‘In loco parentis’
In a previous life, I was a teacher. Fairly early in my career, a boy in my Year 8 class was reported to have left the room.
“Sir!! Kim’s outside having a fit!”
With no idea as to the severity of the seizure, I had to choose instantly between my responsibility to the 24 students still in the room (full of dangerous tools and other hazards), and the student having a medical crisis outside. What would a reasonable parent do?
I rushed outside to find the boy involuntarily ‘bumping’ his head on the pavement – littered with gravel and sharp pebbles! Others gathered as I placed a jumper under his head, so there was a crowd control issue emerging as well. Adrenalin rushed through my body as I tried to manage the stress response (fight, flight, freeze, fawn, “fine”, or faint).
I directed a student to notify the office and ask for urgent first-aid support. Meanwhile, I was trying to remember the first aid protocol for a seizure, and whether I was supposed to prevent him biting his tongue. Thankfully a more experienced person arrived very promptly, and I was able to return to my class and resume some semblance of normalcy. The students settled reasonably well – especially after we got word that the boy was OK and that he was being collected by his parents.
(These events occurred decades ago, before the development of Epilepsy Management Plans and resources. See current advice to Epilepsy Smart Schools here)
In Australia, the concept of ‘in loco parentis‘ (“in the place of a parent“) is a foundational principle in the regulation of teachers. I was introduced to the concept during my teacher training, but its real implications were brought into sharp relief by this incident.
As a ‘responsible person‘ trusted to care for students, the law expects that a teacher will act with the same care and responsibility as a reasonable parent, ensuring the safety, well-being, and development of their children. This principle is reflected in professional standards, codes of conduct, legislation, and school policies, guiding teachers in their day-to-day interactions and responsibilities.
This is just one example of the way the law defines and regulates a ‘responsible person’.
Everyone’s ‘responsible’
We all like to think that we are responsible. Generally, we mean that we are considerate of others and take care not to cause harm.
When we are responsible, we have a duty or an obligation to see that something is done or taken care of. We might be considered responsible if we are trustworthy, sensible, or capable of rational behaviour. A responsible job involves important duties. The responsible person in most situations is ‘the adult in the room’, or perhaps the ‘designated driver’ at a social event.
We may also be responsible, however, if we are considered the cause of some outcome or the perpetrator of some action.
For directors and managers, it can also mean that we have specific legal obligations.
Being Held Responsible
We may like to claim responsibility for certain things in our lives, and disavow others, but being held responsible is another matter entirely. Legal and ethical liability attaches to those identified by regulators as ‘responsible persons’, especially where there is some risk to the welfare of stakeholders. That risk could be related to their health, wealth, reputation, or other interests.
The governance and management of nonprofit organisations involves different definitions of ‘responsible persons’, depending on the legislation under which the entity is constituted and regulated. The differences extend beyond definitions to requiring that certain standards, codes, or requirements must be met – specific to the context and circumstances.
Australian legislation prescribes who is eligible to be a ‘responsible person’ in a range of contexts and settings. Some of these are identified in the following chart, which demonstrates the diversity of settings in which someone is held responsible.
Key Commonalities and Differences
In all contexts, the term ‘responsible person‘ generally refers to an individual or entity with a significant degree of control or authority over certain activities or entities. They are charged with ensuring compliance with relevant laws and regulations.
The specific duties and legal obligations of a ‘responsible person’ vary greatly depending on the legislative context. For example, a director of a company has different responsibilities compared to a healthcare provider or a building certifier.
Different ‘responsible person’ obligations also apply to charity leaders. Even here, there may be somewhat different requirements depending on the type of charity you operate, as recognised by the Australian Taxation Office (ATO) and the Australian Charities and Not-for-profit Commission (ACNC). Here the focus is on the degree of responsibility the charity leaders owe to the general community.
A comparison of the definitions and key responsibilities of ‘responsible persons’ under Australian Corporations, Charity, and Tax laws is offered below:
Tax and Charity Laws – Key Commonalities
Compliance: Both contexts require a high level of compliance with relevant laws and regulations.
Reporting: Both require accurate and timely reporting to relevant authorities.
Governance: Both involve ensuring the proper management and oversight of the organization’s activities and finances.
Tax and Charity Laws – Key Differences
Scope of Duties: The duties under tax law focus primarily on financial compliance and reporting to the ATO, while charity law obligations encompass broader governance, ethical behavior, and ensuring charitable purposes.
Personal Liability: Directors under tax law can be personally liable for certain tax debts, whereas charity law focuses more on governance and adherence to charitable purposes, with less direct financial liability on trustees or board members.
Regulatory Bodies: Tax obligations are overseen by the ATO, whereas charity obligations are regulated by the ACNC.
Understanding these distinctions is crucial for individuals serving as responsible persons in both tax and charity contexts to ensure they meet their respective obligations effectively. Given the complexity of these arrangements, it is essential that nonprofit boards obtain expert and independent advice.
Public Fund Charities – Responsibility to the Community
Australian Charities that are Deductible Gift Recipients (DGRs) usually operate a public fund. (International readers will need to refer to local legal and tax requirements for charity donations).
“A public fund provides money or property to support activities carried out by other entities or people, including its sponsoring organisation.
Public funds for DGR purposes fall under 2 types:
- Funds established and controlled by governmental or quasi-government authority.
- Funds to which the public is invited to contribute and in fact does contribute. These funds must be controlled or administered by persons or institutions having a degree of responsibility to the community as a whole. This could arise, for example, from a person’s occupation or tenure of some public office, or a person’s or institution’s position in the community.
A public fund may be established as a separate entity, for example under an instrument of trust, or as part of a sponsoring organisation.”
The ATO has issued Taxation Ruling TR 95/27 regarding the income status of public funds. This ruling includes a section defining who is eligible to be considered a ‘responsible person’ within a charity structured as a public fund.
“21. For the purposes of … this Ruling, persons who are considered to have a degree of responsibility to the community as a whole include: church authorities, school principals, judges, clergymen, solicitors, doctors, and other professional persons, mayors, councillors, town clerks and members of parliament. Generally, persons who are acceptable as having a degree of responsibility to the community as a whole are known to a broad section of the community because they perform a public function or they belong to a professional body (such as the Institute of Chartered Accountants, State Law Societies and Medical Registration Boards) which has a professional code of ethics and rules of conduct. Other persons who are acceptable are appointees of a Chief Justice of the Supreme Court. Persons who have received formal recognition from the Government for their services to the community (for example, an Order of Australia award).”
https://www.ato.gov.au/businesses-and-organisations/not-for-profit-organisations/getting-started/in-detail/types-of-dgrs/l-z/public-funds
Responsible Person or Authorised Person
For registered charities in Australia, the ACNC requires compliance with a set of governance standards. Standard 4 requires that the charity ensure its Responsible People are suitable, while Standard 5 requires that Responsible People are aware of their duties and comply with them.
These duties include:
⁃ act with reasonable care and diligence
⁃ act honestly and fairly in the best interests of the charity and for its charitable purposes
⁃ not misuse their position or information they gain as a Responsible Person
⁃ disclose actual or potential conflicts of interest
⁃ ensure that the financial affairs of the charity are managed responsibly, and
⁃ not allow the charity to operate while it is insolvent.
The obligations of ‘Responsible People’ (usually directors) and ‘Authorised People’ (usually employees) are somewhat different. Charity leaders are sometimes confused about the distinctions, so the chart below highlights their common and different roles and responsibilities.
A ‘responsible person’ may also be an authorised person in some settings, while an authorised person is not automatically a ‘responsible person’ in the eyes of the law.
See also:
https://www.acnc.gov.au/tools/factsheets/responsible-people-board-or-committee-members
https://www.acnc.gov.au/for-charities/manage-your-charity/checklist-for-new-responsible-or-authorised-people
“With great power comes great responsibility”
Was it Voltaire, Churchill, Roosevelt, or some other notable who first said this? Its use in Spiderman comics and films may have popularised it, but that was not the original source.
Quote Investigator has found a strong match with similar wording during the period of the French Revolution. The following passage, dated 8 May 1793, appeared in a collection of the decrees made by the French National Convention. Here’s one possible English translation:
“The people’s representatives will reach their destination, invested with the highest confidence and unlimited power. They will show great character. They must consider that great responsibility follows inseparably from great power. To their energy, to their courage, and above all to their prudence, they shall owe their success and their glory.”
Here’s a selection of other quotes about responsibility for your reflection:
Responsibilities and Rights
The debate about rights and responsibilities usually starts with a demand for rights and then proceeds to consider what responsibilities accompany those rights.
In the case of those defined by law as ‘responsible persons’ the question is reversed – “What rights come with recognition as a responsible person?” The chart below offers a high-level summary (and should not be considered authoritative).
DISCLAIMER: The contents of this post do not constitute legal advice. If you have queries or concerns regarding your obligations as a ‘responsible person’ or as an ‘authorised person’, it would be wise to consult independent professionals or the relevant regulator.
See also:
Caring about the ‘Duty of Care’
Giving ‘diligence’ its due
NFP powers and duties – inseparable
Sharing Risk while avoiding a Blame Game
