What is a responsible person in NFP organisations

In the Australian not for profit (NFP) sector, the concept of a Responsible Person holds significant weight in ensuring quality governance and public trust. Way back in September 2021, we discussed the role and responsibilities of a Responsible Person. Today, it’s crucial for charity board members and NFP leaders to understand what this role entails under current regulations. While the fundamental duties of Responsible Persons remain the same, the regulatory landscape has evolved since 2021, with updates to governance standards, new compliance obligations, and a continued emphasis on accountability and transparency. This article provides an updated overview of the Responsible Person’s role in Australian NFPs, highlighting the Australian Charities and Not-for-profits Commission (ACNC) guidance, governance standards, director duties, eligibility criteria, and recent developments affecting NFP governance.

A Responsible Person is essentially a member of an organisation’s governing body, usually a board director, management committee member, or trustee, who is responsible for governing a charity/NFP. When an organisation registers with the ACNC, it must identify its Responsible Persons. Importantly, this role is not the same as the CEO or an administrative contact person; it refers to those charged with ultimate oversight.

The rationale behind the term is to ensure the NFP is not controlled by individuals who might jeopardise the organisation’s finances or interfere with its mission. In other words, Responsible Persons are the gatekeepers of quality governance. They make key decisions about the organisation’s direction, manage its finances and risks, and must act in the best interests of the organisation’s mission.

All registered Australian charities are required to meet the ACNC’s Governance Standards, which are core principles for how a charity/NFP should be run. Two of these standards specifically involve Responsible Persons: one addresses their suitability, and the other their duties and responsibilities. In essence, charities/NFPs must ensure that the people governing them are fit and proper for the role and that these people understand and carry out a set of fundamental duties. Below, we delve into these requirements and their implications for boards and Responsible Persons in 2025.

Governance standard 4 ensures that the people in charge of a charity/NFP are appropriate and not disqualified from holding such positions. Organisations must take proper steps to ensure each Responsible Person is not disqualified from:

Managing a corporation under the Corporations Act 2001 (Commonwealth). (This typically covers persons banned due to insolvency, wrongdoing or director disqualification by ASIC.)

Being a Responsible Person of a charity by the ACNC Commissioner, within the past 12 months.

In practice, an NFP should check the background of anyone stepping into a board or committee role. Common steps include searching the ASIC Disqualified Persons Register for banned company directors and verifying the ACNC’s own list of disqualified persons. To date, the ACNC has not yet had to disqualify individuals, but the register exists as a precaution. It’s also wise for organisations to ask incoming board members to sign a declaration confirming they are not disqualified and disclosing any relevant legal history. The ACNC provides a template for such a declaration, which many charities/NFPs now use during board recruitment and onboarding.

If an organisation cannot verify that a candidate is free from disqualification, it should hold off appointing them. And if an existing Responsible Person becomes disqualified, for example, if they are banned by ASIC or removed by the ACNC, the charity must remove them from the board to remain compliant.

These rules uphold public confidence that those at the helm of charities and not for profit organisations are fit and proper persons. ACNC guidance encourages charities/NFPs to perform these checks not just at appointment but periodically, and to have policies requiring board members to notify the organisation if their circumstances change.

Since late 2022, all directors of companies in Australia, including those of charitable companies limited by guarantee, have been required by law to obtain a Director Identification Number (DIN). Ensuring your organisation’s directors have completed this one-off registration is now a standard compliance step.

Governance Standard 5 requires charities/NFPs to take reasonable steps to ensure Responsible Persons are aware of and follow their duties. These duties mirror the fundamental principles of good directorship and fiduciary responsibility. In summary, every Responsible Person must:

• Act with reasonable care and diligence. They should stay informed about the organisation’s operations and finances, attend board meetings, and actively participate in decision-making. Negligence or willful ignorance can be a breach of this duty.
• Act honestly and fairly in the best interests of the charity and for its charitable purposes. Decisions should be made with the organisation’s mission and beneficiaries in mind, rather than personal interests.
• Not to misuse their position or information. A board member should never use their role, or any information gained through it, for personal gain or to the detriment of the charity/NFP.
• Disclose any actual or potential conflicts of interest. Conflicts should be declared and managed in accordance with the organisation’s conflict of interest policy.
• Ensure the organisation’s financial affairs are managed responsibly. The board must steward the finances prudently, which includes keeping proper financial records, monitoring budgets, and ensuring funds are used for the organisation’s purposes.
• Not allow the organisation to operate while insolvent. Responsible Persons must not permit the organisation to incur debts if it is clear that the organisation cannot pay its bills.

These duties underscore that Responsible Persons should act with high standards of integrity, care, and common sense. They are similar to the duties company directors owe under corporate law, adapted to the charity/NFP’s context. Every board member or trustee should be fully conversant with these obligations.

To comply with Governance Standard 5, charities/NPFs should embed these duties into their governance practices. A practical step is to formally inform new Responsible Persons of their duties, for instance, by providing a copy of the ACNC’s guidance or a letter of appointment detailing the duties when someone joins the board. The ACNC offers a template appointment letter outlining all the duties, which can be a helpful tool.

Additionally, charities/NFPS should encourage an active and accountable board culture. This means expecting Responsible Persons to attend and engage in meetings, ask questions, and contribute to strategy and oversight. Having clear policies is essential, and there should also be procedures to address any performance or conduct issues. By being proactive in these ways, an NFP board not only meets the letter of Governance Standard 5 but also fosters a culture of good governance that benefits the whole organisation.

Since the original article was published in 2021, an additional governance standard has been implemented. Governance Standard 6, introduced in 2021, aims to maintain and enhance public trust in the charity/NFP sector. This standard requires a charity to take reasonable steps to become a participating institution in the National Redress Scheme for Institutional Child Sexual Abuse if the charity/NFP is, or is likely to be, identified as being involved in past abuse of individuals.

In practical terms, Governance Standard 6 applies to charities/NFPs, often faith-based, educational, or care organisations, that have been named in relation to past child sexual abuse cases. Such organisations are expected to join the government’s redress scheme to support and compensate survivors. Failing to do so can put the organisation at risk of breaching this standard and facing regulatory action. Although this situation is specific, the introduction of Standard 6 conveys a broader message to all NFPs: a charity’s commitment to public accountability entails addressing serious wrongdoing and participating in sector-wide solutions to maintain community confidence.

For most ordinary charities/NFPs that aren’t involved in such cases, the key takeaway is that the ACNC and government expect charities to uphold public trust proactively. All six Governance Standards, from purpose and accountability, Standards 1 and 2, through to compliance with laws, Standard 3, responsible persons’ suitability and duties, Standards 4 and 5, and now public trust via redress, Standard 6, together reinforce that a charity/NFP must be run in an ethical, accountable way to retain its registration.

The ACNC provides extensive guidance to help NFPs and their Responsible Persons meet these governance requirements. On the ACNC website, the “Governance Hub” offers plain-language guides and tools. Charities can use the ACNC’s self-evaluation tool to assess how well they are complying with the Governance Standards. This tool walks users through key questions about board processes, financial management, and compliance, helping them identify any gaps.

Beyond the ACNC, sector groups offer additional support. Organisations like Justice Connect provide guidance tailored explicitly to not for profit governance. Many NFP boards invest in governance training workshops or engage in regular board evaluations to continually improve their oversight role. The overall message is that Responsible Persons should take advantage of these tools and educational opportunities to stay informed and perform their role effectively.

Since 2021, several significant developments have occurred that Responsible Persons should be aware of, reflecting heightened regulatory expectations and emerging best practices in the NFP sector.

• Greater transparency in reporting: New reporting requirements have been introduced to shed light on transactions and payments involving individuals in governance roles. Starting from the 2023 Annual Information Statement (AIS), all registered charities must declare related-party transactions. This means if the charity has any financial dealings with a Related Party. For example, a business owned by a board member or a close family member of a Responsible Person must disclose these dealings to the ACNC. Medium and large charities, those with annual revenue of $500,000 or more, are required to provide details of any material related-party transactions in their AIS and in financial reports, if lodging them. Small charities must at least report whether any such transactions occurred. Additionally, large charities with a revenue of $3 million or more are now required to report on the remuneration of Key Management Personnel. This typically includes the total compensation or salary bands for senior executives and may cover any payments to board members if the charity’s Responsible Persons are remunerated.
• Director Identification Numbers (DIN): As noted earlier, a new compliance measure affecting many NFP Responsible Persons is the Director ID requirement. Since November 2022, every director of an Australian company has been required to hold a unique Director ID issued by the Australian Business Registry Services. This rule applies to directors of charitable companies limited by guarantee, one of the most common structures for larger NFPs and charities. Boards should verify that all their company directors have obtained their ID and have recorded it, as failing to have a Director ID when required is actually an offence.
• Focus on board diversity and capability: Sector expectations have evolved to place greater emphasis on the composition and capability of NFP boards. While not a legal requirement per se, there is a strong push from funders, regulators, and peak bodies for charities/NFPs to have diverse and appropriately skilled Responsible Persons. Diversity here encompasses not only gender and cultural diversity, but also the diversity of skills and professional backgrounds. For Responsible Persons, this trend means there’s an expectation to engage in ongoing professional development and possibly recruit new board members to fill skill gaps. Many boards are voluntarily adopting practices such as skills matrices, board tenure limits, and succession plans to ensure they remain effective governors of their organisations. In 2025, an NFP board member is expected not just to lend their name to a cause but to contribute knowledge, insight, and leadership actively.
• Continued emphasis on accountability and ethics: The ACNC, under its current leadership, continues to emphasise that charities/NFPs must be accountable and ethical in their operations. Public expectations have also been shaped by various inquiries and media reports, meaning Responsible Persons are in the spotlight if something goes wrong under their watch. Issues such as safeguarding vulnerable people, beyond the specific Redress Scheme context and ensuring proper use of funds are paramount.

By staying informed about these developments and expectations, Responsible Persons can better protect their organisations and uphold the trust placed in them by donors, beneficiaries, and the public.

The role of a Responsible Person in an Australian NFP comes with both legal responsibilities and moral duties, but when well-executed, it enables organisations to thrive and pursue their missions. By staying informed about regulatory changes, from ACNC standards to corporations law updates, and adapting the organisation’s governance practices accordingly, Responsible Persons can execute their roles with confidence. Our advice is to remain inquisitive, read board papers, ask questions, and seek external advice when needed to make sound decisions.

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