The Australian Charities and Not-for-profits Commission (ACNC) has recently released its Charity Compliance Report based on 2017 data. As a matter of concern for the sector, there was a 42% increase in reported concerns about charities in 2017. In the media and the news there were several high-profile controversies surrounding charities, however the controversies and concerns are not limited to Australia’s big charities.
What is evident from the report is that members of the public are becoming increasingly aware of the powers of the ACNC and are more aware of their rights regarding reporting of charity misconduct and concerns.
Most concerns raised were about charity governance and the actions of board members. As a result of the concerns, 202 formal investigations were opened and dozens of charities had their charitable status revoked.
The ACNC has now made it clear that it will crack down on the following types of behaviours from charities:
- money laundering and potential terrorism financing;
- unauthorised political advocacy; and
- breaches of governance standards.
In investigating these concerns, the ACNC has broad powers to perform such actions as gathering information, issuing warnings, enforceable undertaking, injunctions and administrative penalties, disqualifying responsible persons and revoking charity status.
To avoid being subjected to the ACNC’s enforcement powers, it is extremely important that board members and persons responsible for running charities are fully aware of their legal obligations and responsibilities. Charities should draft and put into place policies which can govern the way decisions are made, actions are taken and matters are reported. All policies should be focused upon adhering to the ACNC’s five governance standards:
- Charities must have charitable purposes and act as not-for-profits;
- Charities must have full and transparent accountability to their members;
- Charities must comply with Australian law;
- Board members must be suitable; and
- Board members must carry out their duties responsibly, reasonably, honestly and in the best interests of the charity.
As public scrutiny increases and the push for accountability and transparency intensifies, it is extremely important that charities have the checks and balances in place that are needed to avoid scandals, controversies and breaches of protocol.
If you are running a charity, are interested in establishing a charity or have been asked to run a charity, a great strategy for protecting your charity’s reputation would be to get in touch with our expert team of charity and not-for-profit lawyers.