Kate H: Imagine this. The Committee is discussing the idea of taking on its first employee. It's a big step. The newest Committee member asks, does our constitution allow us to do this? The room goes quiet.

Kate M: The secretary looks at the president. The president looks at the secretary. The president says, I think so. Does anyone actually have a copy of the constitution on them? The meeting takes a break while the secretary hunts around in the shared drive for the constitution.

Kate H: Eventually, they find it, scan, and guess what? They can't find anything about employees. The constitution talks about volunteers in the objects, but it says absolutely nothing about employees.

Kate M: Now if this little puzzle sounds like something your committee has experienced, welcome to The Committee Room.

Kate H: Welcome back to The Committee Room.

I'm Kate Hartwig, Kate one.

Kate M: And I'm Kate McPhee, Kate two. Apparently, I'm the swearing one. We help small, time poor, volunteer led committees run better meetings, make better decisions, and build stronger structures and systems with less stress and less mess and just a few swear words every now and then.

Kate H: Always in the best possible taste.

Today, we're starting a new series, Documents Done Right. And we're beginning with the most important document your organisation has, the constitution. What it is, why it matters, what must be in it, and why the right constitution for your organisation is probably not the same as the right constitution for the one down the road. And a quick note before we start, this podcast is for general information on best practice governance for small to medium associations. It is not legal advice.

Kate M: Let's start with what a constitution actually is. Now here's a fun fact for you. In South Australia, the Associations Incorporation Act calls it the rules, not constitution. But in reality, most organizations use the term constitution. So you can use whatever word your organization uses. That's fine. Just make sure that everyone knows what the document is and where to find it.

Kate H: When an association incorporates under the act, it becomes a separate legal entity distinct from its individual members. And that gives its individual members a lot of protection, which is why people choose to incorporate. The Constitution is the document that defines what that entity is, what it can do, and how it must operate. It's binding on the association itself and on every single member, not just committee members, all members, whether they've read it or not.

Kate M: So Kate, we covered this in episode four when we talked about the duty of obedience. So the committee is required to act in accordance with the organization's governing rules, whether it knows those rules or not. And this is why knowing your constitution matters. You don't need to memorize it word for word. In fact, sometimes in the training programs I run, Kate, I say to people that they should be sleeping with their constitution under their pillow.

Kate H: I think putting it under your pillow is a very good idea. Generally, reading a constitution is even better than counting sheep for insomnia.

Kate M: You do need to understand the rules that govern the decisions you are making, and you need to check the constitution when you're not sure. Because ignorance of your own constitution is not a defense against a claim that the committee did something wrong. Now some people might say that that's harsh for a group of people who are nearly always volunteers, but it's important. You can't avoid responsibility for a decision simply because you didn't know that the constitution said something different.

Kate H: Well, that's the case for most laws, Kate. Ignorance is no defense.

Kate M: That's right. That's right. So the constitution gives the committee particular powers. So the committee needs to stay within those powers. And if the constitution sets limitations on those powers, then the committee has to stay within those limits. You know? It has to stay within its lane. If the constitution sets out a particular process, then the committee needs to follow it. So knowing what the constitution requires helps the committee to make decisions that are valid and are within its authority.

Kate H: And the constitution must not contradict the act. But within that framework, and it's really just a framework, Kate, the act doesn't tell you what you have to do.

It tells you what has to be in there, but it doesn't tell you what it has to be. So there is some real flexibility and some real choices that you can make with your committee about how your constitution is framed and how your organization will work. That's why there's no such thing as a one size fits all constitution.

Kate M: Kate, we've read a lot of constitutions in our time, you know, good, bad, some of them downright ugly. And we know that there is no single right constitution.

So, you know, a sporting club or a kids' charity, a peak industry body or a community childcare center, they all need very different governance structures. Not because, you know, one is more sophisticated or complex or simple than another, but because they are fundamentally different kinds of organizations.

Kate H: A club that delivers services to its own members, so like a sporting club, a social club, a professional association. Now that has different governance needs to one that delivers services to outsiders like a community service organisation. A club operating within a league or federation's rules has constraints or limitations that a fully independent organisation doesn't. An organisation whose members are other organisations has different voting dynamics to one with individual members.

Kate M: Some organisations are advised to just use the model constitution or an example constitution. Now that's well intentioned advice, but it's incomplete. You know, referring to a model or an example, you know, it's that's worth knowing about. It gives you a starting point and and might identify things that your constitution needs to deal with. But any model or example constitution, it it's generic. You know? So any listener who's ever shopped for clothes, as Kate and I know, one size never fits all.

Kate H: Just like that pantsuit I got from an online retailer that said one size fits most. It didn't.

Kate M: So those model rules or those example rules were not written for your organization. So simply adopting them without the necessary tweaks and tucks and so on will leave you with a constitution that at first glance looks perfectly respectable but doesn't actually fit the organization it's supposed to govern.

Kate H: Yes. Well, the goal is a constitution that fits properly. One that reflects how your organization actually works or wants to work in the future, that gives you the flexibility you need, and doesn't create unnecessary friction every time something changes.

Kate M: Every constitution has to cover certain things that are required by the Associations Incorporation Act regardless of what type of organization you are. So these are the nonnegotiables. Then on top of that, there's a layer of best practice. So things that aren't necessarily required by the act, but that most organizations would benefit from having in their constitution. And then the third layer is the things that are specific to your organization. Choices you make because of how your organisation operates, what your members need, and what you want your constitution to achieve.

Kate H: So let's have a look at these required or mandatory elements. First, the name of the association. And here is a big tip. Don't include the word the before your name just because it reads better. If it's there, the becomes a part of your legal name and you are stuck with it. Another required element is the association's objects or purpose. Now that explains why you exist and outlines your main goals and activities. Now remember to use very general terms such as to promote the enjoyment of football or to engage with our community, not to play football every weekend. And this is also where a good catch all clause can be really useful.

Something like, and to do all such other lawful things that support the attainment of these objects. Now that gives your organisation some room to evolve. You don't have to go back and change the constitution every time you introduce a new activity, provided that activity is lawful and supports the organisation's existing objects. Just gives you that wriggle room. And without that sort of flexibility, you can find yourself having to amend your constitution just because the way you pursue your objects has changed.

Kate M: So let's look at the next requirement, membership. So that covers who can join, eligibility criteria if you set them, whether there are different categories and so on. Now you wanna try really hard to keep the categories as simple as possible. So here here's another handy catch all or future proofing phrase. Include words such as I have to put on my special reading constitution voice here, Kate. And such other classes of membership as the committee may determine from time to time. Now this matters more than most committees realize, and we'll come back to why that's important in the next episode.

Kate H: Next requirement, committee composition and elections. How many committee members do you need? Is there a minimum or a maximum? How are they elected? And this is where you get really important choices. Do you want staggered terms so the whole committee doesn't change over at once? Do you want to limit on how many consecutive terms or terms in a row that someone can serve? Do you want to allow some members to be appointed rather than elected? Because that might bring in particular skills.

Now these are governance decisions that each organisation makes for itself based on what works for its members and how it wants to operate. This is where you can tweak and tailor the constitution to suit your organization rather than trying to squeeze your organization into an off the shelf set of rules, because I know that that will work no better than me trying to squeeze myself into that jumpsuit I bought online because it looked so cute at the time. Epic fail. It didn't end well. They always look so good in the picture, don't they?

Kate M: Well, especially when the picture's on your phone and it's 11:00 at night after, know, as you say, a little, you know, beverage or two. Never works that well. Okay. Let's get serious, Kate, and look at the powers of the association and how they're exercised.

So let's go back to our opening scenario where the committee didn't know whether or not it could employ someone. So once the secretary found the constitution, they had a good look at it, and they couldn't find anything about employing people. Now some committee members might have thought that meant that they couldn't, but that's actually not correct. If the constitution gives the committee the power to enter into contracts, and, Kate, every constitution I've ever read does, that can include an employment contract. So, yes, their organization can employ someone.

And, hey, three cheers to the new committee member for asking, by the way. And three soft boos to the secretary for not having a copy of the constitution at hand for the meeting. Hard or soft copy, you know, it doesn't matter. The Committee need to be able to access the constitution at literally a moment's notice. Now some constitutions do put specific limits on what an organization can do, So they might specifically prohibit employing people or require member approval before the organization can borrow more than a certain dollar amount. So this is why you need to be up close and personal with your constitution on a regular basis. You need to check what your constitution actually says rather than assuming that if something isn't specifically listed, you can't do it.

Now membership and voting rights. Kate, we have seen constitutions with one category of members and constitutions with many, many categories. One I was working with recently had 14 categories of membership. I just needed a Bex and a lie down every time I looked at it. Of those 14 categories, not all of those members had voting rights. So I have a question. If you can't vote and you can't stand for election, are you really a member? Now, Kate, I know you have opinions, and I know that you have an opinion on this. So please tell us.

Kate H: Opinions? Well, maybe I do. And on this, I have a strong one. Look, call me a purist, but I think that being a member means that you have the right to engage in the governance of your club or association to vote and stand for office.

Now if you can't do those things, then you're not really a member. You're a non member wearing member clothing, and it can cause a lot of confusion. We've seen so many constitutions where there are members, affiliate members, social members, junior members, cub members, you name it. There are all sorts of members, and hardly any of them have voting rights or can stand for election. So my recommendation is to come up with other terms, and there are plenty to choose from.

Associate, affiliate, supporter, friend, sponsor, even junior for those who are under the voting age in your constitution. Just leave out the word member. Once you call someone a member, they have rights and obligations. The constitution should be clear about both and not blur the boundaries.

Kate M: So there are a range of other nonnegotiables that need to be included in your constitution. So you will need to specify in the constitution who, for instance, will be the public officer, when your financial year will start and finish, how your general meetings are called and conducted, when the AGM has to be held. You'll need to specify how many members you need at a meeting to amend or replace your constitution or amend or replace particular clauses. And you'll need to have a winding up clause which says how the members can decide to dissolve the association and what will happen to its assets.

Kate H: And, Kate, here's another fun fact. That amendment threshold, most people assume the law requires a 75% majority to change a constitution, but it doesn't. That's the Association Incorporation Act's default position if your constitution doesn't specify otherwise. But you can set a different threshold in your own constitution. Higher, say 80%, if you want stronger protection against hasty changes or lower within reason, so say two thirds, if you want a smaller number of members to be able to make changes. This is another really good example of how a constitution is a framework that you can tailor to suit your own needs.

Now I think, Kate, that the single most important thing about how a constitution is written is not the words, but the plain English test. A constitution full of legal jargon that no ordinary member can understand is a constitution no one will use. Plain English isn't a luxury. It's essential.

Kate M: So if your constitution reads like it was written in 1897, don't despair. There's a very simple practical technique that you can use for reviewing or updating it without getting overwhelmed by the legalese. So this is what you do. You strip the legalese language away entirely, and you work with the headings.

Kate H: So under each heading, write in simple dot points how you want the organisation to operate. So no legal language, no formal structure. Just do a brain dump. What do we want this section to say? Okay. So the members elect the committee. The committee will have between six and ten members. Each serves a two year term, maximum three consecutive terms. The committee elects the president, treasurer and secretary. That's it. That's your intent in plain language written by the people who actually know and run the organization.

And you do that for each section where you have flexibility in what you can include. And then you convert those dot points into constitution format.

Kate M: So either using a model template as a reference or engaging someone else to do the writing for you. The thinking is already done. The drafting, the writing is just translating your intent into the formal language required by the act.

Kate H: And, Kate, as this is our podcast, we can do a tiny weeny shameless plug. That dot points exercise is very much the first step in our brand new constitution composer process that we've developed at Fresh Allsorts.

Now we don't start by handing you a generic constitution template and asking you to fill in the blanks. We start by getting to know your organization, what you do and how you do it, what you want to keep and what you want to change, things that you like, things that you don't like, your membership, the committee structure, decision making and how you run your meetings. We work through those questions with you first, then use the answers to build a shiny brand new constitution. It's built around your organisation, your circumstances and the way you actually want to operate rather than taking an off the shelf document and trying to make it fit you with all your organisation's unique lumps and bumps. You're not just writing rules, you're deciding with our guidance what rules should bind your members and your committee and how you want your organisation to operate into the future. We do the composing, you do the conducting. If that's the sort of practical help that sounds like what your committee needs, there's a link in the show notes.

Kate M: So, Kate, let's go back to where we started with that opening scenario of everyone sitting around the committee table wondering what the hell their constitution actually says. Now imagine how different it feels when someone asks, does our constitution allow us to do this? And you all know that the secretary can look it up, find the relevant clause, and give the meeting, you know, within a minute or three, a confident answer that the committee and all the members can rely upon. No uncertainty. No guessing. No speaking with your fingers crossed behind your back. No hoping for the best. Instead, you have clear rules that everyone can refer to and understand.

Kate H: So Kate, let's recap. Your constitution is binding on every member, whether they read it or not. There is no one size fits all constitution. The right constitution is one that fits your organisation rather than a generic template you've simply adopted because at the time it seemed like the easy option. The Act sets out the things your constitution has to cover, but it doesn't say how.

Within those requirements you have real choices about how your organisation will work. You decide who can become a member and what rights they have. You decide who gets to vote and how important decisions are made. You decide how your committee is structured, how people come onto it and whether there should be limits on how long they can stay. And you decide how much protection you want around changing the rules in the future.

And finally, don't make the constitution harder to understand than it needs to be. Start with dot points, work out what you actually want the rules to say, then put them into clear plain English.

Kate M: So, dear listener, here's your improvement activity homework for this week. Ask yourself, when did I last read the constitution from start to finish? If the answer is I'm not sure, that's your homework. Find it and read it from beginning to end. I'd be very surprised, dear listener, if you don't find at least one thing in a dusty corner of your constitution that makes you stop and say, WTF? It really says that? And if you want to go one step further, we have put an essential elements checklist from Kate One's very excellent committee companion in the show notes. So you can work through that with your constitution in front of you, and I can guarantee that you will learn a lot.

Kate H: Now if you suspect your constitution is no longer fit for purpose, if it still assumes that everyone in the world is a he, or if it's too complicated or too simple or too generic, or if it just doesn't reflect how your organisation currently works or wants to work in the future, Kate and I can help. Our new Constitution Composer is a fixed price, structured approach to getting you a shiny, new tailor made constitution that won't break your brain or your bank account. The details are on our Fresh All Sorts website and of course in the show notes.

Now we would love to hear from our listeners. If you've got a governance question you'd like us tackle on the show as we did in episodes 10 and in last week's wonderful episode number 18, use the contact form at the committee room dot com dot a u. And you never know, maybe you'll get another bloopers reel as a bonus.

Kate M: So if today's episode has helped you, please subscribe wherever you get your podcasts so that future episodes turn up on your listening device without you having to do anything. And please share the podcast with someone else on a committee. The show notes are at thecommitteeroom.com.au. And that brings us to next week's episode.

Kate H: We'll cover what happens when the constitution you've come to know and love or not needs to change. Just like husbands, we'll be looking at the process to amend or replace your current rules. What's required, what your committee can decide for itself, where the members need to be involved and what happens after they've given their approval. Because changing the constitution isn't as simple as changing a policy or a husband. There's a specific process to follow, including getting the approved changes formally lodged and registered with the relevant government department.

Kate M: Until then, I'm Kate McPhee, who can't stop laughing. I'm Kate Two,

Kate H: And I'm Kate Hartwig, Kate One.

Kate M: And this has been The Committee Room. Remember,

Kate H: you don't need good luck if you've got good governance.