ACNC Guidance on Board Remuneration

The Australian Charities and Not-for-profits Commission (ACNC) published guidance on 12 July 2017 aimed at providing charities with practical advice on paying their board members.

While most charity board members are not paid, serving as volunteers, all charities are different and there are different views about the appropriateness of paying board members. The ultimate test is: Is paying board members in the best interests of the charity?

The answers will vary depending on the nature and complexity of the charity and the skills and time required of board members.

Board members may be paid as long as doing so furthers the organisation’s charitable purpose, is allowed under the charity’s governing rules, is properly authorised, and is conducted in a transparent and robust way. This is consistent with the obligations of board members under the ACNC’s Governance Standards. Board members must act in the best interests of their charity and manage its finances in a responsible way.

The ACNC Commissioner Susan Pascoe says:

The payment of board members may present a conflict of interest and this needs to be managed. We would expect a proper process to be undertaken to set a reasonable and proportionate level of remuneration.

Charities also need to be mindful of community expectations as well as the views of their members, supporters and the users of their services. If a charity feels uncomfortable disclosing and publicly justifying the level and nature of the remuneration, then this should be an alarm bell.

Any payments to board members that are unreasonable, unauthorised, or unjustifiable, may mean that the charity is not complying with the Governance Standards – which could be grounds for revocation of charity status. The ACNC will not hesitate to investigate in such circumstances.

Before leaping in to pay board members, charities must also consider particular rules that might apply to them. For example, most schools would lose their state and federal funding if they paid their board members.

The guidance – Remunerating Charity Board Members – provides an overview of issues relating to board remuneration, as well as some of the factors charities need to properly consider when making a decision on paying board members for their duties. Charities can download the new guidance on the ACNC website.

If your charity is considering paying its board members, please contact Xh%AC%D9%A2%AFl%8E%BF%C5%CA%8F to ensure that you take into account all the relevant issues and that implementing your decision is effected correctly.