Annual Report Reveals ACNC Taking Proactive Approach to Compliance

The national charity regulator is taking a more proactive approach to compliance, according to its latest annual report which reveals it addressed more public concerns about charities in the last year than ever before.

The Australian Charities and Not-for-profits Commission (ACNC) tabled its 2016–17 Annual Report on Friday, marking its fifth report to Parliament since the regulator was established in December 2012.

The report, which provides an account of the ACNC’s key activities over the past year and evaluates their success in meeting key performance criteria, showed ensuring registered charities were complying with the ACNC Act remained a strong focus in 2016–17.

Acting ACNC commissioner David Locke said the commission was taking a “proactive” approach.

“This year the ACNC addressed more public concerns about charities than ever before. The ACNC is now also working proactively with a wide range of federal and state agencies to identify misconduct and mismanagement in the administration of charities,” Locke said.

“Our compliance work has changed from predominantly reacting to concerns, to proactively identifying risk and undertaking targeted investigations and enforcement action.

“In 2016–17, we managed 18 per cent more compliance cases than we did the previous year and took more enforcement action. The registrations of 22 charities were revoked following compliance investigations – more than double the number in 2015–16.”

In total, the ACNC received 1,278 concerns about charities in 2016–17, which represents a 37 per cent increase over the prior year.

The commission also managed 249 concerns of non-compliance associated with 212 registered charities, which controlled a combined $5.1 billion of charitable assets.

Locke said where there were “serious breaches” the ACNC would take “firm but fair action”.

“Charities need to comply with the requirements in the ACNC Act and Governance Standards,” he said.

“These are legal obligations and where there are serious breaches the ACNC will take firm but fair action.

“Our ongoing work to revoke ‘double defaulter’ charities – those that fail to report their Annual Information Statements twice, saw an additional 1,138 organisations lose their charity status in 2016–17.”

As well as dealing with non-compliance, other “key highlights” mentioned in the report included the launch of the Registered Charity Tick, the Australian Charities Report 2015, the report on Australia’s smallest charities, red tape reduction, an IT upgrade and the Commissioner’s Interpretation Statement on Public Benevolent Institutions.

Of particular note, the report showed there has been a jump in the number of Australians accessing the ACNC’s Charity Register.

Locke said the “significant increase” in the use of the ACNC Charity Register, Australia’s first searchable database of charities, was a “major achievement in 2016–17”.

“In 2016–17, searches of the ACNC Charity Register jumped by 37 per cent compared to last year. We have now had over two million searches of the free public register and this is increasing all the time,” Locke said.

“We’re pleased that members of the public and donors are increasingly using the ACNC Charity Register to ensure that charities are registered with the ACNC and to find out information about their governance and financials.

“This year we added over 2,800 new charities to the ACNC Charity Register and customer satisfaction with the registration process remained high at 94 per cent.”

In 2016–17, the ACNC also worked with charities to continue to improve the accuracy of the information available on the ACNC Charity Register.

Locke said it was “very important” that charities were transparent and accountable, and provided accurate information.

“We saw a 13 per cent increase in the number of Annual Information Statement submissions completed by the due date, which is an excellent outcome,”  he said.

“Our data integrity project team also reviewed the records of over 42,000 charities, and worked with them to correct almost 7,000 errors.”

He said the launch of the Registered Charity Tick in December 2016 provided donors with a new way to identify registered charities.

“The Registered Charity Tick is a simple, attractive logo that registered charities can use to show their charity status,” Locke said.

“Over 10,000 charities have downloaded their copy of the logo, including some of Australia’s most well known charities. We are seeing the Registered Charity Tick displayed in all and kinds of places, from fundraising brochures to mini vans.

“This initiative, which the ACNC proudly launched in December 2016, is helping registered charities across Australia show their donors that they are accountable and transparent.”

At the same time, the report revealed that identifying and reducing terrorism financing and money laundering risks continued to be a priority for the ACNC.

In 2016–17, the ACNC partnered with the Australian Transaction Reports and Analysis Centre (AUSTRAC), to conduct Australia’s first ever national risk assessment of the not-for-profit sector to identify money laundering and terrorism financing risks.

“The report highlighted factors that increase a not-for-profit organisation’s terrorism financing risk, which will help the ACNC target its compliance and education activity,” Locke said.

He said red tape reduction was also a priority for the ACNC in 2016–17 and would continue to be in 2017–18.

“Significant progress was made toward reducing red tape for charities in 2016–17,” Locke said.

“Red tape reduction legislation has now passed in South Australia, Tasmania and the Australian Capital Territory.

“This has resulted in streamlined reporting requirements, saving thousands of Australian charities vital resources.

“Victoria has also passed legislation to enable harmonisation of reporting and the ACNC is now working with every single state and territory to reduce red tape. We are confident that this will deliver significant benefits.”

The report showed use of the Charity Passport, the ACNC’s data-sharing portal, had also increased, with 20 government agencies now using it to access charity data.

“I am confident that we will have even more positive news in regards to red tape reduction in next year’s annual report,” Locke said.