Governance Standards for Charities

The Federal Government has announced that its new governance standards for organisations registered with the charity regulator, the Australian Charities and Not-for-profits Commission (ACNC), will be tabled in the next sitting week of Parliament.

The Legislation amends the Australian Charities and Not-for-profits Commission Regulation 2013 to specify governance standards which registered entities must comply with in order to become registered under the Act.

The regulations set out how a registered entity should be governed and to operate in an effective and transparent manner.

"The ACNC governance standards will support our charities by providing a flexible, proportionate and outcomes-focussed regulatory framework,”  Assistant Treasurer, David Bradbury said.

"They will help ensure that all stakeholders, such as the recipients of social services, volunteers, donors and the broader public, can be confident that a minimum standard of governance is being met across all charities and that the ACNC can act to protect the interests of these stakeholders if necessary."

"The ACNC governance standards have been developed through a comprehensive consultation process to ensure all interested stakeholders can provide input and feedback," said the Minister for Social Inclusion, Mark Butler said.

The Government conducted a roundtable meeting of representatives from the NFP sector in November 2012.  Further feedback on the governance standards was sought by way of a consultation paper released in mid-December and during community presentations held in capital cities and regional centres across Australia.

"Significant improvements have been made to the governance standards in response to feedback received from stakeholders throughout this consultation process," said Minister Butler.

"The Gillard Government thanks all stakeholders for their input as part of this process, and looks forward to working with them to continue to strengthen and support the NFP sector as it grows into the future."

The ACNC governance standards are proposed to commence on 1 July 2013, subject to the special Parliamentary scrutiny provisions of the Australian Charities and Not-for-profits Commission Act 2012.

The main changes made to the draft ACNC governance standards, as contained in the consultation paper released in mid-December, are outlined below.

The ACNC says it will be providing guidance to assist registered charities with understanding the governance standards.

The ACNC governance standards cover:

• The purposes and Not for Profit nature of charities
• Accountability to members
• Compliance with Australian laws
• The suitability of those who govern charities
• The duties of those who govern charities
• They are not intended to reflect best practice governance, but rather a minimum standard of governance that would be expected by the Australian community.

Following the public consultation process, a number of changes were made to the governance standards, including:

• inserting references that the governance standards must be interpreted in a manner that is consistent with the objects of the Act and the requirements of section 15?10 of the Act (in particular, the principles of regulatory necessity, reflecting risk and proportionate regulation, as well as the unique nature and diversity of not?for?profit entities and the distinctive role that they play in Australia);
• removing the governance standard proposed in consultation that specifically covered responsible management of financial affairs;
  • This standard has now been incorporated as part of the governance standard that deals with duties of those who govern charities;
• clarifying that the governance standard about compliance with Australian law is necessary to trigger the ACNC Commissioner's enforcement powers in the event of a serious breach of the law, and that compliance with the law sets a minimum benchmark by which all entities should govern themselves;
• clarifying that the governance standard dealing with accountability to members does not mandate annual general meetings, and does not add to the financial reporting requirements that already exist in the ACNC Act; and
• introducing transitional arrangements that apply until 1 July 2017 and will allow incorporated associations to comply with duties under their State or Territory laws, instead of ACNC governance standard 5, which deals with duties of those who govern charities.  This transitional arrangement arose from consultation on the Council of Australian Governments' Regulatory Impact Assessment on regulatory duplication in the NFP sector.

The ACNC governance standards are available on the Treasury website at: website.http://www.comlaw.gov.au/Details/F2013L00402