New governance regime for not-for-profits – disclosure of remuneration on the way?

In preparation for the establishment of the Australian Charities and Not-for-profits Commission (ACNC) from 1 July 2012, the Australian government is reviewing governance arrangements in the NFP sector, with a view to replacing the current duplicative, burdensome and unclear governance structure with a new centralised governance framework for all NFPs.

Consistent with past consultation periods, the consultation paper issued by Treasury on 8 December 2011 sought views from the sector and other stakeholders by 20 January 2012. The government’s aim is to ensure that NFP entities receiving public support operate under appropriate and sound leadership, probably under the assumption that sound leadership makes no allowances for the New Year break and summer vacations.

In relation to remuneration, the consultation paper notes that the remuneration of management and board members can be a contentious issue for NFPs, particularly in attracting and retaining staff. Given that NFPs are often in receipt of public monies, and receive generous tax and other concessions, the paper seeks responses to the question “Should the remuneration (if any) of responsible individuals be required to be disclosed?” Our bet is the government will require disclosure, no matter what views are expressed in the consultation.

NFPs seeking registration with the ACNC will have to meet core governance rules in the following areas:

  • duties and minimum standards of responsible individuals, including rules for proper organisational management and running of the entity • disclosure requirements and managing conflicts of interest
  • risk management procedures – internal and external reviews and auditing requirements
  • the coverage of the minimum requirements of governing rules • relationships with members Treasury is seeking submissions on a range of questions relevant to each of these areas.

The consultation paper is available HERE

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