Areas of concern for charity regulation
Concerns about individual charities
We are alerted to concerns about charities from the public, from referrals from other agencies (including agencies of states and territories) and through regular reporting by charities to us.
Where concerns are raised, our Compliance team is responsible for ensuring that charities meet their obligations under the ACNC Act and the governance standards.
Our compliance team will consider whether any intervention is necessary and in serious cases, we will intervene and conduct either a:
- compliance review (to review a charity’s general level of compliance with the ACNC Act and address any risks identified), or
- an investigation (for higher risk or more complex cases).
The ACNC uses compliance powers from the ACNC Act to review individual charities, support them to meet their obligations and where necessary take appropriate regulatory action.
Broader areas of concern
In addition to looking at individual charities, the ACNC also looks at broader trends to identify broader areas of concern that we want to focus on. To do this, we:
- analyse data and research about charities
- analyse the complaints we receive
- analyse findings from past reviews and investigations, and
- work with other Australian and international regulators to identify common themes and areas of potential risk.
Once risks or issues are identified, the ACNC may focus its compliance activities on these issues, provide more information and guidance on managing common risks, work with other regulators or issue alerts on emerging issues.
Common compliance concerns: governance
Our ongoing analysis consistently reflects that poor governance (management of a charity) is the main issue for charities that leads to ACNC compliance activity. Many involve charities that are relatively new (less than five years old), and affects charities of all sizes and locations.
In considering governance, the ACNC refers regularly to the governance standards, which set out the minimum requirements for the management of all registered charities.
Governance concerns can result in charities no longer being not-for-profit, or pursuing their charitable purpose (Governance standard 1). For example, the ACNC is particularly concerned if charitable assets or funds are used inappropriately (for example, for private accumulation or to purchase private assets). We will also look particularly at failures of responsible persons to meet their duties (Governance standard 5) or where a charity is not providing information and being accountable to its members (Governance standard 2).
The ACNC has produced a number of tools and resources to support charities to meet the governance standards, as well as guidance on good governance, and protecting against fraud. We also provide links to a number of other freely available resources, where appropriate.
Governance and charity management guidance
Ongoing issues and alerts
As part of our work in identifying broader concerns, where appropriate, we seek to alert charities and the broader community about these issues.
Overseas aid charities and terrorist financing
The not-for-profit sector has been identified as vulnerable to the risk of misuse for the purpose of terrorism financing. Charities may be at risk where sending money overseas of their charitable funds being diverted or otherwise misused, even if their intentions are to help in line with their charitable purposes.
It is important that charities use due diligence and have proper processes in place to ensure that their charitable funds are safe from misuse and are being used for their charitable purpose. Overseas charities have obligations under law, including the ACNC governance standards, to do so.
Taking steps to reduce risk
By following good governance practices, charities can ensure their risk is reduced.
Other resources which can also be used to help reduce risk include checking the: