What Is a Board Committee? Types, Roles and Terms of Reference

A board committee is a smaller group of directors (and sometimes external members) appointed by the board to focus on a specific governance area. Committees in not-for-profit organisations, sometimes called sub-committees, report to the board of directors and provide recommendations on specific topics.

Common examples of board committees include:

• Finance Committee — oversees financial planning, budgeting, and reporting to the board.
• Fundraising Committee — develops and implements fundraising strategies and campaigns.
• Audit Committee — oversees the financial reporting process, choosing the independent auditor, and reviewing audit results. In some organisations it is combined with a Risk Committee.
• Nominations Committee — identifies and recruits new board members for the organisation.
• Remuneration Committee — reviews and recommends pay and conditions for the chief executive and senior staff.

Types of board committees

Board committees will typically be one of two types:

1. Standing committee
2. Ad-hoc committee

Which type to use depends on the organisation’s constitution or bylaws and what needs doing. Most organisations use a mix of both.

Standing Committee

A standing committee is a permanent committee established by an organisation’s bylaws or governance structures. Standing committees have ongoing responsibilities, unlike ad hoc committees which are temporary and task-specific.

Common examples include finance, audit, governance, and nominations committees.

Standing committees consist of board members and sometimes non-board members with relevant expertise. They meet regularly, discuss issues in their area, and report findings and recommendations to the full board.

The main benefit of standing committees is dividing the board’s work into manageable portions. Each committee focuses on its area of expertise, while the full board retains oversight of the bigger picture.

Ad-hoc Committee

An ad hoc committee is a temporary committee (sometimes called a task force) set up by the board to deal with a specific issue — a CEO search, a site relocation, a policy review, or similar.

Members are chosen for their skills relevant to the task. Once the work is done, the committee is disbanded.

Standing vs ad-hoc committees

Benefits of using committees

Committees help the board govern more effectively by:

• Splitting the board’s workload into manageable pieces
• Bringing in specialist expertise where it’s needed
• Freeing the board to focus on big-picture governance
• Giving complex issues the time they deserve

Committees let the board spread its workload without losing oversight. But some duties cannot be delegated. Under the Corporations Act 2001, s 295(4) requires directors to make a formal declaration about financial statements by board resolution. In ASIC v Healey [2011] FCA 717 (the Centro case), the Federal Court confirmed that each director must personally read and understand the financial statements before signing that declaration. You cannot hand that off to a committee or to management. The duty to prevent insolvent trading (s 588G) works the same way: it falls on each director individually.

More recently, in ASIC v Bekier [2026] FCA 196 (the Star case), Justice Lee reinforced that boards must control the information they receive and apply an “enquiring mind” to what management presents. Delegating oversight to a committee does not relieve individual directors of the obligation to engage with the material.

Terms of reference

A terms of reference document defines a committee’s purpose, scope, membership, meeting frequency, and reporting obligations.

Without one, committees tend to drift in scope or duplicate work done by other committees or the full board.

A good terms of reference document should include: the committee’s purpose and objectives, scope of authority (what it can decide vs what it must refer to the board), membership requirements, meeting frequency, quorum rules, reporting requirements to the board, and a review period. The board should review and update terms of reference annually to make sure they still reflect the organisation’s governance priorities.

Common committee structures

Organisations structure their committees in different ways depending on their size and complexity:

• Small boards (3–5 directors) often avoid standing committees entirely and handle all matters as a full board. An ad-hoc committee may be formed for a specific project such as a building renovation or policy review.
• Mid-sized boards (6–9 directors) typically operate with one or two standing committees — most commonly a combined finance and audit committee, and sometimes a governance or nominations committee.
• Larger boards (10+ directors) may have five or six standing committees covering finance, audit, risk, nominations, remuneration, and governance separately.

In Australian incorporated associations, the governing body is often called a “committee of management” or “management committee” rather than a board of directors. Despite the different terminology, the principles for sub-committees and delegation of authority are the same.

Related Terms

Board of Directors

Governance

Chief Executive Officer

Delegation of Authority

Related Resources

Getting the Most Out of Board Committees

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Recruiting for Not-For-Profit Boards: Building Strong Foundations

Recruiting Board Members – Working with a Nominations Committee

Director Recruitment – The Habitat for Humanity Approach

Increasing Board Opportunities for Young Women

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