Since its establishment on 3 December 2012, the Australian
Charities and Not-for-profit Commission (ACNC) has been working to
protect public trust and confidence in charities and assist
charities in complying with their obligations under relevant
The ACNC has become known for a less intrusive and more
educational approach to dealing with non-compliance, particularly
when compared to other regulatory bodies. However, this does not
mean that the ACNC does not take its regulatory role seriously; in
fact, the ACNC has conducted more than 200 charity related
investigations since inception.
ACNC investigations to date have largely been initiated from
complaints received by the ACNC from the community and the
not-for-profit sector, and can be categorised into three main risk
types: governance; fraudulent or criminal activity; and private
The main concerns in relation to governance have been in
conflicts of interest of charity officers;
operational decisions regarding charities;
compliance with governing documents;
financial mismanagement; and
lack of or inadequate governance policies and procedures.
The ACNC considers that good governance is in place where a
charity has adequate checks and balances and policies and
procedures in place to ensure transparency and effectiveness in
meeting its objects.
A further indicator of good governance is where the roles,
responsibilities and obligations of those involved with the
management of the charity are clearly understood.
All charities registered with the ACNC must abide by the ACNC
governance standards and, further, must be prepared to act when
governance standards and practices of good corporate governance are
not being adhered to.
Fraudulent or criminal activity
The public was also vigilant in reporting fraudulent and
criminal activity, especially sham charities soliciting funds, bank
accounts being changed and fundraising scams.
While most charities do not engage in this type of behaviour,
the investigations do serve as a reminder to charities to ensure
they have the appropriate authority to fundraise within each
jurisdiction of Australia in which they appeal for public
Additionally, all money that is donated should be kept in a
separate fund and used solely for the purposes and activities set
out in the charity's constitution or other regulations
surrounding the appeal.
The issue of private benefit was also high on the list of public
concerns, based on the complaints to the ACNC.
A private benefit can occur in many ways including: conflict of
interest situations; where a charity's resources are being
utilised for personal use; individuals incurring inappropriate
personal expenses and corporate sponsorship being used for personal
rather than charitable purposes.
In relation to conflicts of interest, there are strict rules
that govern the use of company information and a person's
position in relation to a charity as well as disclosure procedures
that must be followed where a situation of conflict does or is
likely to arise.
Charities and not-for-profit organisations should ensure that
appropriate methods of dealing with conflicts of interest are
prescribed by their constitution and, where necessary, develop
legal agreements to guarantee long term protection of the
charity's assets. The ACNC has indicated that they will
encourage all charities to take these steps to ensure that a
distinction is maintained between private assets and charity
assets, and that the assets of the charity are used for the
purposes and activities outlined in the constitution.
The ACNC is committed to working with charities that have been
affected by inappropriate governance, financial mismanagement and
fraud to help them correct their mistakes.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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