Articles

Illiquidity Vs Insolvency

A non-profit organisation’s financial health is vital to achieving its mission. As stewards of the organisation, board members must understand two key financial concepts - illiquidity and insolvency. On the surface, they may seem similar. But illiquidity and insolvency stem from different causes and have different implications. This article will explain what illiquidity and insolvency mean, their key differences, and provide real-world examples to illustrate how non-profit boards should interpret and respond to signs of financial distress.

Strategic Planning Principles and Practices

Accepting a position as a director requires a willingness to personally grow and develop one’s governance and leadership skills, experience and knowledge, and a commitment to allocating the necessary time to fulfil directors’ corporate governance roles and responsibilities. Strategic leadership is one of the four overarching governance responsibilities of a board; the most well-known manifestation of a board’s strategic leadership is the development and driving of a strategic plan, in partnership with the chief executive officer (CEO) and executives/senior managers.

School Governance 101

Schools face a number of challenges — and so do the boards that govern them. While concern about some of these challenges has fluctuated since 2014, high salary costs and school fees as well as compliance issues have remained top priorities for governors for almost a decade. Twelve key characteristics of effective school boards define healthy school governance and present opportunities to improve at every turn. By adopting most or all of these characteristics, schools can mitigate many of the issues they face today.

Difference between a Company Limited by Shares and Company Limited by Guarantee

What are the key differences between a company limited by shares and a company limited by guarantee? Is one better than the other? Under Australian law, there are two main types of company structures: proprietary companies and public companies. A closer look reveals that these businesses usually operate either as companies limited by shares (CLS) or companies limited by guarantee (CLG). The difference between the CLG vs CLS structure is primarily in the ways each approaches liability, voting and dividend rights, and share distribution.

The Importance of Government Engagement for Board Directors

Amongst finance, risk, strategy, oversight, compliance and share/stake holders, board directors could be forgiven for thinking engaging with government is an afterthought. Yet government engagement is one of the few areas that crosses over every single board director’s responsibility and should be an agenda item on every board meeting. Government engagement is a catch all term we started using almost a decade ago because we felt that terms like lobbying, advocacy and campaigning didn’t quite capture the importance, nuance and detail required to ensure government is aligned to your organisation.

What is a Company Limited by Shares (CLS)?

A company limited by shares (CLS) is one of the most common structures used to conduct business in Australia. As a company founder, the legal structure you choose determines the activities your organisation can legally carry out. Forming a CLS is a good option for organisations planning to conduct commercial activities and can help protect group owners from personal liability. The Corporations Act 2001 (Cth) defines a company limited by shares as “a company formed on the principle of having the liability of its members limited to the amount (if any) unpaid on the shares respectively held by them.

What is a Body Corporate in Australia?

A body corporate, or owner’s corporation, is one of several incorporated legal entities in Australia that use a group structure as a management model. In Australia, a general body corporate represents a group of independent owners who run the company as a corporation to develop, manage, and maintain jointly owned land. Bodies corporate hold the same powers and manage their affairs in a similar way to other incorporated entities, but are regulated by the state in which they are located.

The Secret Ingredient to Great Not-for-Profit Strategy

Co-authored by Felicity Green and Elena Mogilevski Strategic planning for the not-for-profit sector is vastly different from planning for the private sector. Many board directors of not-for-profit organisations are volunteers with a background in corporate or private enterprise, and the difference between strategies in the sectors can sometimes be challenging to navigate. It is imperative to understand, however, that the north star to guide social sector strategy development is not simply shareholder value, but rather an often complex combination of outcomes that drive positive impact for those that the organisation exists to serve.

What is a Public Benevolent Institution (PBI) in Australia?

A public benevolent institution (PBI) is one of several subtypes of charities able to register with the Australian taxation Office and apply for tax concessions. The purpose of a PBI is to ‘relieve poverty or distress’ in a community by providing services to people in need. Like other charities, PBIs have both legal obligations and benefits. One such benefit is that they are eligible to receive the deductible gift recipient status.

What are the non-profit structures in New Zealand Aotearoa?

There is enormous diversity within Aotearoa’s non-profit sector and the different non-profit structures organisations have to choose from. Not-for-profits and charities in New Zealand range from large nationally organised entities and associations to semi-corporate and small, to informal groups that rely on casual volunteering1. Most non-profit organisations rely on donations, gift giving/koha, government grants and contracts, service fee revenue, income from trading, investments or dividends, sponsorships, and membership fees to fund their activities.