Corporate Governance

NFP governance principles

B2B Editor4 July 2013

NFP governance principles

As part of our commitment to the NFP Sector and its directors the Australian Institute of Company Directors has developed the Good Governance Principles and Guidelines for Not for Profit Organisations.

The Principles are designed to assist boards in determining what constitutes good governance practice for their particular organisation and to achieve better outcomes through good governance.

It was recognised through an extensive consultation phase that the NFP sector was extremely diverse. This diversity reinforced the need for Principles which were not prescriptive, and most importantly they could be used differently as organisations mature and develop.

A key aspect of the Principles and Guidance are questions for consideration which are designed to enable boards to consider the governance needs of their own organisation, rather than a “tick and flick” approach of recommendations.

Ten Principles that promote good governance

1. ROLES & RESPONSIBILITIES The need for clarity

2. BOARD COMPOSITION The right group of people

3. PURPOSE & STRATEGY An appropriate vision, purpose and set of strategies

4. RISK Recognition & management appropriate risk oversight

5. ORGANISATION PERFORMANCE A focus on effective use of resources

6. BOARD EFFECTIVENESS Appropriate board structures and processes

7. INTEGRITY & ACCOUNTABILITY The right information at the right time

8. ORGANISATION BUILDING Build and maintain organisational capability to deliver on purpose

9. CULTURE & ETHICS A healthy culture in the boardroom and throughout the organisation

10. ENGAGEMENT Effective stakeholder engagement

Another way organisations can use the Principles is by focusing on one Principle at a time over a series of board meetings. This approach would be more useful, in particular, for organisations where the directors were less experienced in governance issues, or had particular concerns around a particular issue. It is hoped that these Principles go some way

to helping organisations understand what constitutes good governance, and how such governance can assist in overall performance They are designed to assist directors and boards in their conversations on good governance, and how they might practically approach improving governance outcomes. To see the Principles visit;

Phil Butler is Manager – NFP, Public Sector & ACT at the Australian Institute of Company Directors. Level 3 54 Marcus Clarke Street Canberra T: 02 6132 3200 |