On this page
- Can you secure additional or emergency funding?
- How can you reduce costs?
- What is a COVID-19 policy and do you need one?
- What is a business continuity plan and what should it include?
- Should your board change the way it meets during COVID-19?
- Can your not-for-profit organisation hold its AGM remotely or should you postpone the meeting?
- Could your organisation be required to repay membership fees if your usual operations or activities cease because of COVID-19?
Can you secure additional or emergency funding?
The SME Recovery Loan Scheme may help not-for-profit organisations access finance. Under this scheme, the Federal Government is guaranteeing 80% of new loans issued by participating lenders to eligible organisations. Loans under the scheme are available from until 30 June 2022. See the Treasury website for more information on the scheme.
The Government has also agreed to guarantee loan amounts for eligible creative economy businesses in the cultural and creative sector. The Office for the Arts website has further information on this and other support packages.
How can you reduce costs?
You may need to consider cost reduction across all areas of the organisation's operations.
If your operations have stopped or continue to be seriously impacted:
- review your contracts with clients, suppliers and government departments
- consider the potential implications of those contracts, and
- assess whether your not-for-profit can meet its obligations in the changed circumstances
By having conversations with suppliers, your organisation can also try to extend terms of trade where needed or terminate contracts where possible. Be mindful of any wrongful termination provisions in the contract if a party's right to terminate under force majeure is disputed.
What is a COVID-19 policy and do you need one?
If you haven’t already, we recommend you establish a COVID-19 policy, which sets out the rules and procedures your not-for-profit will implement for the duration of the COVID-19 pandemic.
A COVID-19 policy may include a number of measures, such as:
- a 'positive action plan' that sets out what measures employees and volunteers should follow to reduce their exposure to COVID-19 and what happens if they develop symptoms or test positive for COVID-19
- working from home strategies to protect employees and volunteers
- a communication strategy that sets out how you will be communicating with each stakeholder, ensuring the board considers opinions and concerns of key stakeholders during this crisis, and
- providing mental health support to volunteers and employees, and ensuring the board has a clear understanding of the duty of care required in relation to changing work arrangements and the importance of ongoing communication
What is a business continuity plan and what should it include?
A business continuity plan (BCP) prepares your organisation to carry on ‘business as usual’ if there is an incident, crisis or disruption. When a crisis occurs, boards and management must be aligned in terms of preparation required for the short and long term. A BCP facilitates this and allows you to provide a considered and effective approach to restoring and resuming operational normality during the crisis.
Your organisation may already have a BCP in place under its risk management procedures, disaster planning procedures or general emergency management. The size and complexity of your BCP will depend on the nature of your not-for-profit, the services it provides and its overall functions.
We recommend you establish a BCP (or update your existing BCP) to set out how you continue 'business as usual' during a pandemic. This may include considering alternative supply resources due to border restrictions or labour shortages, considering the availability of laptops and telecommunication data for working from home and enforcing data privacy policies. Your COVID-19 policy will also set out many of these measures.
Should your board change the way it meets during COVID-19?
Boards should meet more frequently with management and employees and aim to establish a rhythm of regular meetings, for the duration of the crisis.
Consider establishing a crisis management team, which reports back to the board on the organisation’s response to the crisis.
A structured agenda is important during times of uncertainty because it channels the meeting direction and provides a clear plan. Agendas are also particularly useful when boards are adjusting to meeting electronically.
Make sure all directors have access to electronic platforms so the board can function electronically. There are a number of platforms that provide cost-effective meeting technology including Zoom and Microsoft Teams. Be mindful of using appropriate security and privacy measures for online meetings such as protecting passwords and meeting IDs.
Can your not-for-profit organisation hold its AGM remotely or should you postpone the meeting?
In light of physical distancing and occasional shutdown requirements imposed during the COVID-19 pandemic, you may need to decide if your not-for-profit organisation can hold its AGM remotely through the use of technology or if you could postpone the meeting.
Whether your organisation can hold general meetings remotely will depend on your rules, the law in your state, and the approach of your regulator. While this may be confusing, the most important thing you can do during this time is to act in good faith and be clear in your communications with your members. Regulators may be likely to take a facilitative approach in the current circumstances.
The legislation governing companies limited by guarantee, the Corporations Act, was amended to allow companies to hold AGMs through the use of technology such as video conferencing and to provide notice of those meetings electronically (for example, by email) until 31 March 2022 (under the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 ). The Corporations Amendment (Meetings and Documents) Act 2022 makes these changes permanent from 1 April 2022.
The ACNC has advised that AGMs of registered charities can be postponed if they can’t be conducted safely and will not take action unless there is evidence of wider non-compliance.
For incorporated associations, each state and territory regulator has issued guidance on these issues:
- New South Wales
- Australian Capital Territory
- South Australia
- Western Australia
The Northern Territory hasn’t issued specific guidance on this issue. However, you may contact the regulator directly for specific queries.
For more guidance, see the Governance Institute of Australia's updated AGM guide.
Could your organisation be required to repay membership fees if your usual operations or activities cease because of COVID-19?
This depends on your organisation’s constitution or by-laws.
Membership of a not-for-profit is not the same as a contract between a consumer and a supplier for the supply of ordinary goods or services. It’s ultimately governed by the constitution (rules or by-laws), which defines and regulates the organisation’s relationship with its members (and between the members themselves). Typically, membership fees in the not-for-profit context are fees paid to further the overall purpose of the organisation and not to provide a person or group paying the fee a direct benefit.
Usually, the constitution of a not-for-profit doesn't promise the supply of any goods or services. In certain circumstances, it may give rights to members to use the organisation’s facilities or services, but only when those facilities or services are available to be used, not for example in the middle of the night and not, for example, in times of war or pandemic – including government mandated lockdown.
It is very unlikely that a decision by a not-for-profit to cease operations or provide a limited service, because of COVID-19 would be a ‘breach of membership contract’ requiring compensation (such as repayment of membership fees).
Despite uncertainty about the impact of COVID-19 on your organisation’s service offering or activity, your organisation can still seek annual membership payments for the financial year with little risk that a member is entitled to ask for membership fees to be repaid (once again, this will depend on your constitution or by-laws).
Be clear with your members about:
- the need for membership fees to ensure service continuity (if this is the case)
- the uncertain impact of COVID-19 on the organisation’s service or activities for the foreseeable future (that is, you are unsure about what you will and will not be able to offer in the next financial year), and
- what it means if membership fees are not paid (generally that the person or group is no longer a member)
The content on this webpage was last updated in March 2022 and is not legal advice. See full disclaimer and copyright notice.