Different organisations need different governance approaches 

Governance can look different for different organisations. There’s no single model for governance – it depends on the organisation. How an organisation is set up affects how it’s governed, as different business and company structures come with different ways of overseeing them. 

This applies across the arts sector too. Whether your organisation is a large incorporated entity, unincorporated, a trust, an association, or a local community cooperative, good governance is essential to success.  

The role of the board  

A board has overall responsibility for governance in an organisation. Unlike managers of an organisation, a board only has authority to act as a group. 

Board roles and responsibilities:  

• appoint, evaluate and support the CEO 
• develop high-level strategy and key policies, often in collaboration with management  
• engage with key stakeholders and act as an advocate externally   
• undertake succession planning for the board and CEO 
• set the organisation’s risk appetite  
• oversee performance consistent with an organisation’s mission and purpose 
• determine the delegation of power around major decisions 
• ensure compliance with relevant laws and obligations  
• set organisational culture.  

Board member obligations under legislation 

Board members have a fiduciary duty to the organisation they serve. A fiduciary duty is where a person or company is required to put another person or entity’s interest before their own.  

Board members are expected to:  

• act with reasonable care and diligence  
• act honestly and fairly in the best interests of the organisation and its purposes  
• not misuse their position or information they gain as a board member  
• disclose conflicts of interest 
• ensure the financial affairs of the organisation are managed responsibly 
• not allow the organisation to operate while insolvent.  

Simply put, the duties mean that board members should act with standards of integrity and common sense. 

How legal structure affects governance

For an organisation to be successful and sustainable, it must be well governed and effectively managed. This is true whether your organisation is a large incorporated entity or a local community cooperative.  

But it’s important to know there may be specific governance requirements based on your organisation’s legal structure.  

Companies limited by guarantee  

Many arts organisations are companies limited by guarantee and registered charities. 

This is a type of company that doesn’t have shareholders or share capital. In other words, these are not-for-profits who reinvest any profit towards the company’s purpose.  

A company limited by guarantee will often have a constitution that sets out specific rules governing the company. This will include rules for the board like:  

• the minimum and maximum number of board members 
• processes for electing, appointing or removing directors 
• board duties, responsibilities and term limits. 

Becoming a registered charity

A company limited by guarantee must be registered with the Australian Securities and Investments Commission (ASIC). This type of company can then apply to be registered as a charity with the Australian Charities and Not-for-profits Commission (ACNC).     

Governance for not-for-profits 

There is no single governance code for Australian not-for-profits.   
 
As a not-for-profit, your regulatory baseline is: 

• the ACNC Governance Standards for registered charities; and 
• directors' duties under the Corporations Act 2001; or 
• the relevant state or territory associations legislation.  

Good governance for the arts

In all organisations, good governance starts at the top with members of the board. 

Arts boards govern a wide range of organisations. This can include large performing arts companies, through to visual arts, interdisciplinary arts, First Nations arts, literary and community-based arts organisations.  

Good governance structures encourage these organisations to: 

• create value through entrepreneurism, artistic innovation, development and exploration  
• provide accountability and control systems in keeping with the risks involved.  

Ultimately, the challenge for arts boards is to balance bold artistic vision and programming with sound financial and general management oversight. 
 
Arts and cultural organisations seeking multi-year investment from Creative Australia are required to: 

• be legally constituted: either registered under Australian law (for example an incorporated association or company limited by law) or created by law (for example a government statutory authority) 
• demonstrate a diverse income stream 
• show a record of good governance and effective management.