Proposed new sanctions for charities which fail to join the National Redress Scheme

On 27 November 2020, the Federal Government announced plans to introduce sanctions for charities that fail to join the National Redress Scheme (Scheme) for victims of institutional child sexual abuse.

These plans involve introducing a new Australian Charities and Not-for profits Commission (ACNC) Governance Standard (proposed standard). The proposed standard is intended to promote the desired result of full participation in the Scheme.

The Scheme

The Scheme’s objectives include holding institutions accountable for institutional child sexual abuse. A key component of this involves participating institutions providing redress to individuals who experienced child sexual abuse in connection with those institutions. In order to meet this objective, institutions have been encouraged to join the Scheme following its commencement on 1 July 2018.

However, some institutions have still not joined or signified their intent to join the Scheme. By announcing plans to introduce sanctions for charities that fail to join, the Federal Government is taking a firm stance towards charities which have thus far avoided accountability under the Scheme.

Proposed Changes

The Federal Government’s plans can be summarised as follows.

  • Introducing a new ACNC Governance Standard: The Federal Government plans to introduce a new ACNC Governance Standard requiring registered charities to take all reasonable steps to become a participating non-government institution in the Scheme if a claim has been, or was likely to be, made against them. This includes charities named in the Royal Commission as well as charities that are notified by an individual that they intend to seek redress.
  • Amending the ACNC Act: The Federal Government also plans to amend the definition of ‘basic religious charity’ under s 205-35 of the Australian Charities and Not for-profits Commission Act 2012 (Cth) (ACNC Act) to provide that a religious institution that has been named in a redress application but refuses to join the Scheme will not be entitled to be a ‘basic religious institution’. This will mean that the religious institution is then required to comply with not only the proposed Governance Standard but all of the existing Governance Standards unless and until it joins the Scheme.

Potential consequences

Registered charities which fail to fulfil their obligation to join, or take reasonable steps to join, the Scheme will be subject to the ACNC’s suite of existing compliance powers, including revocation of charity registration.

In addition to ACNC compliance action, registered charities which fail to join or signify their intent to join the Scheme already risk having their name published on the Scheme website in accordance with Scheme legislation. As well as providing transparency for individuals who have applied or are considering applying to the Scheme, this places public pressure on charities to join.

Coverage

Although there are currently over 58,000 charities, very few charities are likely to be affected by the proposed standard. The ACNC Commissioner noted that only ‘a very small number’ of Australian charities are likely to be affected by the proposed changes’ .

This narrow application (and the prescriptive nature of the standard) makes the proposed standard an unusual addition to the current Governance Standards (which generally have broad application and are principle-based rather than prescriptive). This could be ameliorated by reframing the proposed standard as a principle applicable to all charities while still achieving the Federal Government’s goal of encouraging charities to join the Scheme.

Specifically, the proposed standard could be reframed to require charities to ‘protect vulnerable persons’ (with an explanatory statement confirming that failure to take reasonable steps to join the Scheme was a breach of the standard). This would:

  • be consistent with the current Governance Standards;
  • align with the ACNC’s compliance focus of protecting vulnerable individuals;
  • ensure charities’ obligations within Australia are consistent with their obligations outside Australia – the External Conduct Standards already require charities to take reasonable steps to protect vulnerable individuals overseas, while no corresponding obligation applies within Australia; and
  • give the ACNC powers to intervene in all situations where vulnerable individuals are not appropriately protected – not only for failure to join the Scheme, but in other situations where charities place vulnerable individuals at risk.

Treasury is seeking submissions on the draft legislation introducing the proposed Governance Standard until 8 January 2021.

How we can help

Charities that have been named in the Royal Commission, in an application to the Scheme or in information provided to the Scheme should seek urgent advice on the process to join the Scheme.

Otherwise, charities should always ensure that they are aware of and complying with the Governance Standards, particularly in relation to managing historical claims and the protection of vulnerable individuals. In particular, charities are encouraged to:

  • review their child safety documentation and ensure that it is up-to-date and compliant with current legislation;
  • review and upgrade their policies and procedures in relation to historical claims as necessary;
  • ensure that they carry out their activities in a manner which is consistent with their charitable purpose; and
  • maintain good governance policies and practices which accord with the ACNC’s Governance Standards.

For more information or guidance regarding any of the above, please do not hesitate to contact us.