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Proposed Changes To Governance Standards for Registered Charities

Michael Gorton AM, Jonathan Teh and Jaqueline Wilson

Charities registered with the Australian Charities and Not-for-profits Commission (ACNC) are generally required to comply with the governance standards set out in the Australian Charities and Not-for-profits Commission Regulation 2013 (Current Regulations).

Treasury is consulting on proposed changes to governance standard three. The proposed changes:

• expand the scope of activities that registered charities must not engage in or promote others to engage in; and
• address uncertainty about when engaging in or promoting certain kinds of unlawful activity may affect an entity’s entitlement to registration under the Act.

Current governance standard three

A registered charity must not engage in conduct, or omit to engage in conduct, if the conduct or omission may be dealt with (a) as an indictable offence under an Australian law (even if it may, in some circumstances, be dealt with as a summary offence); or (b) by way of a civil penalty of 60 penalty units or more.

Proposed changes to governance standard three

The Australian Charities and Not-for-profits Commission Amendment (2021 Measures No. 2) Regulations 2021 (Proposed Regulations) will extend governance standard three. Charities may lose registration and associated tax concessions if they:

(a) do an act (or omit to do an act) that may be dealt with as a summary offence under an Australian law relating to real property, personal property or causing personal injury or harm to an individual; or
(b) fail to take reasonable steps to ensure their resources are not used to promote acts (or omissions) by any entity that may be dealt with as an indictable offence, a relevant          summary offence, or a civil penalty of 60 penalty units or more.

Registered charities will be required to take reasonable steps to ensure that their resources are not used to promote or support any entity to engage in an unlawful activity where that unlawful activity, if undertaken by the charity itself, would result in a breach of governance standard three.

For the purposes of the proposed changes, ‘resources’ is intended to cover a registered charity’s senior management and its staff, funds, property and other assets, including a charity’s online presence, responsible persons and employees of the charity, charitable revenues (including donations) and land or buildings owned by the charity. ‘Resources’ does not include the charity’s volunteers.

Examples of the summary offences that are covered include:

• unlawfully gathering or remaining on land or in a building;
• trespass on real property;
• malicious damage, vandalism or theft of personal property; and
• common assault, causing injury or harm or threatening violence against an individual.

How might a charity meet the expanded governance standard?

Responsible persons will need to develop an understanding of the relevant summary offences and ensure that the charity has appropriate policies, controls, reviews and audits in place to monitor compliance.

Consultation on the Exposure Draft

The Exposure Draft, Explanatory Statement and Treasury’s FAQ document may be located here. The Consultation period extends until 14 March 2021. The Act may be accessed here and the Current Regulations accessed here.

How we can help

Russell Kennedy is well placed to assist registered charities manage their obligations with respect to their registration and regulation under the Australian Charities and Not-for-profits Commission Act 2012.

If you require further information, please contact Michael GortonSolomon MillerJonathan Teh or Jaqueline Wilson of our Corporate and Commercial Advisory team.

If you would like to keep up to date with Alerts, Insights and upcoming events, you can subscribe to our mailing list here.

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