Are you considering joining your first board and not sure where to begin or what you should be thinking about? Below are some key points to be considering (these reflections are a summary that came from an hour long discussion with a group of experienced board members Steven Moe helped facilitate recently – so is the collective wisdom of about 15 people):

  • Be clear on your motivation – if it’s about kudos or prestige then it is unlikely to result in being effective or be sustainable. One way to test your motivation is (for non profit boards) to consider whether or not you would actually give them money if they asked for that? If not, well…
  • Expectations are critical – so clarify what is expected of you (the number of meetings, number of committees, other work contributions) – it is not understanding what is expected of you that usually leads to issues.
  • People are key – talk with the CEO, meet with the other board members, get to know them first before committing.
  • Undertake due diligence – do at least some basic checking and ask to see the finances, understand why the last person left, ask questions about future strategy. If it is appropriate, ask to attend a board meeting just to see how they operate before agreeing to join – and pay particular attention to ‘board only time’ to see what is discussed and the style and approach of the chair.
  • Ask for an induction – make it an expectation that you will receive an induction to learn about the history, ways of decision making, explanation of future etc. Having a manual for new board members can be good too.
  • Mentors – Value and seek out mentors who can give you advice as you start a governance role.
  • Ask questions – don’t be afraid to ask things before you join, in fact that is often what a board is looking for in a new appointee because it shows the style and approach the person brings.
  • Culture rules – make sure you find out about the culture of the board and as part of that learn how the CEO relates to the Board.
  • Resources – Some good resources can be found at Sport New Zealand here as well as IOD resources here and BOMA directors programme courses here. For more information on governance, you can also check out our article “Good Governance” here.

Having posted the points above on Linked In there were a lot of comments added with some insights from others, such as:

  • Dorenda Britten: Listen
  • Sue McCabe: Make sure you are up for what can go wrong – not just business as usual governance – and realise the seriousness of the accountability you take on. My first governance role was for the childcare provider my kids were at. I wanted to ‘give back’ and get experience. We found out that the crèche building had friable, leaking asbestos (so had to consider whether we’d breached health and safety law), needed to manage understandable health worries from staff and parents (no risk in the end), then it led to the centre’s closure and we had to lay off the most wonderful staff and wind up the business. Thankfully the Board was strong and competently led by the Chair Kelvin Wong, so the issues were worked through as well as they could be. Good question Steven Moe – I look forward to more answers.
  • Camille Wrightson: Particularly as a young woman- you might be surprised what you can contribute! Don’t assume everyone in the room is necessarily smarter than you or that they’ve thought of everything.
  • Hannah McKnight: Make sure you truly have the time to commit to a Board role without spreading yourself too thin at mahi, at home, and with other commitments you value. Wellbeing comes first and while an amazing opportunity, you need to ensure you can give your full self to a Board. This is why I’m yet to go ahead with a formal Board position. Timing is everything.
  • Andrew Phillips: Read your rules document / deed very carefully or maybe advise myself of the outcome of the Cricket World Cup this year, a boundary count victory has got to pay out reasonably.
  • Barry Baker: Really good question , research the chair and their back ground. Meet with them and get a feel for them. The chair (and CEO relationship ) is a good indicator of how the board and org operate.
  • Dorenda Britten: Read your briefing/ board papers, learn all you can about the organisation concerned – its history, threats and the context for future opportunities. Listen and observe the characteristics of the existing board members and the leadership team. Figure out how best to use the skills you have been hired to contribute.
  • Phil Johnson: Temper your enthusiasm to “get involved” with your responsibility to govern. Mistake I made in my first role was to assume that operational involvement was an inherent element of governance.

We hope that these tips will be of use to you as you start on the journey of joining a board.  Please feel free to contact Steven Moe at stevenmoe@parryfield.com or 021 761 292 should you require assistance – we have a lot of free resources for start-ups, boards and companies including “Start-ups Legal Toolkit” which covers the key issues we see people face when starting out (it’s a free PDF guide in the resources section of this site).

Sending your volunteers overseas can be a hugely enriching experience. It can benefit your organisation which  can provide on the ground support to projects, while the people who go have enriching and often life changing experiences.  However those who run the organisations must be careful to disclose the risks that the volunteers may face. For many, being overseas will involve exposure to new cultures, different standards of living, and different levels of security and safety.

In finalising arrangements for those you select to go overseas, we suggest some points which you may want to consider  include:

  • Language: We suggest you create a “key phrases” summary of the typical words used for greeting, asking for food, saying thank you etc.
  • Culture: Consider creating a briefing for those coming about your culture and any key differences that they should be aware of eg is tipping common?  Any cultural taboos?
  • Travel: Describe the best route to get to your location (train, bus, taxi etc) and anything else they should know eg.,any transport vendors to avoid?.
  • Immigration: the difference between paid working/volunteering and what is permissible, including visa requirements.
  • Living options: Where the volunteer will live and if there are different options (including family considerations).
  • Legal issues: Who is legally responsible in the event of things going wrong. (See discussion at the end of this article regarding a Deed of Release)
  • Discipline: The organisation’s rules about persoanl conduct and the consequences of not abiding by  them (eg being asked to return to their home country).
  • Orientation: Consider having a program of orientation for people when they first arrive, or at a pre-trip event .
  • Costs: What will be covered by who and what it is expected that will be paid for eg food.
  • Schedule: The usual schedule and rhythm of life and what is expected eg special groups / services / evening meetings / small group participation.
  • Privacy: Any policies around sharing of material about the experience and obtaining consent to use the person’s picture and information in publicity, if needed.

It is important that where possible, you give your volunteers adequate training to prepare them for this exciting time. Cultural insights and training for their particular roles will help make the transition easier.  It may be good to consider some language training before and after they go with that as well.

Despite the training that is provided to volunteers, an organisation should make it clear that it cannot take on the responsibility for everything that happens while overseas. Organisations need to be careful to make clear that they are unable to take on the risk against situations like civil unrest, accidents, injuries and sickness. Nor can the oprganisation be expected to be responsible for events that might arise because a volunteer acted outside the applicable rules and guidelines.

For this reason we encourage organisations to sign a Deed of Release with their volunteers before they embark on their journey. This Deed could acknowledge that the organisation will assist where it can, yet it cannot guarantee the safety of the volunteer.

The Deed can also set out the terms of the nature of the relationship which can be altered to each organisation. This can require the volunteer to seek independent legal and medical advice prior to the trip. Organisations can also use this Deed to cover the use of photos and film for promotional purposes.

Requirements for a Charitable Trust

At the very least, a charitable trust must:

– have a charitable purpose;
– have trustees to administer the trust;
– have a registered address in New Zealand;
– be internally managed by a trust deed;
– keep a record of trustee meetings through minutes and resolutions; and
– keep proper financial records.

Annual returns and Auditing

A charitable trust will be required to submit annual returns that vary in requirements depending on the tier of charity. This varies as follows:

– Tier 1: Over $30 million expenditure;
– Tier 2: Under $30 million expenditure;
– Tier 3: Under $2 million annual expenses; or
– Tier 4: Under $125,000 annual operating expenses.

Regarding the auditing of accounts, if the total operating expenditure for the last two accounting periods was:

– over $500,000 – financial statements must be either audited or reviewed by a qualified auditor; or
– over $1 million – financial statements must be audited by a qualified auditor.

Charities Services

After your trust board is incorporated, you may apply to Charities Services to register as a charity. Once you are registered with Charities Services you will engage with them in relation to ongoing compliance requirements such as annual reports and notifying changes. The following areas need to be updated if there are changes:

– the name of the charity;
– a change in the officers;
– the rules;
– the address for service;
– the purposes of the charity; and
– the balance date.

These changes can be made online rather than by filing paper forms.

Every situation is unique so please discuss your situation with a professional advisor who can provide tailored solutions to you. We offer advice on all aspects of charitable trusts and are happy to answer any questions that you might have. Contact Steven Moe at stevenmoe@parryfield.com or 03-348-8480 for more information.

What is a Charitable Trust?

In New Zealand a common form that a charity will take is a charitable trust. These are used where there is not a “profit” motive for private gain for an individual from the activities of the trust. The regulator is both Charities Services (which registers charities if they meet legal criteria under the Charities Act 2005) and the Registrar of Incorporated Societies (which approves the incorporation of the trust boards under the Charitable Trusts Act 1957).

A registered charitable trust has the following key features:

– it is a separate legal entity;
– the liability of trustees is limited if the trust board has been incorporated;
– there is some cost involved in establishing the trust as certain documents are required but there is no cost to registering it; and
– there are ongoing reporting and administrative requirements.

Some Advantages

1. Separate Legal Entity

A charitable trust board which has been incorporated is a separate legal entity which can contract with others. A settlor (sometimes called donor) is needed to provide the initial amount which is how the trust is created (this is often a nominal figure such as $10).

2. Limited Liability

The liability of trustees is limited if the trust board has been incorporated. It is also common for a trust to provide indemnities for its trustees and officers and to take out insurance. Note, however, that trustees will be personally jointly and severably liable for certain taxes (GST, ACC levies, PAYE).

3. National Registration

New Zealand does not have a state-based system like Australia, so when a charitable trust has been registered by Charities Services that is a national registration.

4. Purposes are Restrictive

A charity in New Zealand must act to further its purposes which are set out in a trust deed. To be accepted as a registered charity those purposes must be charitable as defined in New Zealand law (which includes advancing religion). The charity cannot distribute funds or assets for the private gain of any individuals.

5. Powers of Trustees

Trustees can have a wide range of powers depending on how they are written in the Trust Deed. They can include matters such as use of funds, purchasing property, accepting money and carrying on a business.

Some Disadvantages

1. Establishment Costs

A charitable trust has some costs involved to set it up (usually more than $2,000.00 NZD). A lawyer will likely be involved to make sure that the purposes are charitable according to New Zealand law. They can also provide ongoing advice on the trust’s ongoing regulatory and filing requirements.

2. Disclosure and Reporting Requirements

A registered charity will have reporting requirements which can vary depending on their size (there are four tiers). There are financial reporting and auditing obligations on registered charities.

Every situation is unique so please discuss your situation with a professional advisor who can provide tailored solutions to you. We offer advice on all aspects of charitable trusts and are happy to answer any questions that you might have. Contact Steven Moe at stevenmoe@parryfield.com or 03-348-8480 for more information.

Legal Mashup recording now available: Kris Morrison and Steven Moe talked about what a social enterprise is, best legal structure options for them, the charitable option, governance, board size, liability, intellectual property, overseas considerations, employment, start-up issues .. a lot was covered!

 

The Legal Mashup is back!

With a focus on social enterprises, not-for-profits and charities, Parry Field Lawyers will be having another free evening of discussions on the topics you want to hear about.

When? Tuesday 4th September at 6pm.

Where? XCHC, 376 Wilsons Road, Christchurch

RSVP to Steven Moe at stevenmoe@parryfield.com with a question or topic you want to be covered and we will add it tot he list and cover all we can!

We look forward to seeing you there

What are your options when a charity “runs out of steam” but you don’t want to give up on it altogether?  What if you want some time to have a break from the charity and its compliance obligations, but intend to come back to it in a few years?  We were recently asked the question of whether it is possible for a charity to “pause” for a period of time, and here is what we said:

 

Can you “pause” a charity?

Generally, a charity is deregistered (removed from the Charities Register) where it ceases all activity. This means that in order for a trust to remain “alive”, it must continue to be active. Pausing a charity essentially means that all activity for the charity will cease for a period of time and it is therefore no longer active. If a charity has been de-registered and wishes to get back on the Charities Register, it will need to go through the application process again.

There is, however, an exception to this – it is possible for a charity to continue to file annual returns for the years that it is “paused” which essentially holds the charity accountable to the fact that it has paused. So long as the charity is not making any returns, it would not need to pay anything on filing those annual returns.

Conclusion

In conclusion, it is possible that you could pause a charity and come back to it in a couple of years, provided that you continue to file an annual return each year for the years where the charity is paused.  This option could be advisable where you do not want your charity to be deregistered and to have to go through the application process again at a later date.

 

Every situation is unique so please discuss your situation with a professional advisor who can provide tailored solutions to you. We offer advice on all aspects of charitable trusts and are happy to answer any questions that you might have.  Contact Steven Moe at stevenmoe@parryfield.com or 03-348-8480 for more information.

Keynote by Hon Peeni Henare.

 

Hon Peeni Henare – Keynote – Q & A session.