Association administration

Proper administration creates a foundation for all association activities. A non-profit association’s activities and actions must be democratic, legal, valid, ethically sustainable and serve the common good. An association must treat its members equally and the executive committee members may not enjoy special privileges compared to other members. The highest decision-making power belongs to the members of the association. The executive committee carries out the will of the members and is responsible for statutory duties.

Membership and positions of trust

Member: In an association, all members are equal and have an equal right to participate in the association’s decision-making. Members have the right to obtain services from the associations, while also having the right to not participate in any activities. Members have the right to inspect the association’s documents, with the exception of the executive committee’s meeting minutes.

Members are not obligated to carry out commitments made by the association, since the members are not accountable for decisions made in the meeting of the association. Members may also refuse any position of trust. Members can take into court decisions made by the association if the decision is against the law or the association’s rules or violate the equality or interest of the members.

Chairperson: The chairperson and vice chairperson must be over the age of 18 and resident in Finland. The chairperson of an association must not be a debtor in ongoing enforcement proceedings, must be known to be of a good character, and must have legal capacity. The role of a chairperson is important for the day-to-day functioning of the executive committee and for the public image of the association. Typically, the chairperson leads the work of the executive committee, officials and employees. They are usually responsible for developing the association and handling external relations, and also participate in the association’s other activities as needed. The chairperson’s statutory duties include signing on behalf of the association (unless otherwise determined in the rules of the association) and signing the start-up notification and any notifications of changes.

Secretary: The secretary’s established duties include recording the executive committee meeting minutes, filing notifications to authorities, and drafting the annual report. The secretary is often also responsible for maintaining the register of members.

Treasurer: A treasurer participates in financial planning, handles everyday finances as instructed by the executive committee, and presents financial matters to the executive committee. In small associations, the treasurer is usually responsible for accounting. When activities expand, the executive committee can name an external accountant for the association. In this case, the treasurer’s role mostly involves financial monitoring.

External office-holders: The executive committee can name external actors to support the association. For example, external actors are often named as heads of various working groups.

Executive director or secretary-general: Not all associations have an executive director or a secretary-general, and the role is common mainly in professionally operating associations. If the association does not have an executive director or a secretary-general, the chairperson of the executive committee leads the association.

An executive director or a secretary-general is an employee tasked with leading day-to-day operations and administration. They report to the executive committee and work under its supervision. Due to this, the executive director or secretary-general cannot simultaneously be a member of the executive committee. It is also important to note that the executive committee has employer obligations when an executive director or secretary-general is a salaried employee. The duties and the extent of the leading employee’s decision-making power are agreed in writing, for example in the association’s rules and regulations or in the employment contract. Cooperation and communication between the chairperson of the executive committee and the executive director or secretary-general is crucial for the operations of the association.

The executive director or secretary-general provides the executive committee with the necessary information to carry out its duties, conducts preparations for the executive committee meetings and participates in them, unless otherwise decided by the executive committee. Labour law will apply to the leading employee in cases such as termination of employment or concerning liability for damage incurred to the association. The Associations Act does not contain statutes regarding the leading employee, but their position most often comes with a power to take actions which create obligations for the association. Whether the leading employee can sign on behalf of the association is typically determined in the association’s rules.

Operations inspector: The operations inspector’s primary task is to assess the organisation of an association’s administration, the regularity of its bookkeeping and financial statement, the appropriateness of benefits enjoyed by the leadership and related-party transactions, as well as the realisation of equal treatment of members. The executive committee is responsible for assisting the operations inspector and for ensuring that the operations inspector has access to the association’s financial statement, annual report and other documents within the statutory time-frame.

An operations inspector must have a good working knowledge of financial and legal matters. They must also be free to state their opinion independently of external factors. For this reason, the operations inspector cannot be a member of the executive committee or an employee of the association. However, a member of the association can usually act as an operations inspector. The operations inspector cannot, however, be a juridical person, a minor, in bankruptcy, or a person with limited legal capacity.

Auditor: The association must appoint an auditor if its balance-sheet total exceeds EUR 100,000, if its gross revenue exceeds EUR 200,000 or if it employs more than three people. Associations are also obligated to conduct an audit if they are a recipient of substantial funding. General grants received by associations are not to be included in their gross revenue. If the aforementioned upper limits are not crossed, the association only appoints an operations inspector, and a professional audit will not be conducted.

Decision-making power in an association

Annual general meeting: An association’s statutory annual general meeting is the highest decision-making body of the association. All members must be invited to the meeting within the time-frame specified in the association’s rules, e.g. two weeks prior to the date of the meeting. The association’s members are not accountable to the association for the decisions made in the meeting. Statutory meetings of the association can be held either once or twice per year.

If there is only one annual meeting of the association, the plan of operations and the budget as well as the previous year’s annual report and financial statement will be covered in the same meeting. If these documents are approved by the meeting, the previous year’s executive committee will be discharged from their liability. After this, the members elect a new executive committee, chairperson, and an operations inspector. If there are two annual meetings, the spring meeting will typically process the financial statement and the annual report. The autumn meeting, on the other hand, will process the plan of operations and the budget as well elect the new executive committee, chairperson, and operations inspector.

Executive committee: The executive committee wields administrative power and is accountable to the association for the decisions it makes. The executive committee prepares the following year’s plan of operations and budget for the annual general meeting. Once the annual general meeting has approved them, the executive committee is responsible for implementing the plan. The executive committee does not have general power of competence, however, and simply implements the plans established by the association. The executive committee cannot in any way independently alter the rules, plan of operations or budget approved by the meeting of the association.

Executive committee meetings: The meetings of the executive committee are free-form, and the executive committee independently decides on its operational framework unless otherwise determined in the association’s rules. The executive committee leads the association’s operations based on the plan of operations and makes practical decisions related to the association’s activities.

The moral obligations of the executive committee members: The members have an obligation to familiarise themselves with the association’s mission, rules, history, and long-term plans and objectives. In addition, the executive committee members should know the previous year’s annual report and financial statement, as well as the plan of operations and the budget. A person that fulfills the moral obligations is one who always keeps their promises. Even the most critical observer should not find fault in such an individual’s actions.

Liability and accountability in an association

The association’s trustees, namely the executive committee and individuals in other positions of trust, are accountable for the association’s actions and their own decisions. Members of the association are not accountable for the decisions they make in annual general meetings. A trustee can be dismissed from their position if they no longer enjoy sufficient confidence. Dismissal is decided by the same body which has appointed the person to their position. It is worth noting that an employee of the association cannot be dismissed in the same manner, since they are protected by labour law and other contractual provisions.

The association’s executive committee members and employees are personally liable for any damages they have incurred to the association either on purpose or due to negligence. If the damage has been caused by more than one person, each is liable to compensate for damages on their own behalf as well as others’.

The operations inspector is liable to compensate for any damages which they have incurred to the association in their position either on purpose or due to negligence. The same applies to damage incurred to the association members or others due to violation of the Associations Act or the association’s rules. The auditor’s damage liability is determined by the Auditing Act (found on the Finlex website, opens in new tab).

English translation of the Finnish Associations Act (found on PRH website, opens in a new tab)

Vocabulary

Accounting: Accounting is used to maintain information on the association’s financial activities and status. Accounting is handled by either the treasurer or a separate accountant.

Agenda: The agenda includes the items that are discussed at a meeting. The agenda always needs to be prepared beforehand.

Annual report: The annual report is the executive committee’s written report on the activities of the previous year.

Association: Association is a coalition of at least three members, that works for a common cause. Associations are democratic; members hold the decision-making power, while the responsibility lies with the executive committee.

Associations Act: The Finnish Associations Act regulates the functioning of both registered and unregistered associations.

Auditor: A professional auditor reviews the financial statement in bigger associations.

Budget: Each year the association composes a budget concerning the association activities. The budget is prepared by the executive committee and approved by the general meeting.

Chairperson: The chairperson directs the activities and meetings of the executive committee as well as represents the association.

Executive committee; board: The executive committee acts as a statutory representative of the association, takes care of its finances and is responsible for its operations.

Financial statement: The financial statement consists of an income statement (how the association’s funds have been used, and how the activities have been funded) and a balance sheet (the association’s wealth as well as receivables, debts, and loans).

Member: The members of the association decide on the activities of the association in the general meetings.

Minutes: The meeting minutes are always written down and they contain the matters discussed and decisions made in the meeting. The minutes are inspected and signed.

Operations inspector: The operations inspector supervises the activities of the association. Operations inspection is done once a year, when both the administration (annual report) and the finances (financial statement) are reviewed.

Plan of operations: Each year the association composes a plan of operations that includes for example the main goals and activities for the upcoming year.

Register of Associations: A registered association is an association that is registered in the Finnish Register of Associations, which is governed by the Finnish Patent and Registration Office. A registered association is a legal entity. This means that it can enter into contracts in the name of the organisation and act as a single entity for legal purpose.

Register of members: The executive committee maintains a register of members, which contains at least the names and the places of residence of the members.

Rules of an association: The rules of an association guide the activities of the association. The Associations Act states what the rules must contain.

Secretary: The secretary prepares the agenda, writes the minutes and often also takes care of the register of members.

(Statutory) general meeting: Statutory general meeting is held once or twice a year (annual general meeting or spring and autumn general meeting). The members of the association are invited to attend the general meeting.

Treasurer: The treasurer monitors how the association uses money and often also takes care of the  accounting

Vice Chairperson: The vice chairperson acts as a deputy, when the chairperson is absent.

The Association Administration vocabulary Finnish – English (PDF) (link opens in a new tab)

Additional information: ‘The year of the association’ animation

To support associations’ activities, Järjestöhautomo provides an animation about the administrative year of an association. The video goes through one annual meeting model. The video is available in five languages (found on YouTube, links open in a new tab):

The year of the association: One annual meeting model (English)

Работа Совета Ассоциации: Модель годичного собрания (Russian)

سنة الجمعية: نموذج السنة الواحدة (Arabic)

Sanadkii Ururka: Qaabka shir sanadeedka ee Ururka (Somali)

Yhdistyksen vuosi: yhden vuosikokouksen malli (Finnish)

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