NNNGO Newsletter on Understanding the Companies and Allied Matters Act – September, 2019

Constitutions help set the rules guiding the operation of nonprofits. They are important because they establish procedures that everyone can rely on and give a level of certainty about how the organisation should be run; the rules and processes provided in the constitution binds the board, the organisation and its members. Legally, a nonprofit’s constitution is what the Corporate Affairs Commission (CAC) uses to determine its object and decide if it is indeed, a nonprofit.

The first thing nonprofits need to understand when setting up their organisation or applying formally to the Corporate Affairs Commission is to ensure that their board meets either physically or online to discuss the constitution and agree to its adoption; the minutes of this meeting must be documented for future purposes.

When drafting a constitution, nonprofits should ensure that their constitution states the name or title of the organisation, clearly articulates the aims/objects(charitable purpose) of the organisation, clearly sets out the role/powers of the board indicating their job descriptions, appointment/tenure of office and replacement of trustees, how meetings of the board are called and held and what would happen if the organisation must wind up.

At this point, it is important for the prospective board(trustees) to read the constitution and accept responsibility through a signed document for leading the governance of the organisation and ensuring its effectiveness.

It is highly recommended that nonprofits do not copy and paste their organisational constitution to ensure that the constitution and governance documents accurately reflects their organisations’ peculiarities, situations that are unique to how their organisation operates or will operate; this constitution should contain rules that the particular nonprofit understand and will be able to follow.

Ultimately, nonprofits are required to have in place a constitution that governs its operations and safeguards it for efficient and effective running of day to day activities.

This newsletter is supported by the Commonwealth Foundation. However, the ideas and opinions presented in this document do not necessarily represent those of Commonwealth Foundation, NNNGO or any other organisations mentioned