Author Archives: Joanne O'Brien

About Joanne O'Brien

An expert with years of experience in, and passion for, advising the not for profit sector in all aspects of their operations from creation, management, mergers and governance through to risk and compliance and beyond, particularly in the aged care sector.

Not for Profit Conference | 20 April 2018

Join me, Patrick Herd from Community Business Australia and Adam Bradfield of Thomas Noble and Russell in a one day mini conference for Not for Profit Organisations in beautiful Byron Bay.  The focus for the conference will be exploring options and strategies to secure a sustainable future.  It will be a great opportunity for board/Committee members and Senior Managers to hear from industry experts and participate in interactive discussions about the key challenges facing NFP organisations.

Click here to register for the conference and to see the Agenda for the day.

Report on the Housing Legislation (Building Better Futures) Amendment Bill 2017 (Qld) released

On 28 September 2017, the Public Works and Utilities Committee’s (Committee) report on Housing Legislation (Building Better Futures) Amendment Bill 2017 (Bill) was released.

The report took into account many submissions from the public including operators and residents.  The Committee made 18 recommendations as a result of its review of the Bill.  These recommendations included:

  1. Most significantly, a recommendation that the Bill be passed by Parliament; and
  2. That the retirement village provisions be amended to include:
    • A 90 day timeframe within which the Chief Executive must make a decision about a transition plan approval process;
    • A 90 day timeframe within which the Chief Executive must make a decision about any proposed redevelopment plan approvals; and
    • Clarification around the payment of the general services charge during the construction of units within a retirement village.  The Bill currently appears to require the scheme operator to pay the general services charge during the construction period.  However, the Committee has recommended that this provision be clarified to ensure that the general services charge only becomes payable once a unit is completed.

In addition to considering the Committee’s recommendations, there is still much work to be undertaken before these legislative changes can take effect including:

  1. Releasing the proposed Approved Forms referred to throughout the Bill; and
  2. Releasing the proposed Regulations referred to throughout the Bill.

A copy of the report can be viewed by clicking on the link below:

The report along with the Bill is tabled for consideration at the next sitting of Parliament on 10 October 2017.

If you would like any further information about the report or the Bill in the meantime, please do not hesitate to contact us.  Otherwise, look out for further alerts from CRH Law as the Bill progresses through the Parliament.

Bullying on the Board and the Fair Work Commission

The Fair Work Commission (FWC) has found that a director engaged in activities related to Board meetings and fulfilling the role of a director can be the subject of bullying under the Fair Work Act (FWA).

The particular circumstances of this case involved a Mr Adamson, who was at the time Chairperson of the Anangu Pitjantjatjara Yankunytjatjara Inc (APY Inc) applied to the Fair Work Commission for a stop bullying order. His application was based on various allegations about the conduct of the General Manager and Deputy Chairperson of APY Inc. The alleged conduct included:

  1. Refusing to deal with the Chairperson and disrespecting his wishes;
  2. Interfering with the Chairperson’s conduct of meetings;
  3. Orchestrating events to prevent a quorum at Board meetings; and
  4. Preventing the Chairperson from accessing Board minutes.

There were extensive attempts made at reaching a conciliated resolution to the matter but all were unsuccessful. Prior to the case making it to a hearing, a board election was held and Mr Adamson was not re-elected.

Significantly in this case, for the provisions of the FWA to apply, the alleged bullying must take place while the worker is at work. There are no physical restrictions on what constitutes the work place so that the bullying can occur any time that the worker is performing work; regardless of location or time of day.

The FWC found that when the Chairperson was attending & conducting Board meetings and otherwise performing the role of the Chairperson, her was “at work”. In addition, it did not matter that the Mr Adamson was elected to his position and not engaged by APY Inc in the usual sense of an employment contract.

The finding that Mr Adamson was “at work’ when the alleged bully occurred is significant for NFP Boards as it means that a director or officer of an NFP entity will be a worker if they are:

  1. Remunerated for the work as a director or officer; or
  2. A volunteer director or officer.

The only exception is directors or officers who perform their role within an organisation that has no employees. That is, it functions entirely through volunteers.

It does not matter that the organisation conducts its business on a not for profit basis.

However, even where there is a finding of bullying at work, the FWC cannot order reinstatement, payment of compensation or a pecuniary amount. “The power of the Commission to grant an order is limited to preventing the applicant worker from being (further) bullied at work, and the focus is on enabling normal working relationships to resume in a mutually safe and productive manner.” [1]

As a result, because Mr Adamson was no longer on the Board at the time of the FWC hearing, no orders were made.

What does this mean?

Boards and management committees of NFP organisations are made up of people and there will inevitably be friction or disagreement between individual members at some time. However, if the behaviour of an individual director or group of directors goes beyond normal discourse between people with differing opinions, it may be possible for an aggrieved director to make an application to the FWC. Regardless of the outcome, such an application is likely to harm the reputation of the organisation and result in taking valuable time and resources away from community or charitable purposes.

This case is a reminder of the importance of strong governance practices and the documents that underpin those – the constitution, governance policies and protocols. If you would like assistance with strengthening governance to minimise the risks posed by this type of conduct, please contact us.

[1] Para 24 of the judgement

What is Good Corporate Governance?

It is hard to imagine any Board member questioning the need for good corporate governance, but identifying the processes and practices required to achieve that aim is not so straightforward.

In an effort to identify the link between governance practices and performance, the Australian Institute of Company Directors commissioned a review[1] of the research into this elusive connection. Amongst the key findings of the review was that:

  1. Research does not provide any conclusive links between governance practices and performance;
  2. The outcomes of research are contradictory and provide little assistance in identifying good governance practices; and
  3. There are no readily identifiable causal connections between governance practices and outcomes.

In summary, the research conducted to date does not help Boards identify governance practices that will lead to the outcomes they want. So, if the academics and experts can’t help, how does a Board, particularly a volunteer Board in the not for profit sector, go about adopting good corporate governance.

Here are five tips to help along the way;

 1.  Adopt a governance framework or charter

Just because the task is difficult doesn’t mean it shouldn’t be done. There is a wealth of materials available that will provide a starting point including those freely available from the ACNC and other regulators and manuals that can be purchased from professional advisors and consultants. Choose one from a trusted source.

2.  Adapt the governance framework to your organisation’s needs

Whilst organisations in the NFP sector might have a lot in common, it is a mistake to assume they are identical.  So, make sure that the governance framework suits your needs and is appropriate to your organisation’s size, service sector, and geographical location.

3.  Implement the governance policies

There is no point in having the perfect governance charter in a manual that is never taken out of its folder. Ensure that the policies and procedures are implemented and adhered to. This can be worked into meeting agendas and risk management policies as well as annual performance reviews.

4.  Assess performance

Just as it is important to review the performance of Board members and staff, an essential element of applying good corporate governance is regularly reviewing your governance framework itself. That includes the various policies and procedures that flow from it. This does not have to be an overly complicated process and can be dovetailed with constitutional reviews. At the least, it should be done whenever a practical problem arises as a result of using the framework.

5.  Be sceptical of exceptions

Be wary whenever a Board member or senior manager suggests that ‘this is a special circumstance; we don’t need to follow our usual process/rules this time’. Your governance framework is designed to protect everyone involved in the organisation and every significant decision should be tested against it.

If you would like more information on corporate governance practices or assistance with your organisation’s governance please contact me.

[1] Ford, G & Rooney, J 2016 ‘Emerging themes of corporate governance and firm performance, AICD Governance Leadership Centre

Australian Consumer Law Review: Guidance for Fundraising in the NFP Sector

On 19 April 2017, Consumer Affairs Australia and New Zealand (“CAANZ”) released its Final Report detailing its findings following an extensive review of the Australian Consumer Law (ACL).

As noted in the report, the ACL will apply to the fundraising activities of not-for-profit organisations in certain circumstances. In the past, there has been uncertainty within the sector surrounding the extent the ACL applies to the fundraising activities of charitable and not-for-profit organisations; particularly where there is a pure ‘donation’ and no associated supply of goods or services. The result has been a general lack of informed compliance by the sector and minimal awareness of consumer rights under the ACL.

The Final Report acknowledges these difficulties and notes that regulatory guidance is immediately needed to clarify the current application of the ACL to the activities of charities, not-for-profit entities and fundraisers.

The report concludes that the development of regulatory guidance will be a priority project in 2017. The Final Report can be accessed online via this link.

The sector has experienced its disappointment with the Final Report; seeing the review as a missed opportunity for reforming fundraising laws and adopting a national approach to regulation.

For more information on the ACL and its implications for the not-for-profit sector, please contact us.

NFP’s and Donald Rumsfeld

Remember the Rumsfeld mantra about military intelligence – there are 3 types:

  • Known knowns
  • Known unknowns
  • Unknown unknowns

As lawyers we are trained and paid to know the law. For us, most of the law falls into the category of known knowns. Trouble is for many NFP’s it falls into the unknown unknowns either because they don’t bother to find out about the knowns or because they just don’t realise they should.

The consequence – this avoidance psychosis feeds the need for lawyers – not to tell NFP’s what the law is but to help them recover from not knowing.

Here is an example:

  • An NFP was looking to merge with another NFP
  • Both parties signed up to a Memorandum of Understanding (MOU) which was not drafted by a lawyer nor vetted by any
  • While it was meant to be just an understanding, the way it was drafted made it an actual agreement
  • When one of the NFP’s wanted to pull out of the process, the other replied, “I don’t think so – you can’t under our MOU” (and they were right).

It was all good for lawyers.

The complexity and impact of the law cannot be assigned to assumptions, presumptions, blissful ignorance, gut instinct or prayer.

This was brought home to me recently when I read an interesting fact sheet issued by the Australian Government Solicitor (AGS) entitled “Commonwealth Legislation that may apply to Australian Government funding recipients“. There are numerous organisations out there who receive Commonwealth Government funding and maybe you’re one of them.

Here’s what the AGS thinks is the roll call of potentially relevant legislation applying to each of those organisations:

  1. Crimes Act 1914
  1. Commonwealth Criminal Code
  1. Competition and Consumers Act 2010
  1. Privacy Act 1988
  1. Archives Act 1983
  1. Auditor-General Act 1997
  1. Ombudsman Act 1976
  1. Financial Management and Accountability Act 1997
  1. Commonwealth Authorities and Companies Act 1997
  1. Racial Discrimination Act 1975
  1. Sex Discrimination Act 1984
  1. Disability Discrimination Act 1992
  1. Age Discrimination Act 1992
  1. Age Discrimination Act 2004
  1. Australian Human Rights Commission Act 1986
  1. Equal Opportunity for Women in the Workplace Act 1999
  1. Work Health and Safety Act 2011
  1. Australian Government Building and Construction OHS Accreditation Scheme
  1. Fair Work Act 2009
  1. Environment Protection and Biodiversity Conservation Act 1999
  1. Copyright Act 1968

Remember, this is only a list of Commonwealth laws potentially applying to funded organisations. It still leaves an even bigger list – State law and even local government law. Maybe it’s time you asked a few more questions to make sure you get it right or before you take that next step – to increase your known knowns.

The message is a familiar and resonant one – what you don’t know can hurt you.

Recording Board Meetings

To record or not to record – that is the question. Opinions on what constitutes good governance or good practice in the board room are many and varied. One question that is frequently asked, particularly in relation to not for profit organisations is ‘Should board meetings be recorded?’  This article takes a brief look at both the legal and practical issues relevant to that question.

Legal Issues

Unless the Constitution requires it, there is no legal requirement to tape record a board meeting nor, subject to the comments below, is there any law which says you can’t.

However, tape recording everything said at a board meeting has legal dangers being:

  • Oral defamation that is not recorded is always hard to prove but when you tape record a meeting, there is a permanent record of who said what at a meeting which opens up and increases the possibilities for many (and often petty and destructive) defamation claims
  • It can have privacy implications especially because it is very difficult to have an ‘off the record” tape recording of something that is tape recorded

If it is proposed to tape record a meeting, two further issues arise relating to who and by what authority the tape recording is done. For example:

  • does one board member propose to record the meeting themselves for their own purposes; or
  • does the board authorise by resolution the recording of the meeting generally.

If it is the former, a board member should not be permitted to tape record a meeting without the approval of the other members present. However, if the Board resolves to permit the tape recording of the meeting, then that is a decision the Board can make and it would have the effect of authorising the tape recording on behalf of the Board generally.

Pragmatic Issues

Tape recording of Board meetings is not common and generally should be discouraged.

I am generally opposed to tape recording board meetings because:

  • You have to ask the initial question “Why?” – what is the need and how will tape recording of board meetings improve the governance and performance of the organisation – in fact it can have the opposite effect (see points below)
  • The psychology of tape recording a discussion can (and often does), discourage full and frank discussion and make a meeting so tame and innocuous as to render the discussion facile
  • As such, in making members (and staff) clam up or limit their contribution, tape recording can backfire on Board members as it can tend to compromise their legal duty and ability to actively partake in robust discussion and questioning of issues
  • It can have a serious adverse effect on Board and staff morale as it implies a lack of trust generally and can be perceived as a device for a witch hunt as part of a broader ‘gotcha’ mentality.
  • The issue can be an emotive and divisive one as no doubt, there will be Board members who oppose it and those who support it
  • It can lead to oppressive process issues including whether a member can request the tape be turned off for what he/she is about to say and if so, what rules will the Board invoke to cover this contingency – that then can lead to time wasting discussion about the issue of whether to turn the tape off or not and when to turn it back on again

The response of a director wanting to record meetings to the initial question Why? often revolves around apparent misstatements made at Board meetings or inaccurate minutes.  Even if untruths are said at board meetings, that does not by itself overcome the pragmatic difficulties above especially because:

  • Most significant things said at a board meeting in front of board members are remembered by those present and there is seldom major disagreement on what was said – there is more collective memory than collective amnesia
  • The difficulties with misstatements or untruths usually indicate an issue with what the minutes record as opposed to how the discussion was recorded.

A Board should have a policy on minutes and what they should record that would deal with these problems.  Generally minutes perform 2 roles:

  1. A summary of each item that was discussed; and
  2. If the item gave rise to a resolution, what was the resolution, who moved it and whether it was passed or not.

In the first point above, the summary can include significant facts or statements made during the course of a discussion on an item.

In the context of the pragmatic issues above, concerns about untruths or inaccuracies are better addressed by examining the Board’s policy on minute taking and to what extent the minutes adequately record discussion as well as resolutions. Not all discussion at a Board meeting results in a resolution so consideration needs to be given as to what extent discussion on an issue should be recorded.

Consideration should also be given to the form and substance of reports given to the board, most notably the CEO’s report.

As always, your organisation is unique and we’d be happy to assist you to address these issues to suit your own circumstances.

Amalgamations and Mergers – the downstream costs

Much is made of the benefits that can be derived from amalgamations and mergers of not for profit organisations. Those most often touted are the savings that can be gained from economies of scale and centralised back of house administration. There is far less talk about some downstream costs.

I’m not referring to the obvious up-front costs associated with due diligence investigations, amalgamation agreements and transactional costs but rather those costs that typically surface after the fact such as:

  1. HR time and resources spent trying to mesh together two very different workplaces including the impact on that elusive commodity that is ‘culture’;
  2. The complications associated with melding together different IT and finance systems;
  3. Payout or termination fees for service contracts to avoid duplication from multiple service providers;
  4. Termination payments for staff that don’t want to join the new amalgamated entity or who refuse to (or can’t) change and have to be ‘moved on’;
  5. The opportunity costs associated with having senior members of management distracted from core business by being involved in ensuring the amalgamation proceeds and is then successful; and
  6. The resources required to ensure that clients, staff and stakeholders are supported through the transition phase so that the business remains intact.

All of these factors need to be considered alongside the benefits that can be derived from an amalgamation. For an amalgamation to be truly successful, these softer issues should be accounted for and built into the transition plan before taking the final plunge.

The dynamics of deregulation in home care and disability services

The December 7 edition of The Weekly Source reported on a new arrangement between Home Instead Senior Care’s Gosford franchise and Meals on Wheels Central Coast.  Chris Baynes made an insightful comment when he described it as “an interesting concept. In effect you will have volunteers promoting a private home care service against local Not For Profit home care operators.”

In many respects this encapsulates the changing dynamic that a deregulated market place is creating in the home care and disability care sectors. Accepted norms, assumed allegiances and presumed alliances are being shaken up. It will expose weaknesses in relationships between not for profit service providers in particular. No longer will they be able to rely on undocumented arrangements between friends or loosely worded agreements that create no meaningful obligations on either party.

That is not to say that collaboration and cooperation between not for profit providers should be a thing of the past. There are enormous benefits to be gained through working together, sharing expertise and resources or identifying referral opportunities. For some smaller organisations, these types of arrangements will be the very thing that secures their long term viability.

But an open market will bring the necessity to approach these arrangements from a commercial perspective and require organisations to seek certainty about what they are going to receive and what they will have to pay or do in return. In this environment there is no substitute for well drafted agreements in plain English that encapsulate the enforceable underlying legal relationships.

If you need assistance with formalising collaborative arrangements, please contact us.