Signatory organisations are accountable to stakeholders for how their organisations are run; including their structure, governance, integrity, financial controls and treatment of staff and volunteers.
Although signatory organisations are diverse in their purpose, size, membership, and culture; they share certain underlying characteristics including their public benefit purpose, their voluntary basis and their not-for-profit status.
D.1.1 Public Benefit
Signatory organisations are not-for-profit and formed voluntarily by a group of interested people for a common purpose that serves a public benefit and is not carried on for the profit or gain of individual members.
- The signatory organisation’s governing instrument(s) will clearly indicate the not-for-profit purpose and character of the organisation and the public benefit to which it is dedicated.
- The organisation may make and retain or invest a surplus, provided that surplus is directed to carrying out the organisation’s purposes.
- The governance instrument(s) will prevent the organisation from distributing profits or assets for the benefit of members or other private persons, both during operation and on winding up.
It is important that signatory organisations maintain their reputation, credibility and trust with the public. As values based organisations, signatory organisations dedicate all of their resources and any surplus to the achievement of their aid and development objectives. Voluntary governing bodies enhance the ability of signatory organisations to make independent decisions and focus on achieving their objectives.
This standard reflects the Code of Conduct’s commitment to:
- Accountability to all stakeholders
- Honesty and transparency in all dealings
- Strengthening civil society.
Here are some practical suggestions for your organisation to demonstrate it is not-for-profit and voluntary:
- Being not-for-profit relates to how profits or surpluses are used. A not-for-profit organisation can still make a profit (or surplus), but assets and income can be used solely towards achieving the organisation’s objectives and not distributed among members.
- Include clauses in your governing instrument which clearly establish the non-for profit status and practices of your organisation
- The following clauses are examples that meet Obligations 1 and 2 of this Standard:
- Not-for-profit clause: The assets and income of the organisation shall be applied solely in furtherance of its objects and no portion shall be distributed directly or indirectly to the members of the organisation except as bona fide compensation for services rendered or expenses incurred on behalf of the organisation.
- Dissolution or Winding up clause: In the event of the organisation being dissolved, the amount that remains after such dissolution and the satisfaction of all debts and liabilities shall be transferred to another organisation with similar purposes which is not carried on for the profit or gain of its individual members.
- Include a clause in your governing instrument describing how you would use any surplus
- Disclose any surplus in your financial reporting
- Being ‘voluntary’ relates to the governing body of your organisation. Governing body members are not allowed to be remunerated for their role as members of the governing body. They may receive reasonable compensation for expenses and if any governing body members are also paid staff members, they may be paid for their role as staff members, for example an Executive Director.
- Include clauses in your governing instrument which clearly establish the voluntary status and practices of your organisation
- The following clause is an example that meets Obligation 3 of this Standard:
- The organisation must not pay fees to a director for acting as a director. The organisation may pay a director for work they do for the organisation, other than as a director, if the amount is no more than a reasonable fee for the work done, or reimburse a director for expenses properly incurred by the director in connection with the affairs of the organisation.
- If any member of the governing body was paid for work performed in a capacity other than as a member of the governing body, the organisation must disclose the payments made in their annual financial statements.
- The clauses above are subject to any conflict of interest issues having been addressed and resolved.
- The inclusion of additional clauses in the governing instrument or the development of a governance policy or board charter could elaborate on the clauses within the governing instrument by detailing the following:
- Reimbursement of any reasonable expenses incurred for governing body members for costs associated with attendance at meetings or in the conduct of their duties
- How governing body members carrying out other professional functions for the organisation such as a consultancy, will be remunerated.
Cross-references to other standards
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