ACNC Regulatory Approach Revised

Charity regulator, the Australian Charities and Not-for-profits Commission (ACNC) has released a revised statement on its regulatory approach following extensive community consultation.

The new statement clarifies the ACNC’s position on the presumption of honesty, the procedures in dealing with complaints about charities and a revised explanation of its scope of powers.

The ACNC says it consulted with stakeholders and the public on the regulatory approach with the majority of charities indicating that they were encouraged by the approach the ACNC is taking.

Sue Woodward, the ACNC Director of Policy and Education says that the responses to the consultation show that the ACNC is developing a reputation for being responsive and respectful within the charity sector.

“The overwhelming majority of respondents to the consultation agreed with the ACNC’s draft regulatory approach. Our approach is fair but firm and it will play an important role in helping to maintain public confidence in registered charities,” Woodward said.

“The ACNC’s proportionate and risk-based approach to compliance is complemented by a strong role in education. For example, the Commission will identify situations in which people could defraud a charity and then educate charities on how to reduce this risk. In addition, the Commission will continue to provide guidance to help charities to understand their obligations and how to meet them.

“The compliance actions that the ACNC can use when charities aren’t meeting their obligations include informal assistance and advice, letters, warnings, directing a charity to do something, suspending or removing a member of a charity’s governing body and revocation of charity registration,” she said.

Over 250 people provided feedback to the regulatory approach consultation, through an online survey, written submissions and a dedicated phone-in day. Hundreds more provided input at the national community presentations.

“We have listened to and considered those consultations very closely and made specific changes to the wording of the Regulatory Approach Statement as part of a detailed response,” Woodward said.

ACNC Commissioner Susan Pascoe emphasised that the majority of charities act honestly but when wilful wrongdoing occurs the Commission will use its regulatory powers.

“Generally, between 80 to 90 per cent of respondents agreed with the statements in the ACNC’s regulatory approach,” Pascoe said.

“The ACNC begins from a presumption that charities act honestly and prudently. However, we will take decisive action when a charity acts dishonestly and puts public trust and confidence at risk.”

Pascoe says the proportionate approach means that the regulator will take the minimum action required to address the issue.

“If a lesser option does not resolve the issue, we will take progressively stronger action until the issue is resolved.

“In most cases we will give the people involved a chance to explain why the issue occurred. We will consider their explanation seriously before we decide if we need to use our formal powers,” Pascoe said.

A new paragraph with a revised explanation of the scope of the ACNC powers, and a briefer reference to the legislative limits of its powers, has been included to read:

“The ACNC Compliance and Enforcement Policy explains the scope of our powers under the ACNC Act. There are three main situations where the ACNC has powers:

• when a charity does not meet its obligations under the ACNC Act to report to us or keep proper records
• when a charity does not meet minimum standards of governance (for example, where those responsible for a charity are not taking reasonable care or not managing conflicts of interest), and
• when an organisation is not, or is no longer, a charity (for example, where it is being used to make a profit for private individuals or is set-up for illegal or improper purposes).”

“The ACNC Compliance and Enforcement Policy also explains the limits to our powers under the ACNC Act, such as the conditions we must satisfy before using our powers, and our role in relation to ‘basic religious charities’ and ‘federally regulated entities’,” the Statement said.

“The ACNC does not deal with all complaints relating to charities. We know that it is not our role to run charities. We do not assess the effectiveness of a charity in meeting its objectives. We will not become involved in internal differences of opinion or employment disputes in charities. For example, we do not intervene where board members have a legitimate difference of opinion about a decision which does not raise any issues of good governance.”

To view the ACNC’s regulatory approach in full click here.

The detailed analysis of the consultation can be found here.