On 25 June 2021, the Australian Government announced amendments to ACNC Governance Standard 3 under the Australian Charities and Not-for-profits Commission Regulation 2013 to broaden the range of acts and omissions that can lead to ACNC compliance action against registered charities. This follows the release of an exposure draft and explanatory statement on 16 February 2021 providing details of the amendments.
What will be amended?
ACNC Governance Standard 3 currently prohibits registered charities from acting (or failing to act) in a way that may be considered as serious offences (an indictable offence under an Australian law or a breach of law (civil not criminal) resulting in a fine of $13,300 (60 penalty units or more)). Under the amendments, registered charities will also be prohibited from acting (or failing to act) in a way that may be dealt with as a summary offence under Australian law in connection with any of the following three matters:
- real or personal property of any description, whether tangible or intangible; or
- a legal or equitable estate or interest in any such property, or a right, power or privilege in connection with any such property; or
- causing personal injury to an individual, or any other kind of impairment of an individual’s health, including the risk or threat of causing such injury or impairment.
Registered charities will also be required to take reasonable steps to ensure that their resources are not used to promote or support actions or omissions which may be dealt with as a serious offence or a summary offence which relates to any of the three matters listed above. “Resources” includes a charity’s funds, responsible entities, employees, websites, social media accounts and other publications. This requires a charity to maintain appropriate oversight and control over the use of its resources by volunteers and employees.
Coverage and effects
The amendments aim to deter registered charities from using their resources to actively promote unlawful behaviour and to empower the ACNC to investigate and take action against registered charities which engage in such behaviour. They were introduced following the revocation of the charity registration of Aussie Farms. The revocation was the result of an ACNC investigation into animal welfare protests connected with Aussie Farms.
The explanatory statement provides that the kinds of summary offences that the amendments cover include unlawfully gathering or remaining on land or in a building, malicious damage, vandalism or theft of personal property, and common assault or threatening violence against an individual. It also clarifies that summary offences which fall outside any of the three matters listed above (such as an employee of a registered charity receiving an infringement notice that is not connected to a property right or injury to an individual) are outside the scope of the amendments. This is because these summary offences are considered to be unlikely to affect the governance or proper regulation of charities.
The amendments have been criticised for exposing registered charities to greater risks of de-registration and other compliance action. The increased risk arises both from the broader range of acts (or omissions) that can lead to compliance action as well as the expanded responsibility for use of a charity’s resources (even if not expressly authorised by the charity). The amendments also set a very low threshold for what constitutes an “act or omission”. Acts or omissions which may be dealt with as a summary offence can constitute a failure to comply with Governance Standard 3 – in other words, an act or omission might lead to ACNC compliance action under Governance Standard 3 even if no charges are laid or no conviction is recorded in respect of the relevant conduct.
In addition to those criticisms, the amendments could also silence charities and prevent them from engaging in activism and advocacy work. This is concerning for charities who engage in activism and advocacy and who ‘speak up’ in pursuit of their charitable purpose.
How we can help
The responsible persons of charities (such as the Board, Committee or Trustees) are responsible for ensuring that charities comply with the Governance Standards. The implications of these amendments to Governance Standard 3 should be brought to their attention and considered by the Board.
In addition, charities should ensure that they have implemented appropriate policies and procedures (including a code of conduct and employment or volunteer agreements) to enable them to demonstrate that they have taken reasonable steps to ensure that their resources are not being used in a manner inconsistent with the amendments to Governance Standard 3.
For more information or guidance regarding any of the above, please do not hesitate to contact us or call Rebecca Lambert-Smith or Leanne Lee on (03) 9843 2124.