The voluntary Code of Practice was endorsed by the Membership of Philanthropy Australia at its Annual General Meeting held on Wednesday, 24 April 2002.

The code is based on some key principles about giving in Australia, which Philanthropy Australia commends to its giving Members. If you are a Member or otherwise involved in the philanthropic community, Philanthropy Australia encourages you to share and discuss this document with the relevant staff and directors/trustees within your organisation.

Code of Practice

1. Introduction

This voluntary Code of Practice constitutes a recommendation to full grant-making Philanthropy Australia members (as defined in the Constitution). Its aim is to encourage best practice, openness and transparency in all aspects of grant-making by these member organisations whether they are family foundations, corporate foundations or corporate giving programs, community foundations, private foundations or government-initiated foundations.

2. Principles of Good Practice

This code is based on some key principles about grant-making in Australia which Philanthropy Australia commends to its members. These include:

• Acknowledgment by grant-makers of the importance of operating in accordance with the wishes of founders who provided initial capital, or in the case of community foundations and corporations, which are dependent on multiple donations, the wishes and concerns of these donors.
• Commitment by grant-makers to the development and promotion of innovative, flexible and effective responses to specific social, cultural, environmental, educational, scientific, health and economic challenges in today's society.
• Acceptance by grant-makers, that in fulfilling their particular role in helping build a just, sustainable and pluralistic society, it is important that there is openness, transparency, integrity, accountability and self-regulation in the provision of resources to grantees.

3. Legal Responsibilities

All Boards of grant-making members of Philanthropy Australia should be aware of the legal duties and obligations imposed on grant-making member trustees. In summary, the major duties imposed on a trustee comprise:

• The duty of the trustee to avoid conflicts of interest - a trustee should not put himself or herself in a position where the trustee's own interests conflict with the interests of the beneficiaries
• The duty of the trustee not to make a personal profit from the position of trustee
• The duty of the trustee to act in the best interests of the beneficiaries
• The duty of the trustee to comply with the relevant trust instrument - the trustee should be familiar with the terms of the trust instrument
• The duty of the trustee to use ordinary business prudence when investing funds on behalf of the trust, and
• The duty of the trustee to seek advice where the trustee is unsure whether he or she is complying with one of the above duties

Additional duties may apply if the grant-making member trustee is a corporate trustee. The Board of a grant-making member that has corporate trustees should therefore be fully appraised of and comply with such additional duties.

The above is not intended to be a complete explanation of the legal principles that apply to trustees. If Boards of grant-making members have any doubt as to which duties apply to them or whether they are in compliance with particular duties, the Board should seek independent advice.

This code of conduct is a voluntary code. However, adherence to the code by grant-making members will ensure that members have a high standard of corporate governance that will in turn foster good practices and enhance public confidence in the integrity of the member.

4. Procedures

Clarity of Purposes

Grant-making organisations should define clearly their purposes and the purposes for which they provide grants and review these on a regular basis.

Communicating to the public and to applicants/grant-seekers these purposes and the procedures that are followed in grant-making is in the interest of all concerned. Effective communication is important if the grant-making process is to function well and if trust in the responsibility and accountability of grant-makers is to be maintained. Wherever possible, grant-makers should disclose appropriate information regarding their grant-making practices, including geographic and policy limitations and procedures and timetable for making grant decisions.

Grant-makers must comply with the Privacy Act (Cwlth). They should respect the confidentiality of applicants, grantees and donors and use discretion in communicating with others about specific organisations and individuals.

Grant-Seekers should be advised of the monitoring, evaluation and reporting requirements associated with receiving a grant.

Grant-makers need to be alert and responsive to changing conditions in society and to the changing needs and merits of particular grant-seeking organisations. Grant-making organisations are encouraged to seek ideas and comments from a variety of independent sources with appropriate knowledge and expertise to add to the input from staff and board members.

Governance

Grant-making organisations acknowledge the importance of having an identifiable decision making body (hereinafter called "the Board") whose members should be nominated and for which succession arrangements for members are made in accordance with legal requirements, established principles and procedures.

Grant-makers also recognise the need for the clear definition of:

• obligations of their Board
• decision-making procedures within the organisation
• the provision of authority to speak on behalf of the organisation

Grant-makers undertake to inform the general public about their activities in ways commensurate with the size of grant-makers operations. This may include periodic reports, preferably annual reports, possibly supplemented by newsletters, articles and the use of other communication channels such as websites.

Grant-makers must comply with obligations and restrictions at relevant states/territories and other jurisdictions in which they operate.

Grant-makers should ensure their management practices, investment strategies and use of resources are prudent.

Grant-makers should ensure appropriate internal control of resources and internal monitoring that would ensure the integrity of their grant-making process.

All grant-making organisations should review their purposes and organisation structures and assess the overall results of their grant-making from time to time. Consistent with the provisions of the legal establishing instrument of the Board, grant-makers should review the structure and membership of the Board from time to time.

In addition to the legal requirements that forbid staff, Board members and their families from profiting financially from any philanthropic grants (See Section 3) it is important that grant-makers weigh carefully all circumstances in which there exists the possibility of accusations of self-interest. In particular, staff and Board members should disclose to the Board the nature of their personal or family affiliation or involvement with any organisations for which a grant is considered, even though such affiliation may not give rise to any pecuniary conflict of interest. This may lead to the development of an appropriate conflict of interest policy for Board members and staff.

Grant-Makers are encouraged to maintain interaction with others in the field of philanthropy including Philanthropy Australia and its associated Affinity Groups as well as relevant state and national organisations. Grant-Makers are encouraged to share with others responsibility for strengthening the effectiveness of the many private and corporate philanthropic initiatives that serve the needs and interests of the Australian community.