Religious Charitable Development Funds are a category of
Charitable Fund Raisers, outside the banking regime. They are
regulated by the Australian Securities & Investment Commission
(ASIC) and the Australian Prudential Regulatory Authority
Charitable Development Funds (CDFs) operated by Diocese
throughout Australia fall into this category. They collect deposits
from stakeholders and lend back for the work of those Diocese for
the purpose of funding projects for church buildings, parish
facilities, school buildings, hospitals and retirement villages and
The CDFs enjoy certain exemptions from the usual regulations
imposed by ASIC and APRA.
In May ASIC issued a consultation paper for response by CDFs 15
July 2013. The consultation paper can be found
There is a move to close the ASIC and APRA exemptions. This has
been prompted by failures of other finance corporations, but it is
useful to point out the distinctions between such corporations and
CDFs. For example, CDFs:
have no shareholders
are not-for-profit entities
do not lend to the public, business or property developers
only lend to parishes, schools and associated church entities
which have reliable cash flows
are risk averse and hold assets predominantly in cash and fixed
interest investments with approve deposit institutions (mainly
are clearly named and branded to identify their connection with
their relevant church affiliates
do not on-lend any funds in accumulated reserves to other
There will be significant losses felt by Diocese across
Australia if certain CDF operations are altered because profit made
on the difference between interest paid on the deposits and
interest collected on loans is always utilised in the ongoing works
of a Diocese. If those works are not paid for from Diocesan funds,
they will fall to government, or be discontinued.
A major concern of APRA and ASIC is the appeal that CDFs have
for "lay" or "retail" depositors. This has been
highlighted by competitive marketing which some CDFs have
conducted. APRA and ASIC are concerned that retail or lay
depositors assume that a CDF is as secure as a bank.
In response, CDF managers would say, a big motivation for a lay
person to deposit funds with a CDF is to promote the charitable
work of the Diocese.
Some submissions for reform which have been made on behalf of
Catholic CDF's are:
to impose additional conditions on their lending
to market only to parish school or church community
not to make any comparisons with other financial
to only apply lay persons' deposits towards financing
capital works of the church or towards investments in approved
to have lay depositors acknowledge in writing that their
investment is not government guaranteed
to remove the word "deposit" from CDF documentation
and replace it with something in the nature of
"investment" or "loan"
CDFs will be hoping ASIC and APRA will accommodate their
submissions and not impose any further conditions or prohibit use
of the CDFs by lay or "retail" customers.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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