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The Australian Charities and Not-for-profits Commission Charity Compliance Report 2015 and 2016 - are you compliant?

Caseflash 21 March 2017

The Australian Charities and Not-for-profits Commission (ACNC) has released its Charity Compliance Report 2015 and 2016 which provides an insight into the ways in which the ACNC dealt with compliance issues between 1 January 2015 and 31 December 2016.

The ACNC compliance regime is aimed at protecting the public’s trust and confidence in the not-for-profit sector by ensuring that registered charities are transparent and remain accountable for their legal and reporting obligations. 

Reminder - what are your compliance obligations?

Registered charities must comply with certain obligations in order to continue to remain eligible for registration on the ACNC Charity Register, including:

  • registered charities must continue to be a charity – that is, they must remain not-for-profit and have a charitable purpose which is for the public benefit.
  • registered charities must ensure that the charity is governed in a manner that complies with the 5 ACNC governance standards which require charities to remain charitable, operate lawfully, and be run in an accountable and responsible way.
  • registered charities must submit an Annual Information Statement to the ACNC within six months of the end of their reporting period.  Medium and large charities must also submit financial reports (which must be reviewed or audited in the case of medium charities and audited in the case of large charities).

What does the Charity Compliance Report 2015 and 2016 show?

In 2015/2016 the following compliance steps were taken by the ACNC:

  • the first penalty notices were issued to charities for failing to submit their Annual Information Statements - 40 large charities that had not submitted their Annual Information Statements despite receiving final warnings from the ACNC were issued penalty notices of $4,500 (being the maximum penalty for large charities).
  • the registration of 5,837 charities were revoked for failure to lodge their Annual Information Statements for two years in a row.

During 2015/2016 the ACNC received 1,872 concerns from the public about registered charities, 242 of which were the subject of a compliance investigation by the ACNC.  Of interest:

  • most concerns raised related to large charities.
  • the most common concerns were about breaches of the ACNC governance standards such as fraud, lack of transparency, and mismanagement particularly breaches by responsible persons with regard to financial mismanagement and failure to address potential harm to beneficiaries.
  • a number of concerns related to registered charities pursuing ‘disqualifying purposes’ particularly charities that were engaging in political advocacy around the election. 

In response to the concerns raised and following on from the compliance steps taken the ACNC has:

  • commenced a national risk assessment of Australia’s not-for-profit sector in partnership with AUSTRAC and the ATO to assess the risk of money laundering and terrorism financing to the Australian not-for profit sector which will be reported on later this year. 
  • launched the ACNC Tick of Charity Registration logo which can be used by registered charities to indicate to the public that the charity is registered on the ACNC Charity Register. 

What should you do?

If you are a registered charity the Charity Compliance Report 2015 and 2016 provides a timely reminder of steps you need to take to ensure compliance such as:

  • submitting an Annual Information Statement to the ACNC within six months of the end of your reporting period (including financial reports if you are a medium or large charity) or risk being fined or having your registration revoked.
  • reminding yourself of the 5 ACNC governance standards and checking that your charity complies with them – if you think there has been a breach or need some help approach the ACNC which can provide practical guidance to help registered charities stay on track.
  • pursuing your charitable purposes as noted on the ACNC Charity Register at all times – if you have changed your charitable purpose advise the ACNC and do not engage in any ‘disqualifying purpose’.
  • if your charity sends money overseas protect your charity against the risk of terrorism funding by making sure mechanisms are in place to ensure funds are spent in a way that pursues your charity’s charitable purpose once they leave Australia.
  • use the ACNC Tick of Charity Registration logo to show the public that you are registered on the ACNC Charity Register and meet your charitable legal and reporting obligations.

Karen Keogh, Partner
Sydney

Emma Talbot, Senior Associate
Sydney

Caseflash 21 March 2017
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