ACNC Governance Standards: Is Your Organisation Working Towards its ‘Charitable Purpose’?

Charities must meet ACNC’s governance standards: Purpose, accountability, compliance, suitability, duties, and maintaining public trust. Failure leads to warnings or revocation.

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A charity must meet the ACNC’s governance s Standards to be registered and remain registered with the ACNC. The standards for charities are set out in the Australian Charities and Not-for-profits Commission Regulation 2013 (Cth).

Standard 1: Purposes and not-for-profit nature

A charity must:

  • be not-for-profit,
  • operate for public benefit
  • work towards it charitable purpose.

The purpose of this standard is to provide reassurance to the public that the charity has good reasons to be entitled to the tax concessions and other benefits it receives. A charity can generally meet this standard if a copy of your charity’s governing documents contains clauses about its charitable purpose and they appear on the ACNC register.

Standard 2: Accountability to members

A charity that has members must take reasonable steps to be accountable to its members and provide them with adequate opportunity to raise concerns about how the charity is governed. The purpose of this standard is to help charity’s members understand the charity’s operation and raise any questions or concerns they may have about the way it is run.

Some ways that charities can meet this standard:

  • holding annual general meetings with opportunities for members to ask questions and vote on resolutions
  • providing information to members on the charity’s activities and finances, and
  • having clear processes for appointing responsible persons

Standard 3: Compliance with Australian Laws

A charity must not commit a serious offence under any Australian law, or breach a law that may result in a penalty of 60 units or more. Acting lawfully helps protect a charity’s assets, reputation and the people it works with.

Standard 4: Suitability of Responsible People

This Standard requires a charity to take reasonable steps to be satisfied that its board or committee members are not disqualified from managing a corporation under the Corporations Act 2001 (Cth) (the Corporations Act) or being a Responsible Person by the ACNC Commissioner within the previous 12 months.

This Standard makes sure that registered charities are not controlled by people who may pose a risk to the charity’s financial position or the pursuit of its charitable work.

Standard 5: Duties of Responsible People

This standard requires charities to take reasonable steps to make sure that the following duties apply to Responsible People and that they follow them. The duties can be summarised as follows:

  • to act with reasonable care and diligence
  • to act honestly and fairly in the best interests of the charity and for its charitable purposes
  • not to misuse their position or information they gain as a Responsible Person
  • to disclose conflicts of interest
  • to ensure that the financial affairs of the charity are managed responsibly, and
  • not to allow the charity to operate while it is insolvent

Standard 6: Maintaining and enhancing public trust and confidence in the Australian not-for-profit sector

The purpose of this Standard is to maintain and enhance public trust and confidence in the Australian charity sector by ensuring that a registered charity’s governance enables it to be accountable for its past conduct relating to institutional child sexual abuse.

Compliance with the Governance Standards is a condition of registration as a charity. Failure to comply with one or more of the Governance Standards may result in warnings being issued to the charity or the revocation of charity registration.

If you are seeking to establish a charitable organisation and obtain charity registration with the ACNC, please contact our team at Warlows Legal for advice on the Governance Standards and what your organisation may be required to do to take reasonable steps to seek to meet new standards.

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