Not-For-Profit | Governance Updates

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The senate has established a select committee on Charity Fundraising in the 21st Century to inquire and report on charities’ fundraising regulation and options for reform.

Its terms of reference are:

  • Whether present fundraising regulation creates unnecessary problems for charities and organisations that rely on donations from Australian supporters
  • Whether fundraising laws meet the objectives that guided the decision to regulate donations
  • Whether fundraising compliance regimes allow charities to cultivate donor activity and make optimal use of donors’ resources
  • To examine the loss in productivity for thousands of charities that try to meet the requirements of seven different fundraising regimes
  • Whether present investigation and enforcement are the best model for contemporary fundraising
  • To examine how federal, state and territory governments could work together to provide charities with a nationally-consistent, contemporary and fit-for-purpose fundraising regime
  • To investigate donor-focused expectations and requirements, which should govern fundraising regulation in the 21st century
  • To investigate how Australian consumer law should apply to NFP fundraising activities
  • What are the best mechanisms to regulate third-party fundraisers and to ensure that the culture of third-party fundraisers matches community perceptions?
  • To examine whether a harmonised, contemporary fundraising regime could help in addressing concerns about the potential influence of foreign money on civil society and political debate in Australia
  • To investigate the cost to the charity and NFP sector and the communities they serve of postponing fundraising reform, and
  • Any other related matters.

Submissions closed on 6 August 2018.  The committee was granted an extension of time to report until the second sitting Tuesday in February 2019.

Treasury has released a consultation paper on the government’s proposed deductible-gift-recipient reforms.

Proposed reforms include:

  • The requirement of non-government organisations with DGR status to register with the Australian Charities and Not-for-profits Commission (ACNC) as charities from 1 July 2019
  • Transition arrangements to support organisations with DGR status to register as charities
  • The commissioner of taxation has discretion to exempt, in limited circumstances, organisations with DGR status from the requirement to register as charities, and
  • The abolition of certain public-fund requirements.

The government’s package is intended to strengthen DGR governance arrangements, reduce administrative complexity and ensure appropriate oversight of DGR-status entities.

Submissions closed on 21 September.

The Australian Taxation Office (ATO) and the ACNC will release guidance materials on the practical application of the proposed reforms.

Treasury has released draft regulations and an explanatory statement on proposed external conduct standards for registered charities.

The standards aim to ensure that the public has confidence that an ACNC-registered charity has appropriate governance processes to address risks that might arise in their overseas activities.

There are four external-conduct standards:

  • the activities and control of resources (including funds);
  • annual review of overseas activities and record-keeping;
  • anti-fraud and anti-corruption; and
  • the protection of vulnerable individuals.

They apply to registered entities that operate outside Australia or work with third parties that do.

Consistent with ACNC governance standards, the draft regulations are a principles-based set of minimum standards of conduct, governance and behaviour that registered charities must comply with when operating outside Australia.

The proposed standards will be implemented through regulations under the Australian Charities and Not-for-profits Commission Act 2012.

Submissions closed on 21 September 2018.

In light of compliance issues and forthcoming 31 December year-ends, it is timely to look at the ACNC’s governance rules.

Apart from a limited class of ‘basic religious charities’, charities must meet ACNC standards to remain registered.  Charities do not need to submit proof to the ACNC that they are meeting the standards but must be able to provide it if requested.

The standards are a set of core, minimum principles that deal with how charities are run (including their processes, activities and relationships) and their governance.

They require charities to remain charitable, operate lawfully, and be run in an accountable and responsible way.  Adherence to the standards helps charities to remain trusted by the public.  Because the standards are high-level principles, not precise rules, your charity must decide how it will comply with them.

It must be able to demonstrate that the steps it has taken to comply are appropriate (considering factors such as size, purpose and activities).

The five governance standards are:

governanceThe ACNC expects that most charities meet governance principles and it will focus on those that have seriously or deliberately breached them by, for example:

  • Diverting money to non-charitable purposes
  • Not disclosing serious conflicts of interest, and
  • Being grossly negligent with their finances.

For further information on how the standards can be applied visit www.acnc.gov.au

To read our other insights, please return to our VIN-spiration: Spring 2018 homepage.

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