If our organisation wants to do good outside our aims, is that a problem?

Borthwick Chris Jul2019lg

In this help sheet series, Our Community’s resident agony uncle, Chris Borthwick, offers answers to frequently asked questions about issues not-for-profits are facing.

Dear Agony Uncle,

If an association undertakes a project which is of service to the community but is not in keeping with the constitution, is that a problem? Are there penalties?

Agony Uncle's answer

Briefly, the answers are, respectively, yes and no.

Your association is, strictly speaking, authorised by its members to do only those things that are specified in its objects, and anything other than that is beyond your power, or, in good old Latin, ultra vires.

Assuming you're acting in good faith, acting ultra vires doesn't necessarily involve any illegality to do with the rest of the world, and it's generally a problem if and only if one of your members complains. It's not going to get you into difficulties with your state regulators, either; they all say firmly on their websites that they don't get involved in constitutional squabbles, which is what a member's complaint would be. If (and only if) you're a charity there's a theoretical possibility that the ACNC would take an interest, but they, too, are very reluctant (for the best of reasons) to intervene, they will give any not-for-profit board a lot of rope, and they are certainly not going to become involved unless

a) you make a habit of it

b) there's a lot of money involved

c) it's a bit suss.

The basic underlying principle is that the main question here is "Who cares?"

If the answer is "Nobody", don't hang back.

Many not-for-profits seem to think that rules are like rat traps, and that if you trigger them then retribution is certain, instant and fatal. Don't make that mistake.

Best wishes,
Agony Uncle.

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