This Commissioner’s Policy Statement is issued under the authority of the Commissioner and should be read together with the ACNC Policy Framework, which sets out the scope, content and definitions common to our policies.

Policy statement

This Commissioner’s Policy Statement supplements the ACNC's Regulatory Approach Statement, which sets out our general approach to regulating charities. This policy statement focuses on the reviews of Deductible Gift Recipient (DGR) endorsed charities. This policy statement sets out the principles we adopt in undertaking the reviews and also provides information about:

  • our general approach to selecting charities for review
  • our general approach to conducting the reviews
  • our information gathering, revocation and other powers and how we will use them.

Principles

Principle 1: The ACNC will use the ACNC`s Regulatory Approach Statement to ensure risk is reflected in the selection of charities for review.

Principle 2: The ACNC will ensure that our review measures and responses are proportionate to the problems we seek to address.

Principle 3: The ACNC will adhere to a set process for reviewing charities to ensure consistency of decision making.

Context

  1. As part of the Government DGR reform initiative, the ACNC has been instructed to review 2% of charities with DGR endorsement annually from 1 July 2020 until further notice.
  2. The reviews will focus on entitlement to be a charity and subtype of charity under Charities Act 2013 (Cth) (the Charities Act) and Australian Charities and Not-for-profits Commission Act 2012 (Cth) (the ACNC Act).
  3. The aim of reviewing DGR-endorsed charities is to improve public confidence in the charity sector by ensuring selected charities:
    • are entitled to remain registered as a charity under the Charities Act and the ACNC Act
    • are registered with the appropriate subtypes of charity
    • have a governing document with appropriate objects and other relevant clauses
    • have complete and accurate information published on the ACNC Charity Register, and
    • via the ATO, can access only appropriate taxation concessions and entitlements.

Principle 1: Reflecting risk

  1. The ACNC’s Regulatory Approach Statement sets out when we will and will not take regulatory action in relation to a registered charity. That statement explains how we will make decisions about the appropriate use of our powers. These powers relate to a charity’s ongoing entitlement to registration, and how we respond to a charity’s non-compliance with the ACNC Act and the Australian Charities and Not-for-profits Commission Regulation 2013 (Cth).
  2. The framework within which we operate is based on evidence and risk. Before taking action, we will assess and consider a number of factors, including:
    • the seriousness of the issue affecting a charity’s entitlement to registration
    • the likelihood and frequency of non-compliance with the ACNC Act occurring or reoccurring, and
    • the potential impact on the charity (including the effect of any proposed compliance action).
  3. These factors ensure that any action the ACNC takes is appropriate and relative to a charity’s circumstances.

Charity selection principle

  1. The ACNC will focus our review of DGR-endorsed charities on charities considered to be high risk. We have defined ‘risk’ to mean charities:
    • that may pose a threat to government revenues by claiming inappropriate taxation concessions or incorrectly holding endorsement for deductible gift recipient status, and/or
    • whose purposes or activities may undermine the integrity of the ACNC Charity Register and pose a risk to the public’s trust and confidence in the charitable sector.
  2. To identify high risk charities, the ACNC has adopted the following four criteria:
    1. Recognise the increased risks attached to particular subtypes or DGR endorsements.
    2. Recognise the increased risks attached to some older charities that may have changed their purposes since they were originally registered.
    3. Exclude charities that are already subject to a high degree of oversight by certain other regulators.
    4. Recognise other indications of heightened risk (for example, missing governing documents or insufficient Responsible Persons).
  3. The ACNC will select a limited number of charities for review using the above criteria.
  4. Identifying a charity as high risk means only that it meets the above criteria. It does not mean the ACNC has identified specific concerns about that charity’s entitlement to registration.
  5. The ACNC may receive complaints or referrals about charities holding DGR endorsement. Some of these concerns may be reviewed as part of the review of DGRs subject to meeting the criteria for inclusion.

Principle 2: Proportionate regulation

  1. Review measures and responses will be proportionate to the problem they seek to address. This means that we will work with a charity to correct an honest mistake or oversight and help it get back on track. This is consistent with our approach to provide guidance and education to assist charities to comply with their obligations.
  2. If the charity is unable or unwilling to address concerns of a serious nature which render the charity ineligible to retain its registration and/or subtype of registration, the ACNC will commence a process to revoke the relevant charity entitlements.
  3. In exercising regulatory powers, we aim to not burden charities any more than is reasonably necessary.

Review methodology

  1. The reviews will initially be undertaken using publicly available information.
  2. If we identify an issue, we will be in touch to help the charity resolve it. The severity of the issue and the willingness of the charity to resolve it will determine our approach. This may include general guidance and suggestions, remedial action such as requesting the charity to amend its governing document or using more formal regulatory powers for serious issues. For serious issues we will always contact the charity in writing and allow time for the charity to provide information or take steps to address the issues before deciding any further action.
  3. If the ACNC does not identify any issues, or a charity satisfactorily addresses the issues we identified, the review will be closed.
  4. During a review of a charity, the ACNC may identify issues that are outside the scope of the reviews. In such cases the ACNC may choose to expand the review to address the concerns or refer the review to our Compliance Directorate for further consideration.

ACNC powers

Revocation power

  1. The ACNC may revoke a charity’s registration or the registration of its subtypes if we reasonably believe that the charity was not, or is no longer, entitled to be registered. This is in accordance with section 35-10(1) of the ACNC Act.
  2. Before making any decisions relating to the revocation of a charity’s registration or the registration of its subtypes, we will apply the principles in the Commissioner’s Policy Statement on Decision-Making and consider the requirements of section 35-10 (2) of the ACNC Act.
  3. Before deciding to revoke a charity’s registration or the registration of its subtypes, the Commissioner will issue a written notice to the charity stating the grounds on which the Commissioner proposes to revoke the registration, unless exceptional circumstances exist. This notice will invite the charity to submit a written statement within 28 days explaining the reasons why the Commissioner should not revoke its registration or registration of its subtypes.
  4. Having registration revoked may affect a charity’s eligibility for tax concessions and other government benefits, concessions and exemptions. In this regard, revocation will only be exercised in the most serious of cases.

Other powers

  1. The ACNC has a range of powers to assist in maintaining, protecting and enhancing public trust and confidence in the charity sector. The ACNC may use these powers to enforce the law and respond to serious incidents of non-compliance. For more information refer to the Commissioner’s Practice Statement: Compliance and enforcement.

Principle 3: The ACNC will adhere to set processes to ensure consistent decision making

  1. Outcomes of our reviews should be consistent and predictable. We aim to ensure charities with similar circumstances or with similar issues are treated consistently and can expect similar review outcomes.
  2. The ACNC website contains guidance on the requirements for registration. ACNC Registration staff will always follow a set process in seeking to determine whether a charity meets the requirements for continued registration as a charity or subtype of charity.
  3. Where a charity’s activities affect other regulators or government bodies, the ACNC will seek to work collaboratively to ensure that issues are addressed consistently, noting that the secrecy provisions in the ACNC Act limit how freely we can share information about registered charities.
  4. For details on how the ACNC may share information, refer to the ACNC’s Corporate Policy on Information handling, Operational Procedure: Referrals and Information Exchange, and the Operational Procedure - Protected ACNC Information for more information.

References

Australian Charities and Not-for-profits Commission Act 2012 (Cth)

Australian Charities and Not-for-profits Commission (Consequential and Transitional) Act 2012 (Cth)

Charter of the United Nations Act 1945 (Cth)

Charities Act 2013 (Cth)

Charities (Consequential Amendments and Transitional Provisions) Act 2013 (Cth)

Commissioner's Policy Statement: Compliance and enforcement

Commissioner's Policy Statement: Decision-making

Commissioner's Policy Statement: Revocation by the ACNC

Commissioner's Policy Statement: Voluntary revocation

Commissioner’s Policy Statement: Registration

Commissioner's Policy Statement: Reviews and Appeals