Why a clear constitution matters for your organisation

A clear and well-drafted constitution is fundamental to the effective governance of any organisation. Whether an organisation is a local club, charity or association registered as an Incorporated Society, it requires a constitution. Its constitution provides the legal framework that outlines how it operates, makes decisions and manages its affairs. This may include the core purposes of the organisation, how Te Tiriti o Waitangi is honoured by the organisation and how disputes are managed (should they arise).

What is required of a constitution?

Incorporated societies

For an incorporated society in Aotearoa New Zealand, having a constitution is not simply good governance practice — it is a legal requirement.

The Incorporated Societies Act 2022 (the Act) requires an incorporated society to have a constitution that complies with the Act and sets out key matters concerning the society’s governance and operation.

Section 26 of the Act requires that a constitution includes the following:

• The society’s name and purposes;

• Membership requirements, including:

  • How someone becomes or stops being a member; and

  • How the register of members is updated;

• The roles, functions and powers of the committee that makes up the society’s committee (the people trusted to make the decisions). This includes:

  • Membership of the committee:

    • How many people are on the committee;

    • How they become a committee member;

    • How long their term on the committee is;

    • How a committee member can be removed;
      

  • Powers of the committee

  • Voting procedures and quorum (the minimum number of committee members that can make a decision).

• Management of finances;

• Procedures for resolving disputes;

• When and how general meetings will be conducted; and

• How the constitution can be amended.

A well-drafted constitution may also include the following, even though they are not legally required under the Act:

• Guiding principles for the society;

• How conflicts of interests managed;

• How the society honours Te Tiriti; and

• A framework for committees or sub-committees.

Registered Charities

For charities, the position is slightly different. A charity’s governing document may be a constitution, trust deed, rules document, charter or, in some cases, an Act of Parliament, depending on its legal structure. Whatever form it takes, the governing document is central to the charity’s legal and operational framework.

Charities Services (the regulator which monitors and supports charitable organisations in Aotearoa New Zealand) requires an organisation’s rules to clearly explain its charitable purposes, how it operates and makes decisions, and how its assets are dealt with.

The rules must also legally bind the organisation, support its charitable purposes, prevent private financial gain, and provide for remaining assets to be applied for charitable purposes if the organisation winds up.

This is particularly important because a charity’s governing document must align with its charitable purposes under the Charities Act 2005.

The purposes should clearly identify what the organisation exists to achieve and provide a sufficient basis for demonstrating public benefit.

Charities Services considers an organisation’s rules alongside its activities when assessing whether it meets the requirements for charitable registration.

How can we help?

A well-drafted constitution or governing document therefore does more than set out administrative rules. It establishes the organisation’s purpose, defines its governance structure and provides the rules by which decisions are made. It can help prevent disputes, provide clarity when difficult decisions arise and ensure that those responsible for running the organisation understand the limits of their authority.

The document should also reflect the organisation’s particular legal structure and circumstances. A constitution suitable for an incorporated society will not necessarily be appropriate for a charitable trust, and a generic template may not adequately address the organisation’s particular purposes, governance arrangements or legal obligations.

For these reasons, organisations should treat their constitution or governing document as a living governance document rather than something that is prepared once and then left unchanged. Regular review is important to ensure that it remains consistent with the organisation’s purposes, reflects how the organisation operates and complies with changes in legislation.

We appreciate that it can be tricky and time-consuming for organisations to ensure that their constitutions meet all of these requirements, and are up to date, year on year.

We are happy to assist with your organisation’s constitution at any stage of the constitution’s lifecycle — whether you are a new organisation needing help to draft your first one or need help reviewing an existing constitution!