At The Mvula Trust, we pride ourselves in being a leading developmental NGO in South Africa, and we embed Corporate Governance Practice in the organisation. In this article, we discuss the meaning of Corporate Governance, and what it means to us at The Mvula Trust.
Corporate governance is defined as a system of rules, practices and processes by which a company is directed and controlled. Corporate governance guidelines for the Non-Profit sector are outlined in the Department of Social Development’s Code of Good Practice for South African Non-Profit Organisations 2001; the SANGOCO’s Code of Ethics for Non-Profit Organisations of 1997; Independent Code of Governance and Values for Non-Profit Organisations in South Africa and the King III practice note published by IODSA on the guide to the application of King III for the non-profit organisations.
Although it is not mandatory for non-profit organisations registered in the terms of the NPO Act to adhere to the Companies Act 2008, it is important that provisions dealing with annual financial statements, in addition to the requirements of the NPO Act, duties and liabilities of directors, as well as processes to be followed in conflict of interests be incorporated by the NPO in its founding document.
Non-Profit Organisations exist solely to serve the common good, and promote a public benefit, rather than to achieve individual profit or advance self-interest, which is the normal purpose of a for-profit entity. This is precisely the aim of The Mvula Trust.
The three voluntary codes all emphasize the following: The ethical role and effective leadership that the Board, as the governing body of the NPO must display; Compliance with South Africa’s accepted accounting and auditing practices; Conducting annual financial audits; Establishing an effective contracting or tendering system; Directors/Trustee to be remunerated only if the founding documents so permits; Annual Financial statements to disclose such remuneration individually; Conflict of interests to be avoided by Trustees/Directors; Trustees/Directors to disclose the nature and extent of personal/related interests; mandatory disclosure where there is a material interest in a contract or business opportunity to be considered at a Board meeting; and the conflicted Trustee/Director to recuse herself/herself from the meeting; Board to ensure compliance with statutory and regulatory prescripts applicable to the NPO; The Board to conduct annual reviews; and Induction training for newly appointed Trustees/Directors.
In terms of the NPO Act, registered NPO’s must submit audited Annual Financial Statements and an annual narrative report describing the activities of the NPO during the preceding period on an annual basis.
The benefit of a NPO, such as The Mvula Trust, applying King III’s guidelines is that, among other things, sound corporate governance builds reputation and trust so that an organisation is able to source funding and recruit experienced persons to serve on its governance body. Governance is one of the key measures of an organisation’s health and accountability in this regard, and is imperative for the achievement of an organisations long term objectives.
Here at The Mvula Trust, we are a leading developmental NPO in South Africa, and our Board of Trustees is assisted by a Company Secretary who acts as a gatekeeper to ensure that good corporate governance practices are implemented by the Board as well as management. Furthermore adherence by The Mvula Trust to all applicable pieces of legislation such as the Trust Property Control Act, the NPO Act, the non-binding code of the King III report, relevant sections of the Companies Act, and complying to the the Fourth Amending Trust Deed is paramount.
All Trustees of The Mvula Trust are required to declare their financial interests annually as well as to declare any conflict of interests in matters in line with the Trust Deed and the Companies Act.
We believe that corporate governance practices should be embedded in the rules, policies, and procedures of a NPO such as ourselves, in order to ensure effective and efficient delivery of themain purpose of the Trust thus ensuring sustainability.