A whistleblower is someone with inside knowledge of an organisation who reports misconduct or dishonest or illegal activity that may have occurred within that organisation.
Whistleblower protections are the protections provided to whistleblowers to enable them to come forward to report misconduct without fear of retribution or personal detriment.
A charity may choose to provide whistleblower protections and the ACNC would encourage this as good governance. There are also certain whistleblower protections that are mandated by legislation. Charities affected by this legislation must know the protections and apply them to whistleblowers or face penalties.
This factsheet provides an overview of the legislative requirements that apply to charities with certain types of legal structures.
The Corporations Act 2001 (Cth) (Corporations Act) and the Taxation Administration Act 1953 (Cth) both contain protections for whistleblowers.
The Australian Securities and Investments Commission (ASIC) prefers to receive whistleblower information via an online form available at asic.gov.au/report-misconduct.
Charities that are companies registered with the Australian Securities and Investments Commission (ASIC) and foreign, trading or financial corporations (which are particular types of entities under the Australian Constitution) must comply with the legislation.
An incorporated association may be considered a ‘trading or financial corporation’, depending on its circumstances.
Trading or financial corporations
Whether an incorporated association or other body corporate is a trading or financial corporation depends on its activities and circumstances.
While we cannot provide a definitive answer for all charities, we can provide general guidance.
Generally, a body will be a trading or financial corporation if its trading or financial activities are a significant proportion of its overall activities.
Trading activities involve buying and selling goods or services. Financial activities involve commercial dealings or transactions in finance, such as borrowing, lending or investing and providing advice on financial matters.
If a charity is unsure whether it is a ‘trading or financial corporation’, it should seek legal advice.
There will be some incorporated associations and other bodies corporate that fall within the definition of a trading or financial corporation. If they do fall within this definition, they will be subject to the whistleblower protection requirements in the Corporations Act.
Under the whistleblower protection legislation, an eligible whistleblower can be someone who is or was:
- an officer or employee of the charity
- an individual or an employee of a person that supplies services or goods to the entity (including volunteers)
- an individual who is an associate of the entity
- a relative or dependant of any of the above, or a dependant of the spouse of any of the above
- an individual prescribed by the Regulations as being an eligible whistleblower.
An eligible whistleblower can remain anonymous and still qualify for protection.
A whistleblower is entitled to protection under the Corporations Act if they make a qualifying disclosure to an eligible recipient.
A qualifying disclosure involves reporting conduct by a charity or an officer or employee of the charity that represents misconduct, an improper state of affairs or circumstances, or breach of the law. This can include conduct that:
- contravenes the Corporations Act, or the ASIC Act
- constitutes an offence against another Commonwealth law that is punishable by imprisonment for 12 months or more
- represents a danger to the public or the financial system, or
- is prescribed by the Regulations.
To qualify for protection, the whistleblower must have reasonable grounds to suspect that the information they will disclose indicates misconduct.
To qualify for protection, a whistleblower must make their disclosure to an eligible recipient:
- the Australian Securities and Investment Commission (ASIC)
- the Australian Prudential Regulatory Authority (APRA)
- a Commonwealth body nominated for this purpose in the Regulations (this does not include the ACNC)
- a legal practitioner, if someone is seeking legal advice about whether the protections will apply to them
- an officer or senior manager of the charity in question
- an auditor or member of the audit team for the charity
- an actuary of the charity (mainly relevant for banking, insurance, and superannuation entities)
- a person that the charity has authorised to receive a disclosure (this can include a person external to the charity).
Whistleblowers, or potential whistleblowers, can be compensated for any loss, damage, or injury they suffer. It is illegal to fire, harass or discriminate against a whistleblower or potential whistleblower because someone thinks they made a disclosure.
If a person breaches a whistleblower’s confidentiality or causes detriment to a whistleblower because of their disclosure, the person faces criminal or civil penalties.
Importantly, these penalties are not limited to situations with an actual disclosure. They extend to situations where the person merely believes or suspects someone made or could have made a disclosure.
If a whistleblower of a charity wants protection, or is concerned about possible harm as a result of making a disclosure, they must raise their concerns with an eligible recipient. It is important to remember that the ACNC is not an eligible recipient.
A whistleblower of a charity who wants to access the protections or fears harm can report to both an eligible recipient and the ACNC, though they are only covered by the protections from when they report to an eligible recipient.
Generally, if someone makes a disclosure about a charity to ASIC, ASIC will recommend the whistleblower also contact the ACNC. ASIC may also release information to the ACNC itself. ASIC will generally obtain the consent of the whistleblower to do this.
The Taxation Administration Act 1953 (Cth) also contains protections for whistleblowers reporting misconduct related to tax.
The ACNC encourages charities assess their own risks. For more, see the guidance on whistleblower protections on the ATO’s website.
Whistleblower policies for charities
The ACNC recommends that a charity documents its approach to whistleblowers and makes this known to all staff, volunteers and third parties.
The ACNC does not prescribe the type of document or how much detail it must contain. We leave this to the charity to decide based on its own circumstances.
All charities should decide if their legal structure means they are required to have a policy. The ACNC recommends that all charities – particularly charities with a large number of volunteers, arrangements with third parties, or complex operating environments – consider having a publicly available whistleblower policy even if they are not legally required to have one.
Incorporated associations or other bodies corporate are not subject to the requirement in the Corporations Act to have a whistleblower policy from 1 January 2020. This is because the requirement to have a whistleblower policy only applies to public companies, large proprietary companies, and proprietary companies that are the trustees of registrable superannuation entities.
Charities or not-for-profits structured as public companies limited by guarantee will need a whistleblower policy if their annual (consolidated) revenue is $1 million or more. For more information, see ASIC Corporations (Whistleblower Policies) Instrument 2019/1146.
Despite not requiring a formal whistleblower policy, if your organisation is subject to the corporate sector whistleblower protection regime, you may benefit from documenting and establishing a strategy for dealing with any whistleblower reports you may receive, in line with the legislative requirements. This may form part of broader governance or compliance measures within your charity. You might want to seek advice, including legal advice, when setting in place these measures.
ASIC has released Regulatory Guide 270 Whistleblower policies (RG 270) to help organisations set up a whistlblower policies that complies with their legal obligations. The guide also contains some good practice guidance on implementing and maintaining a whistleblower policy. The guide may also help organisations that are not required to have a whistleblower policy, but are required to manage whistleblowing in accordance with the Corporations Act.