Governance Standard 3 requires charities to not act in a way that, under Commonwealth, state or territory law, could be dealt with as:
- an indictable offence (being a serious crime that is generally tried by a judge and a jury), or
- a breach of law that has a civil (not criminal) penalty of 60 penalty units or more.
Purpose of this standard
Acting lawfully helps protect a charity’s assets, reputation and the people it works with.
This standard does not impose a new burden on charities as they are already required to follow Australian laws.
This standard allows the ACNC to investigate potentially serious breaches of law.
Ways to meet this standard
You can take some simple steps to reduce the risk of your charity breaching this standard. In most cases, common sense and good practice will reduce risk, such as:
- being familiar with the main areas of regulation for your charity
- having some processes to protect your charity’s finances and assets
- having a process to ensure your charity meets its legal obligations.
The extent and type of processes and controls that are reasonable for each charity will vary depending on its situation.
How the ACNC will approach this standard
The ACNC will not investigate every alleged breach of law by a charity.
The ACNC will only investigate serious offences (for example, fraud, money laundering or terrorist financing) that are likely to affect public trust and confidence and where this is necessary to protect the assets of the charity and the people it serves.
The ACNC will not investigate breaches of law or issues that other regulators or the police are better placed to handle. The ACNC will work with those agencies where appropriate.
Examples
A self-help group for people recovering from substance abuse has 20 members, with five of those members forming the charity’s board.
They don’t often have legal issues and as far as they know, the charity has not acted in any way that could be a serious offence under Australian law.
Tick icon The charity meets Governance Standard 3.
A charity that provides childcare services across Tasmania must follow laws covering a number of areas (including employment, working with children and food-handling).
Because of this, it developed a document that sets out the areas of law that they need to comply with and what they are doing to meet these legal obligations.
The board reviews this document regularly and considers whether any changes need to be made. As far as the board is aware, the charity has not acted in any way that could be a serious offence under Australian law.
Tick icon The charity meets Governance Standard 3, and has taken reasonable steps to help ensure it does not commit serious offences.
A charity that provides food to people experiencing poverty has some paid staff, but mostly relies on the efforts of a dedicated group of volunteers.
The ACNC receives evidence the charity is breaching health and safety laws. The ACNC refers the complaint to the relevant health and safety regulator as the issue more appropriately falls within their expertise. The breach is found not to be serious.
Tick icon The charity meets Governance Standard 3.
A long-established charity provides training to the community covering environmental issues.
It receives a large donation from one person. The charity then contracts with a second organisation to conduct training on its behalf.
The ACNC receives evidence that this training was never conducted, that the funding has been used fraudulently and that this second organisation is controlled by the charity's major donor.
The charity has just been found guilty of fraud.
Cross icon The charity has been found guilty of fraud which is an indictable offence. Therefore, the charity does not meet Governance Standard 3.
The ACNC does not need to wait for charges to be laid to start investigating and therefore had already begun investigating the matter as a case of potential fraud committed by the charity.