Pacific Legal Network -Article: Not For Profit enterprises in the Pacific: Is your organisation compliant?

Authored By Dirk Heinz

“Not-for-profit” is a phrase that can be used to describe all sorts of enterprises, including charities, NGOs and others. They all have at their core the requirement that they do not operate for profit. These entities can be incorporated almost anywhere and have a long history of operating in the Pacific. If you’re part of such an organisation (which we will call below an ‘NGO’) and have spent time living in the Pacific region, you’ll be acutely aware of just how important the role of aid funding can play in improving quality of life for many Pacific peoples. In the face of a growing threat from climate induced natural disasters and as efforts to close the gap between emerging island economies and the developed world continue, NGOs are more important than ever.

However, NGOs are often under-resourced and very busy carrying on with their missions. Sometimes it is easy to forget about the regulatory and operational requirements of your NGO. No matter the level of “goodness” behind your intentions and deeds, government departments and national corporate regulators across the Pacific still require that you abide by certain regulations which apply to all entities operating in each jurisdiction, no matter your social or commercial aims.

Aside from reputational risks that come with non-compliance hefty fines can follow. So, it’s integral that you comply with filing and ongoing disclosure requirements in accordance with the laws of the country you operate in and your constitutional framework.

Committee members and board members of NGOs should also be intimately familiar with their corporate governance requirements and have a sound understanding of their obligations to the NGO – this should include understanding the financial position of the NGO.

Similarly, failures by the NGO to take regular audits, including of employee entitlements, property and asset holdings and liabilities or insurance policies to ensure they are fit-for-purpose, can jeopardise the sound functioning of your NGO, the security of assets held and potentially expose your organisation to significant financial loss.

Typically when working with NGO clients, we asks a number of key questions including:

Is your organisation validly incorporated or properly registered as a ‘charitable organisation’?

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