Societies and Trusts losing their way
Is there a problem?
Members of a society or trustees of a charitable trust may be concerned that the entity has “lost its way.” That phrase can apply to a not-for-profit entity in different circumstances and be evidenced in a number of ways:
- Falling attendances at entity events and meetings,
- Vocal grumbling amongst the membership or those served by the entity,
- The emergence of groups of disruptive members,
- Falling membership, and
- Falling income.
Possible causes of any actual or potential problem
Before anyone blames anyone else for any actual or potential problem, they need to understand that everyone in the entity bears some responsibility for how well (or how badly) the entity functions and serves its members and the community. That assertion is based on a number of fundamental propositions or questions:
- The objects of an entity should underpin what it does, and some questions, such as the following, may need to be asked and discussed:
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- Does the entity actively advance its purposes by what it does?
- Are visitors and guests made to feel welcome and involved?
- Are its activities varied and interesting and do they provoke member and guest interest?
- Are the entity’s activities held at a time and place suitable to members and guests?
- An entity’s activities should run by a number of different members and not just by a “faithful few” who are taken for granted or do run or help run activities.
- Is every meeting or activity basically the same, or are they varied to inspire greater interest by participants?
- Are the purposes of the entity supplemented by any form of strategy which looks beyond the short term?
- Do the “faithful few” always end up overseeing and running the entity’s activities, or are new people with new ideas encouraged to get involved?
How to avoid or overcome the problem
Fundamentally, everyone in an entity needs to accept responsibility if there is a problem. There are a number of reasons for that rather bald statement:
- If the entity is a society, its members elect its committee, and if the committee is not doing a good job (either in running activities or in choosing those who run activities) then the members need to take some remedial action (see the next sub-heading).
- If the entity is a trust, the trustees are responsible if they run or arrange other people to run activities. The trustees need to be informed, and asked to remedy the problem.
- Whether entity is a society or a trust it needs to be strategic in planning its activities:
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- While the entity’s purposes will be set out in its constitutional documents those purposes are usually expressed in “broad brush” terms which should underpin its annual activities.
- An entity should some form of strategic plan which enables it to advance its purposes each year, and that plan should set specific objectives for each year and the activities which will be organised. In addition, the strategic plan should include provision for the periodic evaluation of progress in meeting the strategic plan’s objectives.
- Reference was made above to the possible need for members to take remedial action, and if those governing an entity are not satisfying the expectations of the entity’s members then those members need to understand that they should be doing something to remedy the problem:
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- Members should understand that they can and should be volunteering to assist in the planning and running of activities.
- Members should provide constructive feedback on activities to those in governance.
If all else fails, be even more proactive
Frustrated people ask my advice when all their efforts to remedy poor governance of a community society fail to achieve the desired result. My response is usually rather blunt; “Look in the mirror!” That is followed by some rather more sympathetic and practical suggestions:
- If you have not already done so, you need to volunteer to advise those in governance or to help them in running activities.
- If that does not achieve the desired results your options are one of the following:
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- To admit defeat and walk away,
- In the case of a society, seek a special general meeting to discuss a notice of motion which sets out what you believe the committee should be doing,
- In the case of a society, at an annual general meeting or special general meeting seek to replace the committee with people who will remedy the problem,
- In the case of a trust, you probably have few constitutional options to change those people in control of the trust.,
Legal principles
Generally, as discussed in my Law of Societies text at paragraphs 6.2.3 and 6.2.4:
- A society executive or committee is accountable to the membership for its management and administration of the affairs of a society, primarily through general meetings of members, and especially the general annual meeting, and
- Ultimately, an annual or special general meeting of a society’s members can direct the executive or committee to comply with the wishes of the membership, and to replace some or all of the executive or committee.
It should also be noted that, while it is commonly assumed that a motion of no confidence once passed removes an officer or committee, passing motion does not actually direct the removal. Rather than use the time-honoured but, on analysis, meaningless form of words, it would be better to move, “That the president be invited to resign from office”.
Conclusions
In my opinion, in the absence of clear constitutional provisions to the contrary, a society committee is always subject to the directions of members in a general meeting as a society ultimately exists for the benefit of the members generally. If that is not correct, then members could simply change the constitution and give themselves express power to remove their committee if they consider that to be in the best interests of the society.
For specific advice about any of the issues discussed in this article, please contact Mark at mark@nfplaw.co.nz.