Charity partnerships are getting more attention: what boards should do before the next agreement is signed
Partnerships have become part of everyday life for many Australian not for profits.
A small community organisation might work with a local council to deliver a program. A disability or community services provider might subcontract part of a service. A charity might share facilities, collaborate on a funding application, use a fundraising agency or enter a corporate partnership.
These arrangements can create opportunities that an organisation could not achieve alone. They can also create risks that are easily underestimated.
That makes the Australian Charities and Not for profits Commission's 2026 to 2027 Regulatory Focus worth paying attention to. One of its focus areas is how charities work with partners.
For boards and CEOs, the message is relatively simple. A partnership should not stop being a governance issue once the agreement has been signed. Partnerships in the NFP sector are rarely just commercial transactions. They can affect clients, staff, volunteers, reputation, funding, service continuity and the organisation's ability to achieve its charitable purpose.This is particularly important for smaller organisations.
A large organisation may have legal, procurement, risk and contract management teams. A small charity may have a CEO, a volunteer treasurer and a board trying to assess a substantial partnership between ordinary board meetings. The governance obligations do not disappear because resources are limited.
The ACNC's guidance makes clear that Responsible People retain ultimate responsibility for identifying and managing relevant partnership risks. Its Governance Standard 5 also requires charities to take reasonable steps to ensure Responsible People act with reasonable care and diligence, act in the charity's best interests and for its charitable purposes, disclose conflicts and manage the charity's financial affairs responsibly. That does not mean the board needs to negotiate every contract. It means the board needs enough information, appropriate systems and sensible reporting to exercise genuine oversight.
A common mistake is to treat partnership risk as mainly a question for the lawyer reviewing the agreement. The written agreement matters, but it is only one part of the picture. Before entering a significant partnership, an NFP should understand who it is dealing with, why the arrangement supports the organisation's purpose and whether the proposed partner's values, capability and practices are compatible with its own.
The ACNC specifically encourages charities to consider the benefits of a partnership, risks and conflicts of interest, how those risks will be managed, whether the board supports the arrangement and whether the prospective partner's values, work and aims align with the charity. There are also operational questions.
+Who manages the relationship?
+Who deals with complaints?
+What happens if service standards decline?
+Who owns information created through the partnership?
+What information can each party access?
+How are safeguarding concerns escalated?
+What happens to employees, volunteers, clients and records if the partnership ends?
These questions often sit across governance, HR, operations and risk management rather than comfortably within one organisational function.
A practical NFP example
Consider a medium sized community organisation that receives funding to expand a regional support program. Rather than recruiting an entirely new internal team, it partners with a smaller local organisation that already has community connections. Strategically, this may be an excellent decision. But the arrangement needs more than goodwill. Management should understand whether the partner has suitable workforce capability, safeguarding systems, insurance, financial stability, policies, privacy practices and mechanisms for supervising its people. The board should understand how performance will be measured, which risks remain with its own organisation and what management will do if delivery falls below expectations. The arrangement also needs an exit pathway. An agreement that works well in year one may no longer be appropriate after a funding change, leadership transition, incident or shift in strategy.
The ACNC suggests charities consider partnerships across a lifecycle that includes identifying the need, entering the agreement, monitoring the relationship, and renewal or exit. It also recommends that organisations which work regularly with partners consider standard procedures such as partnership policies, suitability checks, background research and partnership risk assessments.
There is another important connection in the ACNC's current regulatory priorities.
Its other 2026 to 2027 focus area is governing documents.
A charity's constitution, rules or trust deed should accurately reflect its purposes and the way the organisation operates. The ACNC has warned that an unclear, outdated or inconsistent governing document can create legal, governance and operational risks. That matters when partnerships materially change how services are delivered. A charity can evolve gradually until its activities look quite different from those contemplated when its constitution was written.
Before entering a major new collaboration, merger style arrangement or significant expansion, management and the board should therefore ask whether the proposed activity remains clearly connected with the organisation's charitable purposes.
Actions management should take
A practical first step is to identify all significant current partnerships rather than only new ones. Management can then assess whether each arrangement has a clear owner, documented purpose, current agreement, appropriate due diligence, identified risks, performance measures, review dates and exit arrangements.
The level of work should be proportionate to the risk. A small collaboration with another community group does not require the same process as outsourcing a major funded service. But an informal arrangement is not automatically a low risk arrangement. Management should also establish clear escalation thresholds.
For example, the board might require notification where a partnership involves significant expenditure, delivery of core services, sensitive client information, vulnerable people, substantial reputational exposure or material strategic commitments. Partnership review should then form part of normal governance reporting rather than being triggered only when something goes wrong.
At its next governance or strategy discussion, the board could consider:
+Which partnerships are genuinely critical to our organisation's services, funding or reputation?
+What due diligence was completed before those relationships commenced?
+Are the responsibilities of both parties clearly documented?
+How do we know each partnership continues to advance our charitable purposes?
+What financial, workforce, safeguarding, privacy and reputational risks are we carrying?
+What information does the board receive about partnership performance?
+When were our major partnerships last formally reviewed?
+Are conflicts of interest being identified and appropriately managed?
+Do we know how we would exit an underperforming or unsuitable arrangement?
These are not questions designed to slow collaboration down. They are designed to make collaboration sustainable.
The NFP sector depends on collaboration. Funding arrangements, community networks and complex social needs make working with other organisations unavoidable and, in many cases, highly beneficial.
The ACNC's current focus is therefore not an argument against partnership. It is a reminder that partnerships work best when purpose, accountability and oversight are clear. For a board, the objective is not to manage every operational detail. It is to ensure that the organisation has a disciplined way of choosing partners, documenting expectations, monitoring performance and responding when circumstances change. For many charities, that is a useful governance discussion to have before the next major partnership proposal reaches the board table.
This article provides general information only and is not legal or regulatory advice. Requirements may vary according to an organisation's legal structure, activities, jurisdiction and circumstances. Organisations should obtain appropriate professional advice where required.
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