ACNC Regulatory Approach Statement

Purpose

This statement sets out the regulatory approach of the Australian Charities and Not-for-profits Commission (ACNC). It explains to charities and other stakeholders how we regulate charities and helps ACNC staff make appropriate and consistent decisions.

Overview

1. The Regulatory Approach Statement has three main sections. The document begins with an overview of the ACNC and its functions and our understanding of the sector. This section anchors our regulatory approach within the broader picture of our overarching functions and role. The second section demonstrates our regulatory pyramid and the values that underpin our regulatory approach. The third section sets out how we will regulate charities.
2. This document uses many terms that have a particular meaning in ACNC documents. These are defined in the ACNC Policy Framework.

Section 1: Our role

Objects

3. The ACNC is the independent national regulator of charities. It is established by, and administers, the Australian Charities and Not-for-profits Commission Act 2012 (Cth) (‘ACNC Act’). The objects of the ACNC Act are to:
   • maintain, protect and enhance public trust and confidence in the Australian not-for-profit sector,
   • support and sustain a robust, vibrant, independent and innovative Australian not-for-profit sector, and
   • promote the reduction of unnecessary regulatory obligations on the Australian not-for-profit sector.
4. The ACNC also administers the Australian Charities and Not-for-profits Commission Regulations 2022 (Cth) (the ACNC Regulations) and Charities Act 2013 (Cth) (the Charities Act).

Scope

5. Although the objects of the ACNC Act refer to charities and not-for-profits, the ACNC currently only regulates registered charities as defined by the legislation. Charities can choose to register with the ACNC, and registration is free. Only registered charities can access Commonwealth charity tax concessions and benefits.

Understanding charities

6. Charities exist to provide benefits for communities and the society more broadly. Australia’s charity sector is large and diverse and addresses a wide variety of needs in our society, including health, education, religion and protecting the environment.
7. The public provides significant support to charities through donations of time, skills and money. The ACNC recognises that charities’ purposes, activities, needs and funding sources will alter over time as charities reflect and shape changes in society.
8. We know that charities want to devote their time, efforts and resources to their mission rather than on meeting regulatory requirements. We also understand that charities pursue diverse goals in different ways. Their goals, activities, sizes, legal structures, and those they help are different, and result in varying opportunities and challenges.
9. Charities and their people have diverse beliefs and values, and reflect communities diverse in culture, language and belief.

Functions

10. The ACNC was established as a digital first, data driven regulator. Wherever possible our communication and transactions take place online. We collect only data that is necessary to deliver our functions and aim to make as much of that data as possible publicly available in line with the Australian Government Public Data Policy Statement.

Registering charities

11. The ACNC registers not-for-profit organisations as charities through a transparent application process, applying the ACNC Act and the definitions of ‘charity’ and ‘charitable purpose’ in the Charities Act.

Maintaining the ACNC Charity Register

12. The ACNC only asks charities to report information that we need to enable assessment of a charity’s compliance with the ACNC Act and Regulations. In exercising our powers, we do not burden charities any more than is reasonably necessary.
13. The ACNC maintains a free and searchable online public register of charities. The ACNC Charity Register contains information about charities’ purposes, activities, financial information, Responsible People, and the people they work to benefit.
14. Register data helps inform donors, funders and the wider community so they can support charities with trust and confidence. The ACNC works to add value to this data through conducting analysis and research, which is made publicly available.

Report once, use often

15. The ACNC administers a ‘report once, use often’ reporting framework. The ACNC Charity Passport enables authorised government agencies to access ACNC charity data through a formal information sharing process via a file transfer protocol. Allowing agencies access to charity data directly from the ACNC provides a streamlined means of data exchange for government agencies dealing with charities and reduces the amount of information that charities must provide to different government agencies. Charities can report once to the ACNC and other government agencies can then access this information as required (see Figure 1: ACNC and data flow).

Reducing unnecessary regulatory burden

16. We work with other Australian Government agencies to reduce unnecessary or duplicative administrative requirements imposed on the sector. This includes ongoing work with state and territory governments to align regulatory and reporting obligations. (The ACNC reports annually to the government on the work undertaken to reduce duplicative administrative requirements through the Regulator Performance Framework.)

Providing guidance, education and advice

17. The ACNC provides guidance and education to help registered charities understand and comply with their obligations under the ACNC Act, and to help organisations wishing to register as charities understand our registration requirements.
18. This support is timely, accessible to different audiences and provided through a variety of methods. We recognise the diversity of charities and draw upon the existing work and resources of relevant bodies.
19. Charities can access guidance in a range of ways, such as through web-based content, webinars, podcasts, a telephone advice service, online educational tools, and, as needed, face-to-face information sessions.
20. The ACNC provides resources to help the public better understand the work of charities, and to improve the transparency and accountability of the sector.

Monitoring and managing non-compliance

21. The ACNC monitors how registered charities comply with their obligations as set out by the ACNC Act, the Charities Act, and the ACNC Regulations listed at the beginning of this document.
22. The ACNC works across the whole of government to address risks that pose a threat to trust and confidence in the charity sector. We proactively identify trends and emerging risks in the sector.
23. When charities do not meet their obligations, we take proportionate action to the problem we seek to address.

Section 2: The foundations of our regulatory approach

24. The ACNC approaches regulation responsively and makes deliberative and flexible choices about the regulatory strategies applied. The regulatory pyramid represents this approach, by which most of our effort is focused on education, escalated to more interventionist sanctions proportionate to risk and the responsiveness of charities when problems arise.
25. The ACNC uses a risk-based approach to allocate its compliance resources when addressing concerns about charities. The ACNC’s compliance actions are proportionate to the problems we seek to address.
26. Much of our work involves preventing problems by providing information, support and guidance to help charities stay on track. This is reflected in the pyramid’s wide base encompassing educating and informing the charitable sector. Where possible, we work collaboratively with charities to address concerns.
27. This means that where charities have minor problems in complying with the ACNC Act or Regulations, we will seek to work with them to address the minor problem and get the charity back on track. This is consistent with our approach to provide guidance and education to help charities comply with their obligations.
28. However, the ACNC will act swiftly and firmly where vulnerable people or significant charity assets are at risk, where there is evidence of serious mismanagement or misappropriation, or if there is a serious or deliberate breach of the ACNC Act or ACNC Regulations.

Our values and regulation

29. The ACNC’s regulatory approach reflects our five key values: Fairness, Accountability, Independence, Integrity and Respect (FAIIR). Our regulatory approach is also strongly underpinned by our understanding of the charity sector.

Fairness

Presumption of honesty

30. The ACNC understands that most people involved in charities are honest, act in good faith and try to do the right thing. If mistakes are made, they are usually honest mistakes, or due to a lack of knowledge, expertise or capacity.
31. When the ACNC considers how to exercise its regulatory functions, one of the things we look at is whether there was an intention to do the wrong thing and whether any of those responsible for the charity (such as committee members, directors, or trustees) knew about, or participated in, improper conduct.
32. We consider the extent to which the charity is co-operating with us as well as the willingness of those responsible to try and remedy the problem. However, the ACNC will take firm action to address serious non-compliance.

Fair procedures

33. The ACNC applies principles of procedural fairness.
34. We treat all charities equally without favouritism or discrimination.
35. Before we make a decision, we generally contact the charity to clarify matters or raise our concerns.
36. We provide the charity with a reasonable opportunity to address our concerns, taking into consideration the charity’s capacity to respond. We give written reasons for our decisions and tell charities how they can challenge our decisions.
37. In exceptional cases we may choose not to contact a charity before taking action, usually where doing so might jeopardise our investigation, or put a person or assets at risk.

Proportionality and consistency

38. The ACNC takes appropriate and proportionate action to address an issue. We consider a wide range of factors in evaluating how serious an issue is, and the appropriate action to address it.
39. For serious cases, the appropriate action is likely to be a strong one – for example, the only way to protect public trust and confidence in the case of an organisation using a charity to break the law is to revoke its registration.
40. The ACNC makes decisions according to published policies and procedures. This ensures consistency so that charities and the public understand what to expect.

Accountability and transparency

41. The ACNC is accountable for its processes and work. As far as our legislative requirements allow, we are transparent about our procedures, decisions and actions.
42. The ACNC is accountable through regular consultation and feedback, and through periodic meetings with sector and professional representatives, as well as with the ACNC Advisory Board. We have a Complaints and Compliments Policy which encourages people to provide feedback on our performance.
43. The ACNC Act stipulates that some of our decisions can be appealed to the Administrative Appeals Tribunal, and to the courts. We are also accountable to the Parliament, Commonwealth Ombudsman, Auditor-General and the Australian Information Commissioner.
44. The ACNC Annual Report is tabled in Parliament and published online. We also publish our corporate plan, policies and, where appropriate, procedures.
45. We communicate our policies, procedures and decisions in a variety of ways. This includes through meetings and events, as well as on our website and via social media. We publish our service standards so charities know what they can expect from our services, and we report our performance against these standards. We use feedback to improve our services.
46. We are also accountable through the Australian Government Regulator Performance Framework, which includes yearly assessment against performance indicators.

Independence

47. The ACNC Commissioner is an independent statutory office holder. We have our own budget held in a statutory special account and we report annually to Parliament. We are governed by the ACNC Act and Regulations.
48. Within the ACNC, decisions are based on evidence, including information given by charities themselves. We impartially apply the ACNC Act, other laws and ACNC policies.
49. We have a published conflict of interest policy to manage staff members’ apparent and actual conflicts of interest. We do not promote the services of particular charities to the public or in our work, although we may refer to freely available useful resources provided by charities and other sector bodies or publish case studies to demonstrate our regulatory and legal framework in action.

Integrity

50. The ACNC is committed to acting with integrity, adhering to Australian laws and the Australian Public Service’s Code of Conduct and Values, as well as our organisational values.
51. The ACNC Act sets out when and how we may act. Our values and principles guide us in doing so and are embedded through our policies and procedures.
52. Our staff are critical to the ACNC’s integrity. We support our staff to adhere to the highest ethical standards, and to engage openly and genuinely with charities and the public.

Respect

53. The ACNC’s approach is grounded in respect for charities and those who work with them, and for them. We listen to and work with charities. We recognise the unique nature and diversity of charities.

Engaging with charities

54. We have a stakeholder engagement framework, which includes staging regular consultative forums. We work closely with peak bodies, advisors and other key stakeholders. We deliver educational material through multiple channels, often delivered in partnership with peak bodies, to help charities comply with the ACNC Act.
55. We recognise the need to ensure diverse, innovative and accessible ways of reaching charities and those involved with them – particularly small and regional charities. We engage with charities using the web, social media, phone and face-to-face information sessions.

Respecting autonomy

56. We understand that charities are an important part of civil society, not part of government or the business sector. It is for charities to determine their own goals and strategies, and to decide how they should best fulfil them. It is also each individual charity’s role to manage, administer and accept responsibility for governance.

Respecting capacity and accountability

57. In its work, the ACNC considers the available resources of charities and the level of administrative burden. We also consider the existing mechanisms that charities use to account to their diverse and multiple stakeholders. This includes those who benefit from their services, their members, staff, volunteers, funders and the public.
58. We recognise and encourage many charities’ desire to improve their transparency and accountability. Many charities are also regulated by other government agencies or by funders, and we take this regulation into account when designing our processes and when deciding how we will address concerns about a charity.

Section 3: How we exercise our functions and powers

59. The ACNC uses its powers in accordance with the values outlined in Section Two of this document. We assess the risks and the evidence before us. In exercising our powers and functions, we consider the matters set out in section 15-10 of the ACNC Act, including the principles of regulatory necessity, reflecting risk, and proportionate regulation.

Identifying and responding to risk

60. The ACNC operates under an evidence and risk-based framework and uses appropriate compliance and enforcement measures to address non-compliance.
61. The ACNC monitors compliance with the ACNC Act and Regulations by:
    • creating risk profiles based on available data, including charities’ Annual Information Statements and annual financial reports, and non-compliance data we have gathered since our commencement
    • completing intelligence projects, including data-matching across government agencies, to interrogate areas of specific risk (such projects operate within the parameters set by the ACNC Act, the Privacy Act 1988 (Cth) and other relevant legislation)
    • assessing concerns received from the community and other government agencies.
62. The ACNC also works closely with stakeholders, including other agencies and the sector, which provides valuable insights into areas of risk.
63. The ACNC is not resourced to investigate every regulatory concern that is brought to its attention. The ACNC targets its resources in those areas that present the greatest risk to public trust and confidence.

Proportionate regulation

When we will act

64. There are three main situations where the ACNC may take compliance and enforcement action:
    • when a charity does not meet its obligations under the ACNC Act to report to us, notify us of certain matters or keep proper records
    • when a charity does not meet minimum standards as set out in our Governance Standards and External Conduct Standards (if applicable)
    • when an organisation is not, or is no longer eligible to be registered as, a charity.

What actions may we take

65. The type of compliance and enforcement action the ACNC undertakes is determined by the kind of non-compliance we seek to address.
    • We may help charities by providing regulatory advice or information on how to comply with their obligations.
    • We may agree with a charity on a course of action to resolve the non-compliance within a reasonable timeframe.
    • If the breach is very significant or a charity is unable to rectify the situation, then we will use our powers to enforce compliance, which may include revoking a charity’s charitable status.

When we will not act

66. The ACNC does not act in response to all charity-related concerns. It is not our role to run charities.
67. We will not become involved in internal differences of opinion or employment disputes in charities. For example, we do not intervene where board members have a difference of opinion about a decision if no governance-related issues are raised. (See the ACNC Commissioner's Policy Statement: ACNC's approach to internal disputes within charities for more information on this.)
68. The ACNC does not regulate the quality of services provided by charities, for example charities that provide health, education or aged care services, although there may be times when service quality is relevant to a related investigation, or to whether a charity meets registration requirements. If we receive a concern about these matters, we will inform the concerned person about the relevant regulator to contact.
69. There are also times where another regulator is already working to address the problem. For example, another agency may be investigating the misuse of charitable funds. In these cases, we will work in collaboration where appropriate.

Review process

70. The ACNC’s regulatory approach reflects the objects in the ACNC Act, our understanding of the charity sector in Australia, considerations of good regulatory practice, and feedback from the sector.
71. We will review this statement every three years to ensure it demonstrates best regulatory practice. We invite ongoing feedback on our regulatory approach.