Since our last governance update, there has been a lot of action around the Australian Charities and Not-for-profits Commission (ACNC), including:
- On Friday, 6 July 2012, the government finally released the long-awaited final draft of the ACNC bill, accompanied by over 200 pages of notes and explanatory memoranda.
- The bill was referred to the House of Representatives Standing Committee on Economics that same day, to review during the winter parliamentary recess (the Standing Committee features Craig Thompson, the fragile member for Dobell).
- The Chair of the Standing Committee, Julie Owens, immediately issued a media release (also on 6 July) inviting submissions on the new bill in the next 10 working days, with a closing date of 20 July.
- According to the ACNC Implementation Taskforce’s newly-minted Legislation FAQs, the bill will be introduced into the House of Representatives in August, with the intended start date still 1 October 2012.
The draft bill
The draft bill contains considerable refinement of the contentious areas of the original bill. It also makes some changes which indicate that the government has read the Coalition position and has made some compromises in order to get the legislation across the line.
- The governance requirements will now only come into effect from 1 July 2013, and they will be established by regulation (see the Governance regulations section below for more information). As the Coalition had indicated that it would oppose the imposition of governance standards, this cleverly removes an obstacle which would delay the passing of the ACNC bill.
- The definition of “charitable purpose” will retain the common law meaning. The government’s proposed new definition had been another point of contention with the Coalition. This still leaves the way open for future changes.
- “Basic Religious Charities” as defined in the legislation, will be exempt from the governance standards and financial reporting requirements. Tony Abbott had criticised the earlier draft of the bill for giving powers to the ACNC Commissioner to remove an Archbishop from the decision-making body of a charity. However, a “Basic Religious Charity” excludes any charities that are registered under the Corporations Act or are associated incorporations or Designated Gift Recipients, or those who have received a grant from the government in the last two years.
- The Commissioner still retains the power to revoke registration, including situations where the charity has contravened “or is likely to” contravene a provision of the Act, or where the charity does not comply “or is likely not to comply” with a governance standard. The “or is likely to..” provisions should ring warning bells for charities.
- The Commissioner also retains the power to suspend or remove “responsible entities” (read directors or trustees,including Archbishops presumably), as well as the lesser sanctions of giving directions, making enforceable undertakings, and seeking injunctions.
- The Commission’s powers in relation to monitoring compliance under provisions which carry penalties in the Act, are very broad and include ACNC officers having the right to search premises, access documents and request information. This requires either a warrant (which involves reasonable cause issued by a Magistrate) or the organisation voluntarily allowing entry. There is no right against self-incrimination in providing information to the ACNC officer, although this specific information cannot be used in prosecution.
More information is also now available on what will be included in the governance regulations. The governance standards will provide an acceptable minimum to ensure that registered charities actually “pursue their purposes” as well as,
- effectively and efficiently use their resources;
- meet community expectations about managing their affairs and the use of public money, volunteer time and donations; and
- minimise the risk of mismanagement and misappropriation (read “fraud and corruption”).
The bill indicates that the regulations will provide some flexibility in the operation of the governance standards, with exemptions and differentiated requirements for different entities. But given the lack of detail this is obviously still a matter for considerable debate.
Despite the regular reassurances in Susan Pascoe’s regular Interim Commissioner’s newsletters, on reading the bill, it is clear that the ACNC will have some pretty sharp teeth in enforcing governance and compliance.
Organisations can prepare by reviewing their current governance and compliance systems in the light of the ACNC bill’s stated aims. This involves looking at not just your own objectives and expectations, but the expectations of a much broader range of stakeholders, including government, volunteers, tax payers, and donors.
How CompliSpace can help
CompliSpace is a leading provider of Governance, Risk and Compliance (GRC) programs and services across a range of industry groups, including not-for-profits. Our cost effective, technology-enabled solutions, combined with our skills in organisational content integration, enable GRC to come to life in your organisation.
Delivering more than just a risk and compliance software solution, CompliSpace provides industry specific web-based policies and procedures that can be tailored and configured to suit your organisation’s needs. Policies are kept up-to-date with changes in law by a team of specialists to provide a complete governance framework that will enable you to stay on top of your legal and regulatory obligations, while reducing the overall cost of compliance.
For more information, contact us on the details below:
P: +61 (2) 9299 6105 (Sydney) / +61 (8) 9288 1826 (Perth)
This blog is a guide to keep readers updated with the latest information. It is not intended as legal advice or as advice that should be relied on by readers. The information contained in this blog may have been updated since its posting, or it may not apply in all circumstances. If you require specific or legal advice, please contact us on (02) 9299 6105 and we will be happy to assist.