House of Representatives Economics Committee hearings into the second draft ACNC Bill were held in the last week of July and revealed the following significant issues are still bothering the sector
- That the ACNC Bill does not appear to have reduced any red tape (that being one of the main reasons for the Commission's creation)
- The lack of uniformity which will persist between the Commonwealth and the States and Territories until either the States cede their powers or recognise the ACNC regime as satisfying any State based regime requirements
- Uncertainty about the concept of maintaining "public trust and confidence", an expressed object of the ACNC Act, and used frequently throughout the ACNC Bill, but not defined
- Uncertainty as to what governance rules will be passed by later regulation: the preference is to have those rules within the Act, before the Act commences
- Confusion between the role and responsibilities of board members against the role and responsibilities of the charitable entity: there is a risk that the corporate veil will be lifted; that the duties of voluntary board members will be higher than those on for-profit boards
- That the Bill purports to cover a range of entities which will also be covered by other legislation, for example the Corporations Act, the Associations Incorporation Act. etc and uncertainty as to how they will interrelate
- General haste with which the legislation is proposed to be introduced
- Inability of the current Bill to sustain "a robust vibrant and independent" sector: another of the objects expressed in the Bill
With respect to point 4, one of the potentially onerous aspects of the ACNC will be the Commission's role in ensuring that a registered charity continues to conduct itself in accordance with its constitution and objects or risk losing charitable status.
While we cannot gauge the effect of this power or even know whether the final version of the governance rules will maintain that provision (though it seems likely), it is still helpful to look at other jurisdictions which the Australian legislators are using as a model for some guidance.
For instance, the British equivalent, the Charity Commission for England and Wales, has demonstrated its ability to prevent a change in constitution in a 2010 decision which went all the way to the High Court before being referred back to the Commission.
Catholic Care (Diocese of Leeds) was seeking to alter its objects to restrict the adoption of children in their care to heterosexual couples only. The application was ultimately unsuccessful with the Commission ruling that "discriminating on the ground of sexual orientation is generally unacceptable and can only be justified by particularly convincing and weighty reasons", which the charity did not have. You can read the full decision here http://www.charity-commission.gov.uk/Library/about_us/catholic_care.pdf
Basic religious charity
After setting out the features of a basic religious charity in our last newsletter, some religious charities may be interested in the points discussed below. As there is no guarantee, that the Act will reflect the current draft Bill, the points are tentative, but are suggested by the narrow definition which, if unchanged, may result in some religious charities inadvertently disqualifying themselves from the benefits available to a basic religious charity.
Our last newsletter listed the benefits, but in summary the two main ones are:
- exemption from filing annual audited accounts, irrespective of annual revenue over $1m: or exemption from filing reviewed accounts irrespective of revenue over $250,000; and
- exemption from compliance with governance standards (as yet unpublished), but likely to cover proving adequate risk management, avoidance of conflict of interest and responsibility and qualifications of persons managing etc
Matters for consideration include:
- Companies limited by guarantee and incorporated associations cannot be basic religious charities: if any religious work having the sole object of advancing religion, operates using either of these corporate structures, perhaps the charity should consider whether that work requires a separate corporate entity, or whether it could easily be merged with other religious work of the charity.
- Basic religious charities which join with their related entities to provide their annual information statement or annual financial statements will lose their "basic religious charity" status: small groups should consider separating their accounting records from their larger organisation.
- A basic religious charity cannot be a DGR or operate a DGR: parishes operating school building funds would need to separate the operation of the fund from other parish activities. The Australian Catholic Bishops Conference (ACBC) has called for those building funds with annual revenue less than $250,000 not to disentitle the parish from basic religious charity status.
- A basic religious charity cannot receive government grants: the ACBC has argued that small grants should be disregarded.
- A basic religious charity must restrict its purposes to the advancement of religion: the ACBC has called for a charity to retain its "basic" character, even if it is involved in another charitable work eg running a school or a welfare program.
These points are mentioned purely for informal consideration at this stage. Once the Bill enters the parliament, which we anticipate any day now, we will update you on developments. The ACNC implementation task force website at www.acnctaskforce.treasury.gov.au is a useful resource.
Save the date
We will be hosting a Not- for-profit Sector half day seminar at
Australian Catholic University
40 Edward Street
On Thursday morning 29 November, 2012
Many of the issues of topical interest will be discussed. More details will be provided closer to the date.
The Good News
Perhaps it was all the goodwill being generated by the Olympic spirit because there is a glut of good news about charity works at the moment.
Starting with the Olympics, Isaac Rodriguez-Mendez, a generous ten year old actor who featured prominently in a British Airlines ad which encouraged support for the British Olympic team has pledged to donate his earnings from his part in the ad to the airline's own charity which assists disadvantaged youths around the world.
Moving south of London and plans put in place by the British meat industry to hold a charity rowing event which would see teams raise money by rowing across the English Channel have been stalled by French authorities who are refusing to allow the teams to land on the French coast. Teams competing include the 'Lamb Lubbers', 'My Dear Bouys' and the 'Carniv Oars', a French official explained the stand off by saying that the French government will not stand for such PUN-ishment.
Bob Dylan may have named an album 'Blood on the Tracks' but Oklahoma rock band The Flaming Lips are taking a more literal approach by selling special copies of their latest album with actual blood from musicians who collaborated on the album infused into vinyl. The strictly limited run of blood infused records are being sold for $2,500 a piece with profits going to the Oklahoma Humane Society, a charity that aims to eliminate the needless euthanasia of healthy, adoptable animals in Oklahoma City.
Finally, American chicken burger chain Chick-fil-A has long stood on moral principles, such as not operating on Sundays, but has suddenly found itself at the centre of controversy following the company president voicing his beliefs about same sex marriage. While conservative customers have rallied behind the store by flocking to the restaurant like proverbial chickens, there has also been a backlash from others with 'same sex kiss-ins' being staged in some stores and the Jim Henson Company pledging to donate any profits from their supply of children's toys at the restaurant to a gay rights charity. With record sales and international coverage, the company has captured the zeitgeist in the most unusual of ways, a bit of dumb cluck you could say.
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