Which organisations?

Incorporated associations (e.g. sports club, community group, arts organisation, child care centre, local charity, theatre company). The association’s rules will say what the governing body is called, such as committee, board or management committee, but the duties are the same.

Each State and Territory has its own version of the Associations Incorporation Act. The duties of members are similar to company directors’ duties from the Corporations Act 2001. If the association is a registered charity, the ACNC Governance Standard 5 will also apply. If it is a company limited by guarantee, the board members are directors, and they have the Corporations Act duties.

The six duties

Duty	What it looks like in practice
Care and diligence	Read the management papers given to you before a meeting (and ask for them), attend meetings and ask questions, read and understand the finances.
Good faith and proper purpose	Make decisions for the association and its purposes, not for yourself, a friend or a faction.
Don’t misuse your position	Don’t steer work or money to people you are connected to (connected to conflicts).
Don’t misuse information	Keep confidential matters confidential, even after you leave.
Declare conflicts of interest	Tell the committee as soon as you’re aware of one. Declare it at the start of the meeting if possible. Leave the room and don’t vote on that item. Record it in the minutes.
Don’t trade while insolvent	If the association can’t pay its debts when they fall due, it must not take on more. Get advice early.

The duties are drawn from Consumer Affairs Victoria’s guidance for committee members and ACNC Governance Standard 5.

If the association is a registered charity

ACNC Governance Standard 5 requires that a charity takes reasonable steps to make sure its Responsible People know and follow their duties. The Responsible People are generally the board or committee members. Responsible People must also ensure the charity’s financial affairs are managed responsibly. Usually, new members are told about their duties in a letter of appointment or information pack.

What happens if a duty is broken

Members who breach their duties can be fined under the legislation governing the association. Fraud or insolvent trading can be a criminal offence.

On the flip side, the legislation in some states requires the association to indemnify office holders (cover their legal costs) for things they do in good faith while performing their role. This isn’t in every State (e.g. Queensland). However, there may be directors and officers insurance available. Ask before agreeing to take on a role.

A simple routine for prospective committee members

1. Before you join, read the association’s rules and the legislation (just google [state] + incorporated association legislation), and ask for the last financial statements and minutes.
2. At every meeting, start by asking if anyone present has a conflict of interest and write down the answers. Think about your own potential conflicts before the meeting. Sometimes it won’t be obvious until the meeting.
3. Each quarter, look at the bank balance, bills due and money due – even if there is a treasurer. Ask whether the association can pay its debts as they fall due.
4. Before signing a contract, check the committee has approved it, or it is covered under a delegation of authority (e.g. someone is authorised to make purchases up to $5,000 without seeking approval). Ensure that you are signing for the association, not personally.
5. When you leave, hand back the association’s documents, records and property promptly.

This guide is general information, not legal advice for your situation. Rules differ between states and territories, so check your regulator’s website.