‘My charity holds educational programs for children in places like Ethiopia and Rwanda. Am I required to report on these programs, since they are occurring outside of Australia, and therefore outside of Australia’s legal jurisdiction?’
One might think that the overseas operations or finances of a charity are not monitored closely under Australian law.
If you are familiar with the Australian Charities and Non-profits Commission (ACNC), you will find that there are codes of conduct and expectations for charity operations all over the world.
In general, charities must comply with governance standards, however overseas charities must comply with additional governance that provide more oversight.
The ACNC stipulates certain External Conduct Standards that govern the management of a registered charities’ activities outside Australia. Introduced to promote transparency, the standards aim to ensure that charities are conducting legitimate projects and are true to their charitable purposes.
What constitutes ‘overseas’ activities?
Overseas operations of charities can be characterised by minor work, or small amounts of overseas transactions, even when conducted through a third party, i.e. a party undertaking overseas activities on its behalf.
For example, some charities may send money, goods, or staff and volunteers overseas to help support a variety of programs and projects. There are millions of projects all around the world today that help support goals like eradicating poverty in certain countries, encouraging health development and health literacy, promoting education to children under-developed regions, and more. Therefore, these External Standards are extremely pertinent to our globalised world.
When do the Standards not apply?
A charity is not deemed to operate overseas if its activities abroad are directly linked to its purposes in Australia and are incidental to its operations within the country. In this context, ‘incidental’ refers to actions that are a very minor aspect of the charity’s work, primarily benefiting people in Australia. Subsequently, if a charity engages in overseas activities or transfers funds abroad as an incidental part of its mission to benefit Australians, these activities may not fall under the External Conduct Standards.
Additionally, when working with a third party in overseas operations, a charity is not bound by the Standards if the third party is a charity registered with the ACNC, or the collaboration with a third party is not directly related to the charity’s purpose.
What are the Standards?
There are four External Conduct Standards.
Standard 1: Activities and control of resources (including funds);
Standard 2: Annual review of overseas activities and record-keeping;
Standard 3: Anti-fraud and anti-corruption; and
Standard 4: Protection of vulnerable individuals.
For more information regarding each Standard, please visit the ACNC website page titled ‘ACNC External Conduct Standards.’
Importantly, charities do not need to submit anything to the ACNC to demonstrate that they meet the External Conduct Standards, but if requested, they must be able to provide evidence of meeting the standards. Therefore, charities conducting overseas operations must have sufficient record-keeping formalities in place. The ACNC provides a self-evaluation tool for charities to assess their overseas activities. To access this tool, you can visit the ACNC website page ‘Self-evaluation for charities operating overseas.’
In summary, to paraphrase the ACNC, a charity operating overseas must:
- Assess risk
- Monitor funds
- Ensure that overseas partners are legitimate
- Protect staff of charity
- Protect against terrorism
- Protect against financial harm
For more detailed information as to when the External Conduct Standards apply, you can visit the ACNC website page titled ‘When the External Conduct Standards apply,’ to find out more information.
With experience and expertise in charity law, Warlows Legal is here to help you with anything you need. Please contact us using the information below, and receive a free initial consultation.
