Code of Governance for the Community Sector

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Code of Governance
for the
Australian
Community Sector
Developed in consultation with
the Australian community sector
by Our Community (June 2008)
An initiative of the Boards,
Committees & Governance Centre
www.ourcommunity.com.au/boards
Code of Governance for the Community Sector June 2008
This document can be found online at www.ourcommunity.com.au/boards
Dear Colleagues,
At Our Community we get a steady stream of enquiries from puzzled board and committee of management
members who are getting themselves tangled in questions of governance.
Some of the questions are technical and can be quickly fixed using Our Community’s online resources,
particularly the Boards, Committees & Governance Centre –
www.ourcommunity.com.au/boards. This is
the resource created to support the development of more efficient, more responsive and more responsible
community boards in Australia. It includes dozens of free help sheets, an online Policy Bank, a quarterly
newsletter, a Matching Service to help community boards get access to new members, a consultants’
register and much more – all proudly supported by HESTA.
Many questions about governance, however, arise out of confusions about what governance is for, what
it encompasses, and the values that it is trying to achieve. In these cases it is always necessary to lay out
clearly the principles of governance adopted by an organisation. When these principles are not clearly set
down there can be confusion, conflict, and avoidable crossed purposes.
I have come to the realisation that it is a lot easier to build community organisations when there is a sense of
shared values. At the heart, community organisations have in common a commitment to the public good, a
preference for fair dealing and open conduct, and a consciousness of the need to embrace diversity – but all
of this must be confirmed and driven by the board.
In the Draft Code of Governance that follows we have tried to sketch out the rules that seem to flow from
those principles, as they apply to the boards of our organisations. Our initial call for comment brought a
large number of valuable insights and practical suggestions from across the community sector, and this
code now embodies the wisdom of the many.
I hope that we now have a code that can lead us through the morass of politics, finance and marketing that
faces all organisations in this shifting and surprising society of ours.
Denis Moriarty
Group Mananging Director, Our Community

A Code of Governance for the Australian
Community Sector must be:
Code of Governance for the Community Sector June 2008
This document can be found online at www.ourcommunity.com.au/boards
Enabling
The basic requirement of a governance code is that it ensures that power in an organisation is properly
sourced from the organisation’s own community, that it is not able to be hijacked or hidden away, and that it
is able to be contested fairly within the rules.
Responsive
The value of civil society is that it provides a counterweight to power, that it allows dissident views to
be heard, and it gives power to the powerless. These strong points also have to be applied within the
organisation. The power of the board has to be limited by the rights of all stakeholders, and by the
organisation’s responsibility to our society.
Flexible
The Australian community sector is diverse in size, purpose, and legal form. Almost no statement can be
applied to every community organisation, and any rule that applies to every group will be inappropriate for
many. Such a governance code therefore needs to be flexible both in its interpretation and its application,
dealing with principles rather than regulations.
Positive
The code should stress what boards should actually do. A long list of things boards shouldn’t do leads to
caution, inertia, bureaucracy, and many other undesirable organisational traits.
This code should be judged against these criteria.
A governance code sets out the values that the organisation considers central to its operations, describes the
boundaries of acceptable behaviour for the organisation based on these values, and identifies the areas in
which procedures are required to police these boundaries.
A code of governance cannot overrule the organisation’s constitution, still less the legislation that establishes
it. It is enforceable only with the agreement of its users. A code is not self-actuating; it can deal with any
abuses only where the board is prepared to act in its defence.
A code of governance is not a comprehensive statement of the applicable law, nor is it a treatise on
management. These aspects of community group board practice are addressed in more detail at Our
Community’s Boards, Committees & Governance Centre (
www.ourcommunity.com.au/boards).
Any code is of course necessarily general in nature, and every community organisation will have to go
through the necessary process of clarifying its own principles and the policies that flow from these,
adapting the code to its particular situation, (there’s a bank of policies at the Our Community website that
your community group can use as models – see
www.ourcommunity.com.au/policybank) and to its
particular legal form.
Once the organisation has developed its own policies, it will have to make sure that people know what
they are by publishing a specific procedures manual and putting the code and the ensuing policies into the
induction and training packages for board members, staff, and volunteers.

A Code of Governance for the
Australian Community Sector
Board Membership
1. The Board may not place barriers on the free choice of the organisation’s members; in elections to the Board it
should, however, institute procedures and policies that recruit as candidates persons whose skills or experience
would benefit the operations of the Board.
2. The Board should seek advance commitment from prospective Board members to any specific policies concerning
the expectations of the Board regarding such matters as attendance requirements, investment of time, support
for the organisation, conflict of interest policy and practice, collective decision making, and acceptance of
responsibility.
3. The Board should establish policies dealing with the number of consecutive terms a Board member or officeholder
may serve.
Collective Commitment
4. The Board should be independent – not susceptible to outside direction or outside interests.
5. The Board should develop a culture that enables collective decision making.
6. The Board should ensure that while each member has the right to argue for their own point of view and vote as
their conscience dictates, they should, once a decision has been taken, not speak or work against the decision
outside the Board.
7. The Board should take ultimate responsibility for ensuring that effective mechanisms are in place for dealing with
and managing conflicts.
8. The Board should put in place policies to ensure that Board members treat each other frankly and honestly but with
respect.
9. Any members of the Board who are elected by or appointed from particular sections of the community (users, for
example, or staff) cannot be bound to follow the instructions of those sectional interests but must be free to govern
in the best interests of the organisation.
Democratic Governance
10. The Board should ensure that its procedures allow for all Board members to bring issues before the Board, to be
informed on these issues, to discuss these issues productively, and to take informed decisions.
11. The Board should develop standing orders that are flexible, efficient, and simple, and that allow motions of dissent
to be put before the Board without obstruction.
12. The Board should meet at least six times a year.
13. The Board should support the Chair to fulfil his/her functions.
14. The Board should develop a culture that enables members to dissent without apprehension from the Chair’s rulings
or assessment of collective decisions.
Management of the Board
15. The Board should provide induction, instruction, and continuing support to provide all Board members with the
skills needed to carry out their functions.
16. The Board should ensure that clear policies and procedures are in place to remove from the Board, in conformity
with applicable legislation, members who are in the opinion of the Board unable properly to fulfil their legal, ethical
or social responsibilities.
17. The Board should ensure that clear policies and procedures are in place to protect that the rights of members of
the Board to voice their views without fear of reprisals.
18. The Board should have in place clear policies to ensure that all potential conflicts of interest are dealt with in
accordance with ethical codes and applicable legislation through appropriate disclosure or recusal.
Code of Governance for the Community Sector June 2008
This document can be found online at www.ourcommunity.com.au/boards

A Code of Governance for the
Australian Community Sector
Direction
19. The Board has the ultimate responsibility and therefore control of the organisation. No major policy should be put
into effect without analysis and approval by the Board.
20. The Board is responsible for approving the organisation’s mission and strategic direction, its budget and its major
financial affairs, and its policies on governance, management, and program implementation.
21. The Board should in practice concern itself primarily with the strategic direction of the organisation, and should
delegate operational (day-to-day management) issues to its staff (paid or unpaid).
22. The nature and extent of any delegation by the Board should be clearly documented in every case.
23. The Board is legally responsible for the performance of delegated duties, and should institute effective monitoring
and evaluation procedures.
24. Where the organisation employs staff, the chief executive officer (CEO) should be responsible for the operational
management of the organisation. The CEO may delegate tasks to other staff, but the CEO remains accountable to
the Board for their performance.
25. Liaison between Board members and the organisation’s staff should, except in exceptional circumstances, go
through the CEO.
Risk Management
26. The Board should ensure that robust risk management policies and procedures are in effect to minimise any risk to
the organisation’s mission, its assets, its programs, its reputation, its staff, or its users.
27. The Board should continuously test, review and refresh risk management policy and procedures.
28. The Board should ensure that the health and safety of its employees is of equal priority with the performance of the
mission of the organisation.
Accountability
29. The Board is ultimately accountable for the entire operation and the impacts of the organisation.
30. While the Board may be directly accountable either to its members or to the Minister or governmental agency that
appointed it, it is also accountable to those served by its mission.
31. In order to make this accountability meaningful, the Board should ensure that clear procedures are developed
to provide a transparent framework for conducting its meetings, recording its decisions, communicating those
decisions, and receiving feedback from the organisation’s members and the users of its services.
Transparency
32. The Board should withhold from public scrutiny as little information on its operations as is possible. All Board
deliberations should be open to the stakeholders and the broader community, except where the Board passes a
motion to make any specific portion confidential.
33. The Board should report to the organisation’s stakeholders at least annually in a format and using a medium best
suited to the stakeholders. The report should completely disclose information on the topics and indicators required
to demonstrate the impact of the organisation’s activities and to enable stakeholders to make decisions. The report
should also disclose the processes, procedures, and assumptions used to prepare those disclosures.
34. The Board should establish and implement “whistleblower” policies and procedures that enable individuals to
come forward with information on illegal practices (or violations of Board-approved policies) without fear of
retaliation.
Community Responsibility
35. The Board should do its part to reduce systemic social disadvantage in Australia.
Code of Governance for the Community Sector June 2008
This document can be found online at www.ourcommunity.com.au/boards

A Code of Governance for the
Australian Community Sector
36. The Board should work to encourage in the operations of the organisation social diversity, access and inclusion,
community participation, and consumer participation (where this is applicable)
37. The Board should take into account not only the mission and maintenance of the organisation but also
• The rights and interests of the organisation’s users
• The rights and interests of the organisation’s members
• The rights, interests, health, safety, and wellbeing of the organisation’s workforce
• The interests of the community sector as a whole
• The interests of the general public, and
• Human rights locally and globally
and should be prepared to justify its actions to all these constituencies.
Environmental Responsibility
38. The Board should ensure that the organisation actively works to preserve the environmental sustainability of the
planet
• in its own practice,
• as a participant in a community of practice, and
• as a participant in the Australian social discourse.
Diversity and Empowerment
39. The Board should ensure that its membership profile largely reflects the composition of the Australian community.
There should be tangible efforts to increase the representation of women, minority ethnic groups, under-represented
age groups, people with disabilities, and Indigenous Australians.
40. Where services are provided by the community organisation, the Board should ensure that these respond to and
reflect the reality of Australia’s diverse community.
41. Where an organisation is responsible for the delivery of services or provides opportunities to participate, the Board
should respond to the needs of its own users for representation on the organisation’s Board. Where it is desirable to
avoid conflicts of interest this representation should be by proxy through consumer or rights-oriented groups.
42. The Board should ensure that all members brought on to the Board from disadvantaged groups are given adequate
support, mentoring, expenses, and respect, and should ensure, to avoid intense pressure and isolation, that more
than one member is from such disadvantaged groups.
43. The Board should ensure that the whole organisation, in all of its systems, operations and activities, upholds and
promotes the imperatives of empowerment.
44. The Board should ensure that the principles of equal opportunity and diversity are practically applied to all areas of
the organisation’s work, including its planning, its marketing, its employment practices, and its management.
Ethical Fundraising
45. The Board should ensure that all materials used in fundraising are accurate and truthful, and that, except in
exceptional circumstances, funds raised for stated purposes are used for those purposes.
46. The Board should respect the privacy of its donors and should not make their names available to any other person
for any other purpose, except where mandated by law.
47. The Board should adopt policies and procedures for dealing with the circumstances in which the organisation should
refuse a donation that might compromise its ethics, its finances, or its mission.
Effectiveness
48. The Board should periodically review its own effectiveness, and take any necessary steps to ensure it works well.
49. The Board should regularly review and evaluate the performance of the organisation’s CEO.
50. The Board should ensure that the organisation as a whole, and its programs, are regularly reviewed, and its outputs
and outcomes assessed against the organisation’s mission.
Code of Governance for the Community Sector June 2008
This document can be found online at www.ourcommunity.com.au/boards

Code of Governance for the Community Sector June 2008
This document can be found online at www.ourcommunity.com.au/boards
A Code of Governance for the
Australian Community Sector
A note on nomenclature
In the community sector the same thing may have many different names, and some names may apply to
many different things. To simplify matters a little in some places we’ve settled on using one name throughout.
Board means the governing body of a not-for-profit
organisation – and covers bodies named:
• Councils
• Boards of Directors
• Committees of Management
Board member means a member of a governing body – and
covers members named:
• Members
• Directors
• Trustees
Chief Executive Officer
(CEO)
means the (paid) head manager of the
organisation – and covers staff named:
• CEOs
• Managing Directors
• Administrative Officers
• Executive Officers
• Principals
Community
Organisation
means any not-for-profit, community-based
organisation – and covers organisations that are:
• Incorporated associations
• Not-for-profit companies
• Non-profits
• Quasi-non-governmental organisations
(quangos)
User means any of the persons for whose benefit the
not-for-profit organisation was established – and
covers:
• Consumers
• Clients
• Service recipients
We welcome ongoing input and comment on this Code, particularly
• the underlying principles of the code – whether you agree with them, and whether you think they cover
everything that needs to be covered
• the specific detail of this draft – whether you think it’s clear enough to implement, and whether you think
it’s too detailed (or not detailed enough)
• any practical difficulties your own organisation would run into if it adopted and implemented this code.
The community sector will benefit from vigorous debate in all these areas, and Our Community will foster
such a debate on its website and in its monthly newsletter Our Community Matters – see
www.ourcommunity.com.au/ocmatters.
For input/comments, email [email protected]
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$100.00 is donated to Landcare to assist with recreating old landfill sites around Australia.
One of our Corporate Responsibility Actions:
The Boards, Committees
& Governance Centre
The Boards, Committees & Governance Centre is one of the 16 Knowledge Centres developed by
www.ourcommunity.com.au for Australia’s 700,000 community groups.
It is the primary resource for Australian community groups, accelerating their impact and building a stronger and bolder
community sector.
The Boards, Committees & Governance Centre contains everything a community group needs to learn and flourish.
Resources include:
Resource Centre – dozens of practical help sheets on all aspects of joining a board, evaluating and improving
a board, strategic planning, meetings, financial/legal responsibilities, relationship management, building diversity,
troubleshooting and more.
Policy Bank – sample policies and procedures relevant to community boards and committees and the organisations
they govern, ever-expanding and available in Word format for easy download and adaptation.
Board Builder Newsletter – a quarterly newsletter that builds the knowledge and skills of community board and
committee members through the delivery of practical, plain-language information and advice.
How-to Guides – Low-cost, practical books to help guide the development and operation of community groups.
Titles include Making Meetings Work; Transforming Committees and Boards – from Hell to Heaven; and Surviving and
Thriving as a Safe, Effective Board Member.
Matching Service – providing community group boards and committees with access to a pool of skilled and
willing helpers. The service is free to community groups wishing to list a vacancy and individuals wishing to search the
database for opportunities to serve on a board.
Training – Our Community provides a range of training opportunities for board and committee members and their
supporters. Opportunities include the annual Board Builder Conference, half-day seminars on the Secrets of Successful
Boards and Making Meetings Work, and the nationally accredited Certificate IV in Business (Governance).
www.ourcommunity.com.au/boards
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