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Who are your officers and what do they do?
Officers of a charitable entity are responsible for ensuring that their organisation is run in accordance with its rules and the requirements of the Charities Act 2005. In particular, an officer needs to ensure that their organisation’s funds and assets are used exclusively to advance the charitable purposes of the organisation. Your organisation’s charitable purposes are stated in its rules document, so one of the most important roles of an officer is to have a thorough understanding of these rules.
Issues and disputes can arise when officers do not understand their charity’s rules. Take time to familiarise yourself with the relevant documents, and make sure your fellow officers do the same. It is also important to think about how new officers will be told about their obligations under your rules.
You should also have a clear understanding of your role and its responsibilities. Being an officer or on the board of a charity can be a rewarding experience, but it takes time and commitment. You can learn more about the duties of governing body officers by clicking here(external link).
The Charities Act 2005 may define ‘officers’ differently to the way your charity’s rules define them. Your rules could be called a constitution, trust deed or governing document.
If your organisation is a trust, your officers are all your current trustees (including any custodian trustee) and no one else.
If your organisation is not a trust, your officers are all the members of your board or highest governing body and all the people in a position to exercise significant influence over the management or administration of the charity. An officer may be a person or a body corporate (for example, a company).
If you do not have trustees, a board, or governing body, your officers are all the people in a position to exercise significant influence over your management or administration. In some cases, such as a co-operative, the officers may be all the members.
Charities Services recommends you have at least three officers.
Note: Check your rules to see if they specify how many trustees or governing body members you must have. For example, if they specify five trustees, you must certify five trustees.
Where your officers are based may be taken into consideration when assessing whether your charity has a “strong connection” to New Zealand. This is a requirement for registration. You can read more about this under International charities and activities.
Officers need to certify to Charities Services that they fit the criteria to be an officer of a charitable entity. There are a range of factors that may prevent someone from being qualified as an officer under the Charities Act 2005, for example, if they are under 16 years old, an undischarged bankrupt, or have been convicted of a crime involving dishonesty. Check out the Officer Certification section on our website for further information.
An officer can choose to resign, but under certain circumstances, some of their liabilities and obligations may remain in place for a period after their resignation.
Check your rules document to see what it says about how you must appoint officers, and what must happen if they want to resign.
Remember that the Charities Act 2005 or a charity’s rules may require an officer to resign for certain reasons. For example, if an officer becomes an undischarged bankrupt or are convicted of a dishonesty offence, they are no longer qualified as an officer under the Charities Act 2005.
If an officer of your charity resigns or is removed, you must notify Charities Services, and certify any new officer who is appointed in their place. It can be helpful to have an induction process, including a clear description of the position to help any new officers understand their role.
An officer cannot delegate their duties unless their charity’s rules authorise them to do so. Even if duties can be delegated under your rules, officers remain legally responsible for making sure the work is done and all necessary standards are met.
For example, a charity could employ an accountant to prepare its accounts and submit its annual return to Charities Services. The charity’s officers are still responsible for making sure the accounts are prepared, that they meet any standards required by the charity’s rules document and any relevant legislation, and that they are submitted on time to Charities Services.
Charities can reimburse expenses incurred by officers while carrying out their charitable purposes.
Any payments made must be reasonable and not more than the market rate. To ensure transparency, policies and procedures should be in place to manage any conflicts of interest.
To be registered under the Charities Act 2005, Charities Services must be satisfied that your organisation was not set up simply to create a job for an individual or to create a profit for someone. Your rules should clearly show this and make it clear that your organisation may only act to carry out its charitable purposes.
If a trust wants to be able to make payments or provide benefits to its trustees, its rules must clearly show that this is allowed. There also needs to be processes in place to prevent trustees from acting if there is any conflict of interest.