MY CHOIR IS CLOSING DOWN – WHAT NEEDS TO BE DONE?
Sadly, due to many variables, we’ve seen that a number of choirs have had to make the tough decision to wind up. For many this is a heart-breaking time due to the years of hard work, enjoyment and friendships. But when reality hits, and all other options have been explored, then it is time to address an Exit Plan.
If a choir is an incorporated association, that plan is defined by the choir's Constitution. Typically, funds are used to cover outstanding debts and expenses, with any remaining surplus distributed according to the relevant provisions of the constitution. Typically you are required to pass on surplus funds to an incorporated association that holds similar objects to your choir. You cannot share the surplus funds among the current members or donate it to an entity that is unrelated to the objects your choir was set up to achieve.
If your choir is not incorporated you have considerably more flexibility. However, from a good governance perspective, you should still consider directing surplus funds to another organisation rather than to existing members. Fairness is difficult to manage when membership has changed over a considerable period of time so contributing to a different organisation gives the cleanest outcome.
Here's a more detailed breakdown:
1. Review Governing Documents:
- The choir's constitution or bylaws should outline the process for winding up the organisation and distributing assets.
- This document will generally specify the parameters you can apply select an appropriate recipient of surplus funds.
2. Address Outstanding Debts and Expenses:
- All outstanding invoices, debts, and financial obligations of the choir should be settled.
- This may include payments to musicians (including superannuation), venue providers, storage providers or other vendors.
- Dispose of the assets of the group. This may include equipment such as risers and sound equipment. You are not obliged to sell them. Many assets involve storage costs and depreciate in value over time so addressing the holding costs of assets may make giving them away a viable option.
3. Distribute Remaining Funds:
- ·If the bylaws allow, the funds may be donated to a related choir or organisation, such as the Australian National Choral Association (ANCA) Incorporated, or a charitable cause.
4. Seek Legal and Financial Advice:
- It's advisable for the choir to seek legal and financial advice to ensure compliance with all applicable laws and regulations.
- A financial professional can help with the proper accounting and distribution of funds.
5. Transparency and Communication:
- The process of closing the choir and distributing funds should be transparent to all members.
- Regular updates and communication with members can help minimise confusion and ensure a smooth transition.
Australian National Choral Association (ANCA) Incorporated is a registered charity with the ACNC. ABN 84529930920
ANCA’s Object, set out in the constitution is;
To stimulate interest and participation in choral and vocal ensemble music and related activities through discussion, workshops, sharing of programmes and activities, educational events and through contributing to public knowledge of the arts of choral and vocal ensemble music.
ANCA’s Purpose as set out in our current Strategic Framework is;
To inspire and develop a thriving culture of choral and vocal ensemble music across Australia.
All funds donated to ANCA are directed towards achieving these outcomes.
Ultimately, the specific steps for handling choir funds upon closure will depend on the choir's unique circumstances and legal framework. Seeking professional advice and ensuring transparency throughout the process is crucial.
