Strong governance is one indicator of a stable, healthy PBC. Strong governance is reflected in processes, structures, culture and rules that show transparent decision-making and a recognition of regulatory obligations. Governance processes and procedures should clearly outline who is responsible for what, who is accountable for decisions and establish the most effective arrangements for achieving the PBCs aims and objectives. Demonstrating fair and inclusive decision making and appropriate participation by all members of the PBC is a hallmark of effective governance.
Strong governance is also an important factor that funding bodies, donors and investors will consider when making funding decisions. Governance capability is closely aligned with capacity to meet a PBC’s objectives and achieve its aims, and may affect a PBC’s success or failure in attracting funding.
Characteristics of strong governance include:
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Accountability |
The board has an obligation to report, explain and be answerable for decisions it has made on behalf of its members. |
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Transparency |
People should be able to follow and understand the decision-making process. |
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Follows the rule of law |
Decisions should be consistent with relevant legislation and within the powers of the PBC. |
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Responsive |
The PBC should always try and serve the needs of the members and native title holders. |
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Equitable and inclusive |
A community’s wellbeing results from all its members feeling that their interests have been considered in the decision-making process. This means that all groups should have opportunities to participate. |
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Effective and efficient |
The PBC should implement decisions and follow processes that make the best use of the available people, resources and time to ensure the best results for their members and native title holders. |
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Participatory |
Anyone affected by or interested in a decision should have an opportunity to participate in the process for making that decision. |
Adapted from the Good governance guide, Victorian Local Governance Association.
Ten tips for corporate governance from ORIC
ORIC provides the following ten practical tips for good corporate governance:
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1. Keep your register of members up-to-date |
Make sure the register of members has the following information for every person who is or was a member:
(Note: the register of members is a continuing record and if kept correctly, it will help to resolve any disputes about who is a member). |
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2. Know your role and responsibilities |
Make sure the directors fully understand their role and responsibilities. |
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3. Know your rules |
Know your rule book (constitution). Encourage your members to learn about it. |
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4. Know your money position |
Make sure you know about the money position, or use your auditor more often (say every three months) to check that your staff are managing the money properly (a good auditor will do this for the directors). |
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5. Taxes |
Make sure that tax matters are handled correctly, in particular the Goods and Services Tax (GST), Pay As You Go (PAYG) and Fringe Benefits Tax (FBT). Make sure the Superannuation Guarantee contributions are paid for all your staff. |
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6. Attendance |
Make sure a director is at every meeting when the funding agency(s) come to visit. |
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7. Insurance |
Make sure the corporation's property is insured. Check that insurance policies are renewed on (or before) the due date. |
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8. Assets |
Be careful to only use the corporation's assets in line with funding conditions (most will say that personal use is not allowed). Better still, make a policy about this for everyone to see and use. |
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9. Minutes of meetings |
Make sure you keep minutes of every meeting of the corporation. Minutes should say what type of meeting you had (AGM, general meeting or directors' meeting, what day it was held, who came, and what decisions were made). |
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10. Hold an annual general meeting (AGM) |
Make sure you have an AGM every year (usually before 30 November).
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The Australian Institute of Company Directors lists ten principles that promote good governance in not-for-profit organisations and other governance professionals provide further principles for good governance within the board room.
Written by Michael Cawthorn, consultant anthropologist
Further resources
- Good governance principles and guidance for not-for-profit organisations, Australian Institute of Company Directors, 2013
- Understanding governance, Indigenous Governance Toolkit, Australian Indigenous Governance Institute (AIGI), 2012
- Eight elements of good governance, Governance Pro
- Good governance: what are the basic principles and why is it important?, Governance today
- Good governance guide, Victorian Local Governance Association, 2012