The Katherine-based Jawoyn Association has been ordered to get its members to ratify a gift of almost $9,000 in election campaign support for Northern Territory Country Liberals MLA Larisa Lee, or ask her to return the money.
The Jawoyn Association has answered past questions about giving money to Ms Lee by saying the action was properly approved by the its board.
Ms Lee has made the same assertion, saying she was not a board member at the time the gift was made.
But the Commonwealth's national Indigenous corporations watchdog ORIC says, legally, the association must have member approval for such a gift, and there was no evidence that happened.
ORIC has ordered the association to seek approval for the action from a general meeting of its members within 60 days.
If members do not ratify it, the association must take "reasonable steps" to get the money back from Ms Lee, it said.
The ABC has asked the Jawoyn Association and Larisa Lee to respond to the ORIC order.