The Charity Council values the importance of establishing term limits for Board members as it aids in ensuring board renewal and succession planning, which is vital to the long-term sustainability of the charities. With the Board being refreshed at the right time, this will enable better decision making to sustain the charitable organisation in the changing environment.

In the previous Code, guideline 1.1.13 states that the charity should establish term limit for Board members to ensure steady renewal of the Board, and the charity should disclose the reasons for retaining Board member(s) who have served on the Board for more than 10 consecutive years, in its annual report. This is applicable to large charities, and IPCs which have gross annual receipts or total expenditure of $500,000 or more.

The new guideline now requires Tier 2 charities to impose a maximum term limit of 10 consecutive years for all Board members, with the option to re-elect Board members to serve beyond 10 years. The Charity Council assessed it is timely to do so in this latest revision, given that the sector has been prepared for it in the current Code. While this new guideline also applies to smaller IPCs, the Code still operates on a “Comply or Explain” approach and should they have difficulty abiding, they can provide an explanation. In addition, the Council provided the flexibility via re-election should the charity decides it is necessary to retain a Board member beyond 10 years.

The Charity Council has also revised the Code guideline on Board term limits to emphasise the disclosure of reasons for retaining board members who have served for more than 10 consecutive years and to disclose succession plan in its annual report. This increased visibility and transparency will enable donors and the public to be more informed when making giving decisions.