- The organisation’s legal structure and insurances influences the level of personal risk you are exposed to. Unincorporated associations carry higher personal risks for Committee members.
- The main four risks for Boards to manage are around financial abuse; cybersecurity; working with partners; and safeguarding vulnerable people (ACNC).
An important question that is commonly asked is whether a Board member can be personally liable for actions of the Board and whether the Board can be covered by insurance?
The ACNC advises that generally if you’re complying with your legal duties and the organisation is incorporated, a charity, or a company limited by guarantee (i.e. not an unincorporated association), in most cases you wouldn’t be personally liable as a Board Member. Beyond these protections, good governance, processes and procedures minimise risks. However, your organisation’s legal structure will not protect individuals if there is criminal or serious misconduct or negligence.
Refer to our Fact Sheet on the main types of legal structures that your organisation is likely to operate under.
Many organisations carry insurances which are part of the risk management operations of the Board. However, for unincorporated associations, the obligations and liabilities are on each individual director – so it’s worth checking this out further and asking about the legal structure and insurance provisions the organisation has.
The ACNC has some good advice on the main categories of risks that Committees and Boards need to be on the lookout for, along with good advice and resources about how to deal with them. The four key risks are: financial abuse; cybersecurity; working with partners; and safeguarding vulnerable people.
It may be part of the Committee or Board appointment process for the organisation to ask for specific clearances to be in place – for instances a criminal history check or a working with children check (Blue Card) if the organisation works with children.
Ask the organisation about it’s legal structure – and whether it’s an incorporated association; unincorporated association; company limited by guarantee; and/or charity and check our factsheet to understand what this may mean. Unincorporated associations carry higher risks for Committee members.
Ask about what insurances the organisation has for its governance activities and find out more about insurance coverage in the resources referenced below.
Want more? ... check out these resources
Online article – Australian Charities and Not-for-profits Commission – 10 minute read
This is a really useful survey of common risks to guard against when serving on the Board or Committee of a charity – with links through to resources to help you guard against these risks.
Factsheet – Australian Charities and Not-for-profits Commission – 3 minute read
A good one-pager with practical tips for minimising the risk of fraud in your organisation. Gives a good sense of what to be on the lookout for and what your responsibilities as a Committee or Board member might look like.
The Institute of Community Directors has information that explains the different types of insurance that organisations may consider or have depending on their activities and risk profile. It's a useful guide to use as a reference point when asking about the organisation’s legal structure and types of insurances it has in place for its governance.