Don’t let it happen to you.

People running charities should be selfless, honourable. That’s what we expect right?

Certainly, we expect honesty and that they can be trusted to receive and use public money for charitable purposes and not for personal gain.

But what’s in place to help those governing and managing organisations to keep on the straight and narrow and fulfil our expectations?

The short answer is not much.  Organisations have trust deeds but they are highly variable about what they cover. There’s the Charities Act but it’s outdated and currently under review. There’s not much other guidance readily available.

We feel shocked, let down when wrongdoing in charities is exposed.

Sometimes, the organisations are in receipt of huge funding (ie huge for a community service). Yesterday, for example, the New Zealand media revealed that Trustees of Quitline continue to be remunerated although the service itself ceased to operate more than 5 years ago. Moreover, it had more than $2-3 million in reserves including more than $430,000 of Health funding. In a similar vein, a report on an Inquiry into spending by the Hepatitis Foundation, released late 2019, found excessive spending, a lack of recordkeeping and misuse of the charity’s funds.

This is why organisational policies and procedures are so important.  I’ll use the policy and procedures in the online Policy Place service to demonstrate.

It’s important to instil the organisational mission and values

Policies and procedures are central to instilling organisational values throughout an organisation. When organisations join our online policy and procedure service or want a policy overhaul, we provide them with customised policies and procedures. This is so that their policies and procedures reflect their kaupapa and organisations’ unique differences.

In areas like governance and financial management, subscribers gain access to policies that reflect and embed a decision-making approach that would be reasonably expected of an organisation receiving public money. For example, when managing income, expenditure and assets, Policy Place subscribers must consider and apply these principles:

  • Value for money
  • Accountability
  • Transparency
  • Responsible
  • Ethical
  • Equality

Each of these principles is defined. As a component of all aspects of financial management, the principles help prevent situations of excessive expenditure in sensitive areas eg travel, meals and accommodation.

Help with financial management

Board members come from all walks of life. That’s a good thing. But not all of them are going to know about careful and prudent financial management.

The Policy Place online financial management policies and procedures are therefore crucial to board members and managers complying with their financial management responsibilities. In particular, policies and procedures dealing with financial controls, delegations, recordkeeping, reporting and prevention of fraud.

Reimbursement of expenses is often a big issue in organisations. The Policy Place policy includes a number of  controls eg:

  • the above financial principles
  • reimbursement criteria
  • pre-approval requirement
  • the requirement that expenses were both reasonable and actual.

Applied properly, these financial management policies and procedures safeguard our subscribers against the misuse of funds and excessive spending. Trustees and managers are helped to make financial decisions in the best interests of their organisations.

Recruitment of trustworthy board and management 

We know how hard it can be to recruit and retain good people for boards. It’s getting harder and harder.

There’s little guidance around on how to do it.  Trust deeds usually provide for the election of Trustees. There are also some legal disqualifications.  It’s another area that needs to be addressed in policies and procedures.

The Policy Place does this with its online policies and procedures. Policies guiding the recruitment and induction of board members, their responsibilities and outlining membership, disqualification and termination criteria are all relevant and helpful.

Take-aways

We can’t be naive when we’re responsible for public money and fulfilling charitable purposes.

Make sure your organisation’s policies and procedures are consistent with your charitable purpose and kaupapa.

Don’t leave your board and management to sink or swim. Provide the guidance they need with policies and procedures addressing key areas of responsibilities like financial management and governance.

Contact us at the Policy Place for policies and procedures to lessen your stress and worry, guide good decisions and lighten your load.

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