Change to officer disqualification criteria

The IoD supports more stringent requirements on who can be an officer of a charity given the potential to undermine public trust and confidence in the sector.

3. Funds accumulation

The IoD supports this change that will require larger charities (Tier 1, 2 & 3) to report the reasons for their accumulated funds. Organisations need to be transparent about their strategy for accumulating funds and spending funds on charitable purposes. Transparency and meaningful reporting is important to stakeholders and can help build trust and confidence in the charitable sector.