ACNC Annual Report 2014–15

Section 3 - Performance and achievements

In this section:

Outcome and Programme

Image of the Australian Charities and Not-for-profits Commission sign

The policy intent in the ACNC Act is that the regulator operates independently and efficiently in carrying out its regulatory functions.

The ACNC Commissioner is an independent statutory officer with sole responsibility for administering the national regulatory framework for charities. The ACNC purchases its back office services on a fee-for-service basis from the ATO.

For the purpose of reporting under the framework of the Australian Government's Portfolio Budget Statements, the ACNC constitutes Programme 1.5 of the ATO's report.

The ACNC's programme deliverables and key performance indicators are published in the Portfolio Budget Statements and are used to assess and monitor our performance.

Programme objective

Image of office hallway

The ACNC provides independent determination and registration of charities, health promotion institutions, and public benevolent institutions for all Commonwealth purposes. It operates a public information database, the Charity Register, to improve the transparency and accountability of the not-for-profit sector to the public.

Investigations into non-compliance with the ACNC Act help to maintain and enhance public trust and confidence in the charitable and not-for-profit sector.

The ACNC delivers education, advice and support to the sector to improve its governance and compliance with the ACNC Act. This promotes the sustainability and effectiveness of the not-for-profit sector.

The purpose of implementing a 'report-once, use-often' general reporting framework is to reduce red tape and simplify the regulatory framework in cooperation with other Australian Government agencies and state and territory Governments. The aim is to allow not-for-profit organisations to focus on delivering their services to the community rather than reporting to government.

Programme deliverables

As set out in the Australian Government’s Portfolio Budget Statements (Programme 1.5 of the ATO), the ACNC has the following programme deliverables:

  • number of charitable status determinations made within agreed timeframes
  • number of visits to website, and Charity Register
  • number of investigations into non-compliance with the ACNC Act and actions taken
  • ACNC deregulation target met.

Programme key performance indicators

As set out in the Australian Government’s Portfolio Budget Statements (Programme 1.5 of the ATO), the ACNC has the following programme key performance indicators:

  • proportion of determinations delivered within agreed timeframes
  • proportion of complaints and concerns of non-compliance with the ACNC Act addressed within agreed timeframes
  • proportion of advice, education and guidance delivered within agreed timeframes
  • percentage of charities’ annual information statements submitted compared to the number of registered charities.

Performance reporting

The ACNC’s performance against the deliverables and key performance indicators (KPIs) is reported here in the context of how they contribute to achieving the objects of the ACNC Act under the following headings:

  • Service standards
  • Public trust and confidence in charities
  • Supporting charities to be healthy and sustainable
  • Driving regulatory and reporting simplification

The table below sets out where the statements against the deliverables and KPIs can be found throughout the report.

Measure

Deliverables
Number of charitable status determinations made within agreed timeframes
Number of visits to the Charity Register and website
Number of investigations into non-compliance with the ACNC Act and actions taken
ACNC deregulation target met
Key performance indicators
Proportion of determinations delivered within agreed timeframes
Proportion of complaints and concerns of non-compliance with the ACNC Act addressed within agreed timeframes
Proportion of advice, education and guidance delivered within agreed timeframes
Percentage of charities’ Annual Information Statements submitted compared to the number of registered charities

Financial management

The ACNC is a listed entity under the Public Governance, Performance and Accountability Act 2013 (Cth) (PGPA Act), and reports through the Commissioner of Taxation as the accountable authority. For this reason, the ACNC’s financial activities are officially reported in the audited financial statements in the ATO’s annual report.

The ACNC is established with a Special Account which receives its own budget appropriation for the purposes of administering the ACNC Act.

In 2014–15, $15.039 million was allocated in the Special Account for the operation of the ACNC. The ACNC had an underspend of $637 000.

The table below sets out the ACNC’s expenditure for 2014–15 by cost centre. The figures include direct costs of the ACNC, but exclude corporate support and infrastructure costs for services provided by the ATO.

Table 3.2: Direct expenditure by cost centre, 2014–15

Cost centre Salary costs
$’000
Supplier costs
$’000
Total
$’000
Executive 1 091 315 1 406
Advisory Board 17 182 199
Registration 2 874 167 3 041
Business Services 635 684 1 319
Communications 594 483 1 077
Advice Services 1 634 157 1 791
Information Technology 815 895 1 710
Policy and Education 698 415 1 113
Compliance 1 189 300 1 489
Legal 629 62 691
Reporting and Red Tape Reduction 250 -44 206
*Accounting Adjustment 277 31 308
Total 10 703 3 647 14 350

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Service standards

The ACNC is committed to transparency and high quality services guided by our core values of fairness, accountability, independence, integrity and respect.

We are committed to providing customers with prompt, professional and quality services. Indeed our Assistant Commissioner, Charity Services, encourages staff to ‘surprise and delight’ our clients with timeliness, courtesy and valuable support and guidance.

We have deliberately set high service standards despite our modest resources, in recognition of the need to support the charitable sector, especially during the establishment phase. We also want to model transparent, responsive, client-oriented service.

To measure our performance in these terms, service standards were developed in 2012–13. These were reassessed and new service standards came into effect on 1 July 2014 and have been used to measure our performance in 2014–15. The new service standards more closely reflect the business as usual workload and resourcing of an organisation nearing the end of the establishment phase. Given that the ACNC was resourced for a single object at its establishment, yet has administered an Act with three objects, this has taken some prudent management.

To complement the service standards, in 2014–15 we also established a service commitment that reflects our customers’ expectations when they use ACNC services and reinforces our commitment to service excellence. Our service commitment and service standards are published on our website at acnc.gov.au.

Striving to meet our service standards

Image of staff member on phone

Registration

To promote excellent customer service, our current service standard for registration applications provide for one of our registration analysts to contact the applicant within five business days of lodging their application. This standard was achieved for 56% of applications, due to unexpectedly high work volumes causing delays in allocating applications to analysts for processing. Improving the timeliness of our communications will be a key area of focus in 2015–16.

We aim to finalise applications within 15 business days from receiving all necessary information. We achieved this for 91% of applications during 2014–15, exceeding the 90% benchmark.

Advice Services

The ACNC's Advice Services team continues to strive to meet the service standards, and while this has proved difficult, charities continue to provide positive feedback following their interactions with the ACNC See service standards.

Our ability to meet the service standards was impacted by the high volume of correspondence received in relation to:

  • Over 60 000 reminder letters and emails which were sent in 2014–15 to remind registered charities to submit their 2014 Annual Information Statement.
  • Advice Services undertook a project to resolve the status of over 6 000 charities by contacting them and determining if they were no longer operating or meeting ACNC charity registration requirements.
  • Notice of Intention to Revoke and Notice of Revocation letters and emails, which were sent to 6 000 'double defaulter' charities – those that had failed to lodge both the 2013 and 2014 Annual Information Statement. In total, approximately 10 000 letters and emails were sent in 2014–15 as part of the double defaulter project.
  • On 1 January 2014 the Charities Act came into effect. The Charities Act created new subtypes and removed old ones. This meant that approximately 35 000 charities were required to change their charity subtype before 30 June 2015, many of which required assistance.

In 2015–16 Advice Services will focus on improving the timeliness of responses to correspondence, processing forms and answering telephone calls.

Compliance

The Compliance directorate did not meet the 90% timeliness service standard for case closures in 2014–15. This was due to the increase in serious and complex cases which resulted in the revocation of charity status. As a new regulator, 2014–15 was the first year we used enforcement powers such as enforceable undertakings, and developing the systems and processes to do so added significant time to those cases.

However in 2014–15 the case closure rate reached 77%, a 16% improvement on 2013–14.

While we did not meet the 30 day service standard to provide a substantive response to complainants, all complaints were acknowledged within this timeframe, and the standard was met for the first six months of the year.

Delays in filling staff vacancies due to changes in Australian Public Service (APS) recruitment processes impacted on the Compliance directorate’s ability to meet the service standards in 2015–16. With positions now filled the ACNC is confident that service standards will be reached in 2015–16.

Table 3.3: Service standards performance, 2014–15


Benchmark

Benchmark/target

Achieved

When you contact us
General telephone enquiries Answered in 2 mins 80% 73%
General correspondence 3 business days 90% 59%
When you do business with us
Processing approved forms 5 business days 95% 67%
Registering a charity:
Acknowledgement of your application within 5 business days.
5 business days 95% 56%
Registering a charity:
When we have received all the necessary information to progress your application, we aim to make a decision with 15 business days.
15 business days 90% 91%
When you report a concern to us
Concerns about a charity:
We aim to provide a substantive response to your concern with 30 business days
30 business days 95% 64%
Complaints about the ACNC:
Resolution of complaints will be as prompt as possible and in accordance with our policy. We aim to provide a full response within 5 business days.
5 business days 100% 95%
When your charity is under review
Compliance review:
If your charity is being reviewed we aim to finalise the review and notify you of the outcome within 90 business days
90 business days 90% 44%
Investigations:
If your charity is being investigated we aim to finalise the investigation and notify you within 180 business days.
180 business days 90% 64%
Investigations:
Where an investigation is complex or high risk, we aim to finalise the investigation and notify you within 270 business days.
270 business days 95% 88%
When you request information we hold
General information requests – acknowledgement 14 calendar days 100% 100%
Providing a response not falling under the Freedom of Information Act and Privacy Act 30 calendar days 100% N/A
Freedom of Information Act requests 30 days 100% 100%
Response to Freedom of Information Act requests – where third party consultation is required 60 days 100% 100%
Privacy Act requests 30 days 100% N/A

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Feedback about the ACNC

The ACNC welcomes feedback from charities and the public and we use it to improve our services. Feedback includes both complaints and compliments about the ACNC’s services, resources, procedures, and the work of the ACNC.

Compliments and complaints about the ACNC

Advice Services received 143 written compliments during the financial year. The key themes were:

  • timely, efficient and helpful nature of service
  • high quality and professional service provided by staff
  • well written, plain English and comprehensive responses provided to enquiries
  • friendly, courteous and patient approach of the staff.

Feedback from the sector

“Really helpful and excellent guidance.”

“I got precise, easy to follow steps on how to do it and where to get support or help if needed. I’m impressed. Well done and thank you.”

“I really appreciate your prompt and pleasant service.”

“Many thanks for your comprehensive and very helpful response. I really appreciate the extent to which you explained the difficulties in comparing overheads across charities.”

The Advice Services team uses feedback as one mechanism to measure the quality of service. Feedback helps staff monitor their performance, and provides them with tangible evidence of the value that they add to the sector through their support. While the number of compliments for 2014–15 is lower than 2013–14 (252), this reflects that we are no longer a new organisation, and clients have come to expect the level of service that we provide.

In 2014–15 the ACNC received 177 complaints about our services, most of which related to IT systems. During December 2014, a key reporting deadline for thousands of charities, the Charity Portal speed slowed significantly. We resolved the issues promptly and the Commissioner also extended the 2014 Annual Information Statement due date until 31 January for charities that were impacted. We are working to improve the capacity of the IT systems to cope with large volumes of data in the future.

An analysis of the queries and comments from customers about the 2014 Annual Information Statement revealed that:

  • performance of the online form had a significant impact on the experience of customers and resulted in a high level of negative feedback
  • questions in the Annual Information Statement rely too heavily on definitions in the form guidance, and
  • current process for charities to amend incorrect Annual Information Statements is too burdensome.

These findings will inform planning for the 2015–16 reporting period and we are committed to a better experience for users of our services.

Other issues and concerns raised by registered charities

In 2014–15 the ACNC noted a significant increase in queries from registered charities that are companies limited by guarantee. This group, which accounts for approximately 10% of registered charities, were regulated by ASIC prior to the establishment of the ACNC in December 2012.

The issues raised related to:

  • banks and other lenders relying on the out of date information on the ASIC Register
  • mismatches between the ACNC's Charity Register and the ASIC Register, which is no longer updated for registered charities.

In 2013–14 the ACNC received 285 queries of this nature, however this more than doubled in 2014–15 to 748.

The ACNC has worked with ASIC since inception to rectify these issues to minimise the burden on registered charities, and continues to advocate with ASIC for companies limited by guarantee that are impacted by its out-of-date register.

Feedback on the registration process

Infographic showing customer satisfaction with the registration process in 2013-14 was 93% and in 2014-15 was 95%

All applicants are sent an online customer experience survey, which seeks information about the organisation’s experience with the registration process, including the processing analyst’s level of helpfulness, courtesy and knowledge, the overall quality of the registration process, and timeliness.

This year 95% of survey respondents reported overall satisfaction with the registration process, compared with 93% for 2013–14. In 2014–15, 86% of respondents were satisfied with timeliness, compared with 80% for 2013–14.

The increase in satisfaction reflects our ongoing commitment to improving our customer service.

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Public trust and confidence in charities

The first object of the ACNC Act is to maintain, protect and enhance public trust and confidence in the Australian not-for-profit sector. This object underpins all aspects of the ACNC’s work.

Public trust and confidence in Australia’s charities is vital for a sustainable and vibrant charity sector. Australian charities rely heavily on the support of the public through donations and volunteering.

The ACNC works to maintain, protect and enhance public trust and confidence in charities in a number of ways, including:

  • increasing awareness of safe giving practices, including checking the Charity Register
  • implementing a thorough registration process
  • increasing transparency through publishing charities’ Annual Information Statements
  • undertaking risk-based compliance activity

Every two years the ACNC measures public trust and confidence through the Public trust and confidence in Australian charities research report. The second of these studies will be completed in the second half of 2015.

The ACNC Charity Register

Infographic showing in 2012-13 the Charity Register had 85 thousand searches, in 2013-14 had 303 thousand and in 2014-15 had 432 thousand.

The Charity Register, the first free, searchable, database of Australia’s 54 468 registered charities, can be accessed at acnc.gov.au/findacharity.

The Charity Register has greatly increased the transparency and accountability of Australia’s charity sector. People are now able to easily access detailed information on individual charities, helping them to make informed decisions regarding donating, volunteering, starting a new charity, or accessing charity services.

The search functionality has helped the public, researchers, the sector and other government agencies more easily access the wealth of information that the Charity Register now holds.

In 2014–15 the ACNC implemented a variety of communication activities to help raise awareness amongst the public of the Charity Register, including media releases and interviews, social media, advertising and presentations at events.

Use of the Charity Register has grown each year since it was established, showing that it is a useful resource for members of the public and donors.

The ACNC has encouraged members of the public to access the wealth of information available on the Charity Register as a way of giving safely.

Feature - Building the Charity Register

Since the launch of the Charity Register in December 2012, the ACNC has worked to build an accurate database of charities so that the Australian community has an easy way to access credible information on all registered charities.

Initially the Charity Register held the records of 56 553 charities that had previously been endorsed for Commonwealth charity tax concessions by the ATO. These records were paper-based and largely out of date, as the ATO was not required or expected to keep a register of charities.

Infographic - 9,000 revoked/removed from charity Register

During 2014–15 the ACNC undertook a series of projects to ‘clean up’ and build the Charity Register. The emphasis was on confirming the operational status of charities and obtaining accurate and up-to-date information from them. This is largely achieved through the Annual Information Statements.

Since the launch of the Charity Register, over 9 000 charities have been removed or had their status revoked, as they were no longer operating or did not meet their obligations for two consecutive years. This includes 5 500 double defaulter charities, who failed to submit their Annual Information Statements for two consecutive years (see page 46).

Since the establishment of the ACNC, 6 399 new charities have been registered.

The Charity Register now holds detailed information about 54 468 registered charities and has grown to include over:

  • 39 000 governing documents
  • 86 700 Annual Information Statements* and
  • 25 000 financial reports.*
    * Includes both the 2013 and 2014 Annual Information Statements.

Building the Charity Register has been aided by the ACNC's 'digital by default' approach to engaging with registered charities. Since the establishment of the
ACNC, 98% of Annual Information Statements have been lodged online.

Infographic - 87 thousand annual information statements, 25 thousand financial reports and 39 thousand governing documents are on the Charity Register

The 2014 Annual Information Statement marked the first time charities were required to provide financial information to a national regulator. Charities of all sizes were required to answer at least nine basic questions in their Annual Information Statement, with medium and large charities also required to provide reviewed or audited financial statements.

This information was published on the Charity Register, giving the public an unprecedented insight into the assets, revenue, liabilities and expenses of registered charities.

For the first time members of the public have been able to search a register to see if a charity is indeed registered, and then find out what it does, where it operates, the people who run it, the rules it needs to follow, and from 2014–15 onwards, its financial information.

To help the public interpret this new information, the ACNC published a series of factsheets in conjunction with the Queensland University of Technology's Centre for Philanthropic and Nonprofit Studies, and social impact analyst Emma Tomkinson.

The factsheets, available to the public at acnc.gov.au/understandingfinancialinfo, discuss the different financial elements we collect, the factors to consider when interpreting financial information, and also why we collect and publish this information.

Giving safely

Safe giving image - Donating this Christmas, check the ACNC charity register

The ACNC wants to encourage the public to give generously to registered charities and advises that they check the Charity Register to find charities to support. This message has been communicated to the public via the media, social media and advertising.

In 2014–15 we promoted safe giving using the Charity Register during key times of the year, including:

  • Christmas
  • End of the financial year
  • Easter
  • Ramadan
  • Chinese New Year
  • Following major national and international natural disasters.

The ACNC also warns people to be aware of charity-related scams that come to its attention, such as during times of natural disaster. And we provide practical steps on how to minimise the risk of being scammed, for example always checking the Charity Register and not providing personal information over the phone.

Registering new charities

We aim to provide a supportive and interactive registration process, recognising that some applicants have limited knowledge of charity law. Applicants lodging online receive confirmation on lodgement. Each new application is reviewed to determine completeness and complexity before being allocated to an analyst with an appropriate level of technical skill and experience. The analyst explains the registration process to the applicant via an introductory phone call or email message, and provides their contact details, so the applicant has a single point of contact for the application.

The ACNC’s registration team continues to work with applicants to guide them through the registration process to achieve positive outcomes. Where possible, an analyst will work with the applicant so that they can resolve issues that would otherwise prevent them from meeting the registration requirements. In situations where the organisation is not a charity, the ACNC analyst clearly explains to applicant the reasons and the facts on which we had based our decisions. We explain the process by which the applicant can have the decision reviewed, and how they can take the matter to the Administrative Appeals Tribunal if they wish to do so.

Image of charity worker

The registration team reviews the objects and activities of each charity that applies to be registered with the ACNC. Each newly-registered charity receives a registration certificate and Charity Pack with useful information to assist them to manage their charity.

Most of the information provided by successful applicants as part of the registration process is included on the Charity Register.

Registration with the ACNC enables a charity to apply for Commonwealth charity tax concessions from the ATO. As part of the ACNC’s commitment to reducing red tape, our registration application form enables applicants to apply for both charity registration and charity tax concessions at the same time. The ACNC provides this information directly to the ATO and other affected registers after charity registration is completed.

The Charities Act

The Charities Act defines a charity and charitable purposes for the purposes of tax concessions and regulation. The Charities (Consequential Amendments and Transitional Provisions) Act 2013 (Cth) (the Charities (C&T) Act) sets out what other legislation was amended as a result of the Charities Act, and what the move from a common law definition of charity to a statutory one means for charities. Both Acts came into effect on 1 January 2014.

The Charities Act affirms that a charity must have charitable purposes that are for the public benefit. Any other purposes must be incidental or ancillary to, and in furtherance or in aid of, the charitable purposes. The Charities Act also requires a charity to:

  • be not-for-profit
  • not have a disqualifying purpose
  • not be an individual, a political party or
    a government entity.

The Charities Act provides a statutory framework based on the common law principles but incorporates minor modifications to modernise and provide greater clarity and certainty about the meaning of those principles in contemporary Australia. The Charities Act also affirms that a charity may advance public debate about a charitable purpose as an independent charitable purpose.

Popular charity subtypes

The introduction of the Charities Act increased the number of charity subtypes from seven to fourteen. A charity’s subtype reflects its charitable purposes. The most common subtypes applied for are advancing social or public welfare, advancing education, public benevolent institution, advancing religion and advancing health.

The Charities (C&T) Act provides a process for existing charities to update their former subtypes to the new subtypes corresponding to the charitable purposes set out in the Charities Act. Some old subtypes, such as advancing education, advancing religion, health promotion charities and public benevolent institutions are equivalent to new subtypes and were automatically updated on the Charity Register.

The ACNC has worked with existing registered charities that were not automatically transferred to a new subtype, to make them aware of the need to notify the Commissioner of their new subtypes. This has been a significant piece of work for the ACNC in 2014–15.

Registration applications

We received 3 344 new registration applications during the year, down from 3 841 applications lodged in the previous year. The fall in the number of applications lodged may be partially attributed to the large number of bulk registration applications lodged in 2013–14.

In 2014–15, 2 558 new charities were registered.

At 30 June 2015, 558 applications were still being assessed.

In 2014–15 we also received 192 requests to re-register double defaulter charities following revocation of their charity status due to failure to submit Annual Information Statements for two consecutive years.

Refusals

In 2014–15 we refused 337 applications, an increase of 120 over 2013–14.

  • The most common reasons for refusal were:
  • the applicant provided insufficient information
  • applicant has non-charitable purposes (for example, sporting or recreational purposes)
  • applicant is not for the public benefit
  • applicant does not meet the not-for-profit requirements.

Withdrawals

This year 475 organisations chose to withdraw their registration applications.

This was normally after the ACNC analyst had explained why the applicant may not be eligible for registration with the ACNC. Others withdrew their applications while they redrafted governing documents or resolved complex issues preventing registration.

Objections

Under the ACNC Act, a charity or its responsible person may object to certain ACNC decisions, requesting they be internally reviewed see Review and appeals.

In 2014–15 we received 22 objections to decisions to refuse charity registration, or a particular subtype of registration, or decisions not to withhold information from the Charity Register.

In 45% of cases the objection was disallowed, meaning the ACNC’s original view was confirmed. In 14% of cases, the objection was allowed, and in 41% of cases, the objection is still under review as at 30 June 2015.

New charities registered

700 new charities registered in 2012-13, 3141 registered in 2013-14, 2558 registered in 2014-15

Subtype updates

As a result of the introduction of the Charities Act, 34 570 charities had subtypes that required updating. Under the Charities (C&T) Act, charities were given 18 months from 1 January 2014 to nominate new subtypes. At 30 June 2015, 13 248 charities had transitioned to a new subtype.

To simplify the process, we enabled charities to update their new subtypes via the ACNC Charity Portal, and in the second half of 2014–15 we commenced an awareness campaign to encourage them to do this.

The most popular subtypes selected under this process were:
  • advancing social or public welfare
  • purposes beneficial to the public and analogous to other charitable purposes
  • advancing health
  • advancing culture
  • promoting reconciliation, mutual respect and tolerance between groups of individuals that are in Australia.

Although charities are no longer able to access a streamlined process for converting their old subtypes to the new subtypes, we will continue to work with charities to facilitate new subtype selections through the 2015 Annual Information Statement.

Voluntary revocations

Charities can apply to voluntarily revoke their registration with the ACNC. The ACNC must consider the criteria for voluntary revocation before accepting a charity's request. The majority of these requests are from charities that are no longer operating. We received 1 663 requests for voluntary revocation of charity registration in 2014–15, down from 1 997 in 2013–14. The high, but declining number, of voluntary revocations reflects the ongoing process of removing inactive charities from the Charity Register. Charities that have their registration revoked voluntarily still appear on the Charity Register, however their status clearly indicates that they are revoked.

Withholding information from the Charity Register

Under the ACNC Act, charities can apply to have information withheld from the Charity Register on the following grounds:

  • it is commercially sensitive and publication could cause harm to the charity or a person
  • it is inaccurate, or is likely to confuse or mislead the public
  • it is offensive
  • it could endanger public safety, or
  • it is covered by ACNC regulations.

The ACNC may also decide not to publish details of any warnings we have issued to a charity if:

  • the information could cause detriment to the charity or a person
  • the charity was not behaving in bad faith, and
  • the matter has been dealt with so that withholding the information will not conflict with our objects under the ACNC Act.

Even if a charity meets one or more of the above circumstances the ACNC may refuse to withhold or remove information where it considers that the public interest in displaying the information outweighs the likely adverse effect.

Private ancillary funds have additional circumstances under which they can also apply to withhold information.

Table 3.4: Applications to withhold information from the Charity Register, 2014–15

2014-15
Charities that made withhold applications 1 996
Charities can make multiple applications to withhold information. The ACNC may agree to withhold certain information, such as the charity’s address, but refuse to withhold other information, such as the charity’s name.
Total number of applications 6 581
Requests allowed 3 316
Requests not allowed 1 893
Requests withdrawn 777
Requests currently being processed by the ACNC as of 30 June 2015 581

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Feature - Commissioner's Interpretation Statements provide reliable guidance

Commissioner's Interpretation Statements (CIS) set out how the ACNC interprets and applies the law relating to charities. ACNC staff are bound by them when making decisions about charities, and use them to provide reliable guidance to charities and the public on how the ACNC understands and applies the law. CISs are particularly useful for ACNC registration staff and registration applicants.

The ACNC consults widely prior to publishing a CIS, providing drafts to the ACNC Advisory Board, the Professional User Group and the Sector User Group, as well as identified experts in the relevant area. Their feedback is taken into account in finalising the CIS for publication.

During 2014–15 the ACNC published the following CIS:

The Hunger Project – revised CIS

The ACNC first published a CIS on The Hunger Project case, dealing with certain questions concerning the requirements for public benevolent institutions, on 28 August 2013. The original CIS noted that the matter was on appeal to the Full Court of the Federal Court. The Full Court handed down its judgement on 13 June 2014, affirming the decision of the Federal Court, and the ACNC subsequently published a revised CIS, incorporating the Full Court’s decision. Critically, the Full Court affirmed that a ‘public benevolent institution’ doesn’t need to directly dispense relief.

Housing

Following the commencement of the Charities Act on 1 January 2014, a CIS and detailed reasoning statement on the provision of housing by charities was published by the ACNC on 1 December 2014.
The CIS deals with the questions:

  • What charitable purposes may be fulfilled through the provision of housing?
  • To whom can charitable housing be provided?
  • What kinds of housing can be provided as charitable?
  • How does commercial activity fit with the provision of charitable housing?
  • What kind of interaction can occur between Government and charitable housing providers?

Health promotion charities

The concept of a health promotion charity (HPC) was introduced as a tax endorsement category by the Taxation Laws Amendment Act (No. 2) 2001 (Cth). From the commencement of the ACNC on 3 December 2012, charities have been able to apply to be registered with the subtype of HPC. This CIS sets out the ACNC’s interpretation of the requirements for a charity to be registered an HPC.

Image of people at hospital

Reporting to the ACNC

Reporting obligations

Registered charities have an ongoing obligation to report to the ACNC. All charities (except those also registered with the Office of the Registrar of Indigenous Corporations) must submit an Annual Information Statement within six months of their financial year-end, and the information is published on the Charity Register.

The 2014 Annual Information Statement was the first time registered charities were required to provide financial information. The requirement for financial information was proportionate to the size of the charity.

In 2014–15, the completion rate for the 2013 Annual Information Statement reached 99%, with 49 500 submissions in total.

During the same period the completion rate for the 2014 Annual Information Statement reached 75%, with 37 200 submissions. The total completion rate for the 2014 Annual Information Statement will grow during the first half of 2014–15 as late filers submit their outstanding statements.

As the requirement to submit an Annual Information Statement each year is still relatively new for registered charities, the ACNC has given considerable leeway to those that have not met their obligations by the due date. As charities have now been required to report their Annual Information Statement twice, this approach will be reviewed for future years.

Table 3.5: 2013 and 2014 Annual Information Statement and annual financial report submissions


2013 Reporting Period 2014 Reporting Period¹
Annual Information Statements 49 500 37 200
Annual financial reports 9 000² 16 000

1 - Submission statistics for the 2014 reporting period were extracted as at 30 June 2015. They will continue to increase over subsequent months.

2 - All annual financial reports were provided voluntarily for the 2013 reporting period.

Infographic - 99% AIS completion in 2013, 75% in 2014 as at 30 June 2015

As at 30 June 2015

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Feature - Charity financial information

The 2014 Annual Information Statement, which was reported by the vast majority of registered charities in 2014–15, was the first time that the ACNC required financial information. Financial information was collected as part of the 2014 Annual Information Statement and also in separate annual financial reports for medium and large charities.

This information was published on the Charity Register and substantially increased the breadth of information available to the public. As this was the first year of financial reporting the ACNC carefully tracked the incoming data and identified a range of errors. The approach to correcting these errors is outlined below.

The type and amount of financial information required from charities provided was proportional to the size of the charity. In lodging their 2014 Annual Information Statement:

  • small charities were required to provide at least nine basic financial elements, and had the option of providing an annual financial report
  • medium and large sized charities were required to provide 12–15 financial elements and an annual financial report.

Medium sized charities were required to have their annual financial report reviewed or audited, and large charities were required to have their annual financial report audited.

The annual financial report included:

  • financial statements, including an income statement, balance sheet and statement of cash flows
  • notes to the financial statements
  • the responsible entity’s declaration that states whether, in their opinion, there are reasonable grounds to believe that the registered charity is able to pay all of its debts as and when they become due and payable and whether, in their opinion, the financial statements and notes satisfy the requirements of the ACNC Act.

Regulatory approach for charities that fail to report

Charities that fail to submit their Annual Information Statement by the due date receive a written reminder and warning from the ACNC. Where we establish that the charity deliberately intends not to submit its statement we can impose administrative penalties.

Six months after the due date, a public notice, or red mark, is posted on the Charity Register to indicate that the charity has not met its reporting obligations.

Double defaulters

Charities that fail to submit an Annual Information Statement for two consecutive years are classified as a double defaulter.

Since the establishment of the ACNC in December 2012, double defaulter charities have received between four and six reminders to submit their outstanding Annual Information Statements.

In March 2015 the ACNC began notifying double defaulter charities of our intention to revoke their charity status for continued failure to submit their Annual Information Statements – a legal requirement of maintaining their registration.

In 2014 –15 over 7 000 double defaulter charities were issued a formal Notice of Intention to Revoke. The response from charities moving quickly to remedy this reporting failure dramatically increased the volume of calls and emails to ACNC. This contributed to the ACNC not meeting its service standards for timely responses in 2014 –15.

Approximately 1 500 double defaulter charities submitted their outstanding Annual Information Statements and remain registered with the ACNC. Over 5 500 double defaulters had their charity status revoked, taking away their entitlement to Commonwealth charity tax concessions.

The ACNC will continue to revoke the charity status of double defaulter charities annually.

Minimising the reporting burden

The ACNC works with charities to minimise the burden of their reporting requirements through mechanisms such as grouping and bulk lodgement.

Grouping

Infographic - 47 groups reporting which contain 450 charities

Grouping allows a number of related registered charities to submit one Annual Information Statement and one financial report (if applicable) on behalf of the group.

In 2014 –15, the ACNC approved 47 grouping applications. This allows a group of registered charities to submit just one Annual Information Statement and one financial report, instead of one for each registered charity. The groups comprise approximately 450 charities.

Bulk lodgement

Infographic - 15% of 2014 Annual Information Statements were filed using bulk lodgement

Bulk lodgement allows more than one Annual Information Statement to be submitted on behalf of multiple registered charities on a single online form. Bulk lodgement differs from grouping as each charity will still submit its own Annual Information Statement.

Bulk lodgement is a streamlined process that assists corporate trustees or charity administration offices that manage multiple registered charities.

In 2014–15, 15% of 2014 Annual Information Statements were filed using bulk lodgement.

Charity size

A charity's reporting obligations to the ACNC are determined by size, which is based on annual revenue. Where a charity has a one-off increase in revenue that changes it size, a charity can apply to keep its charity size unchanged. In 2014–15 the ACNC approved 39 requests by charities to keep their charity size unchanged.

Substituted accounting periods

A substituted accounting period (SAP) is any reporting period that runs differently from the standard ACNC period of 1 July to 30 June. If a charity has a SAP it must ask for it to be approved by the ACNC. In 2014–15, 907 SAP applications were approved.

Transitional arrangements

The Australian Charities and Not-for-profits (Consequential and Transitional) Act 2012 (Cth) (ACNC C&T Act) made provision for transitional reporting arrangements for the 2012–13, the 2013–14, and the 2014–15 financial years, including:

  • At the discretion of the Commissioner, charities that provided financial reports to a state or territory regulator may have been able to submit the same financial reports to the ACNC, and have them accepted as meeting ACNC financial reporting requirements.
  • In the 2013 reporting period, under Australian law, some medium and large registered charities were not required to provide a financial report that complied with the Australian Accounting Standards. These charities only needed to provide the ACNC with the same financial information as what was required in the financial section of the 2014 Annual Information Statement.
  • Non-government schools that submit a financial questionnaire to Department of Education and Training were not required to complete the financial information in the Annual Information Statement and to lodge a financial report as the information in the financial questionnaire was deemed to have met ACNC financial reporting requirements.

Table 3.6: Reporting statistics


      2013 AIS 2014 AIS
Bulk submissions       8000 6000
  Received Approved Denied Withdrawn In progress
Grouping requests 71 47 0 7 17
Charity size requests 57 39 8 10 0
Extension requests 519 477 0 40 2
SAP requests 929 907 0 0 21

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Feature - Errors Project

The 2014 Annual Information Statement marked the first time that all registered charities were required to provide financial information to the ACNC.

To check the accuracy of the data we initiated an Errors Project to systematically identify errors, issues and anomalies in the self-reported financial information submitted by registered charities.

The initial review of a sample of 150 registered charities identified common errors. We analysed the errors and published additional guidance for registered charities and professional advisers to help them correct their 2014 Annual Information Statement and annual financial reports.

Guidance for charities – Top ten tips for reporting financial information

The top ten tips highlighted the ten most common errors we had found during our analysis of the sample. The top ten tips explained the errors in easy to understand terms, and linked to existing guidance to help registered charities resolve any errors they had made.

Guidance for professional advisers – Lessons on reporting to the ACNC

The Lessons on reporting to the ACNC report explained the issues and errors we had found during our analysis in much greater detail, and included references to the relevant sections of the ACNC Act and Australian Accounting Standards Board requirements. The report also provided break downs of what kinds of charities were making particular errors, to assist professional advisers in identifying which of their clients were at greater risk.

Following the initial review of the sample and publication of the top ten tips and Lessons on reporting to the ACNC report, we undertook analysis of the full data set.

The primary areas of focus were:

  • active charities that did not disclose any financial information in their Annual Information Statement
  • selecting the wrong type of financial statements
  • incorrect transcribing of annual financial report financial information
    calculation errors in the Annual Information Statement
  • failure of medium and large charities to attach an annual financial report
  • the failure of some charities to correctly categorise their size, which resulted in them failing to comply with ACNC obligations appropriate to the relevant size category.

Where we identified a material error in the information provided as part of the 2014 Annual Information Statement, we contacted the charity to request that they correct the issues within the legislated timeframe (28 or 60 days depending on the size of the charity). We also offered additional guidance and support.

Charities were able to quickly and easily log into the Charity Portal, correct the error, and re-submit their 2014 Annual Information Statement and annual financial reports.

As at 30 June 2015, hundreds of millions in charitable assets had been corrected or disclosed on the Charity Register as a result of the Errors Project. The full Errors Project will be completed in 2015–16 and we will report on the outcomes in the 2015–16 Annual Report.

Compliance

Concerns about charities

ACNC fraud guide cover

Receiving and investigating concerns about charities is a key component of our work to maintain and enhance public trust and confidence in the sector. Since the establishment of the ACNC in December 2012, 1 694 concerns have been raised about Australia's charities.

In 2014–15, 810 concerns were raised with the ACNC, a 27% increase compared to 2013–14.

About two thirds of concerns raised in 2014–15 originated from members of the public.

The most common category of concern continued to be ‘private benefit’, whereby the charity’s resources and assets were being inappropriately used by the individuals controlling the charity, rather than being used to pursue the charity’s charitable purpose. Private benefit accounted for over a third of all concerns. Not complying with the ACNC Governance Standards was the second most common type of concern, however this relates to a range of different issues.

In 2014–15, private benefit (33%) and fraudulent or criminal activity (5%) accounted for a combined 38% of all concerns raised. These issues are the most likely to have a substantial negative impact on public trust and confidence in Australia’s charities if they are not addressed.

Infographic - 33% of concerns received from the public were about a charity providing someone with a private benefit

Table 3.7: Types of concerns received from the public

Risk category 2014-15
The charity was providing someone with private benefit 33%
The charity was not complying with the Governance Standards 30%
Other 18%
Activity not stated purposes 7%
Record keeping / reporting obligations 6%
Fraudulent or criminal activity 5%
The concerns were out of jurisdiction 1%

The majority of the concerns received by the ACNC (65%) were addressed by our Advice Services directorate through education, guidance, or were out of jurisdiction. Where the concern being raised is outside of the ACNC’s jurisdiction, for example internal disputes or employment issues, we refer the complainant to the relevant regulator.

The remaining 35% were progressed to the Compliance directorate for assessment.

In 2014–15 the ACNC’s Compliance directorate assessed 287 concerns, relating to 238 registered charities.

The compliance assessments found that the majority of substantiated concerns related to Governance Standard 5.

In 2014–15, 26 compliance cases were finalised. The outcomes were:

  • 10 revocations of charity status – removing access to Commonwealth charity tax concessions, and other Commonwealth concessions, exemptions and benefits.
  • One enforceable undertaking – a legally binding agreement between the charity and the ACNC committing the charity to a specific course of action
  • One request for further reporting
  • 14 instances where the charity was provided with regulatory guidance to rectify their situation

Table 3.8: Compliance investigations, 2014–15

 

2014-15

Number of investigations commenced

25

Number of investigations completed (some of these originated in 2013–14)

26

Number of investigations still in progress

11

Infographic - 810 concerns raised with the ACNC in 2014-15, 639 in 2013-14, 245 in 2012-13

Addressing the risk of terrorism financing

The Terrorism Financing in Australia 2014 report released by the Australian Transaction Reports and Analysis Centre (AUSTRAC) in September 2014 assessed the risks associated with the misuse of charities and not-for-profit organisations, identifying charities as a potential channel for terrorism financing. The report stated that while the incidences of terrorism financing through charities was low, the risk remains high.

Allegations of terrorism financing by charities has been the subject of high-profile national mainstream media stories – highlighting the significant risk to public trust and confidence in charities, if they are found to be involved in this area. It is illegal for charities to support terrorist activities, and if an organisation is characterised by an Australian Government agency as engaging in or supporting terrorist or other criminal activities, it is ineligible for registration under the ACNC Act (s.25-5(3)(d)).

In 2014–15 we continued our work to minimise the risk of terrorism financing through registered charities by:

  • Continued collaboration with other regulators, including AUSTRAC, the ATO and the Australian Federal Police (AFP), to better understand the risks, identify trends and share intelligence.
  • Confirming that registered charities that are Australian Council for International Development (ACFID) members, who comply with the ACFID code, will be deemed to comply with the ACNC governance standards.
  • Publishing guidance for overseas aid charities in respect of terrorism financing – for example the checklist, Protecting your charity against the risk of terrorist financingParticipating in the quarterly Charity Compliance Intelligence Forum, which brings together the state and territory fundraising authorities.
  • Hosting the International Charity Regulators Teleconference, with participation from charity regulators and tax authorities in eight countries, sharing methodologies and insights.
  • Working with both state/territory regulators and international regulators on investigations that have crossed jurisdictions.
  • Planning sector briefings to help charities operating overseas to minimise the risk of financing terrorism. These sessions will be held in 2015–16.

As stated in the Charity Compliance Report December 2012 – December 2014, charities operating overseas will continue to be a focus for the ACNC in 2015–16.

Information gathering powers

Most charities provide information voluntarily during compliance investigations. However the ACNC will use formal information gathering powers when necessary. In 2014–15, the ACNC issued 45 formal section 70-5 information gathering notices. Twenty-one notices were issued to charities and responsible persons, and 24 notices were issued to third parties.

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Feature - Charity Compliance Report: December 2012 – December 2014 and Beyond

In 2014–15 the ACNC published the Charity Compliance Report, a two-year analysis of our compliance activity. The report covered the period of December 2012 to December 2014.

The aim of the report was to share what we learned from our compliance activities with the charity sector and the public.

The analysis will also inform our future compliance focus.

Concerns raised with the ACNC

The report found that the ACNC received over 1 300 concerns about charities in our first two years and that the majority of these were raised by members of the public (67%).

Referrals from other government agencies (18%) and internal processes (15%) were the other main sources.

While most of these were addressed by the Advice Services directorate through guidance and education, 521 concerns were progressed to the Compliance directorate for further assessment during this two year period.

Areas of non-compliance

The report found that over the first two years, complainants were commonly concerned about:

  • charitable resources being used inappropriately for the private benefit of individuals controlling the charity or their associates
  • possible financial mismanagement and fraud within the charity
  • charities failing to follow their constitutions and not being transparent or accountable to members
  • charities that appear to be harming their beneficiaries, and
  • sham charities soliciting funds, and fundraising scams generally

Compliance outcomes

The ACNC’s Compliance directorate assessed 521 concerns; which resulted in 96 registered charities being subject to a compliance review or investigation. These registered charities controlled over $100 million in combined charitable assets.

The investigations resulted in:

  • 67 notices to obtain information and documents
  • three requests for additional reporting from the charity
  • one warning
  • one direction
  • one enforceable undertaking, and
  • 9 revocations of charity status.

Working with charities

The report found that since December 2012, most charities want to do the right thing and will self-correct where there is an issue.

Our experience has shown that as a proportionate and risk-based regulator we’ve been able to work very constructively with charities.

The future

As the ACNC continues to receive more information about charities through the Annual Information Statements, including financial information, we are building a better picture of the charity sector. We will use this information to proactively to identify non-compliance in the future.

We will also focus on charities that provide private benefits to their responsible persons or associates, charities that operate overseas – to ensure they protect their assets against the risk of being misused for terrorist financing – and charities that may be involved with illegal activity or tax avoidance.

Working across government

We have worked with other government agencies to determine who is best placed to act, so charities are not burdened with enquiries from multiple government regulators.

In 2014–15, the ACNC:

  • received 42 referrals from other government agencies
  • made 36 referrals to other government agencies where the ACNC considered there may be possible action under their legislation.

1. Case study - Private benefit leads to revocation of charitable status

About the charity: A medium-sized charity raised funds from a variety of sources including charity bins and then made donations to charities overseas.

Why we got involved: Another agency notified the ACNC that charitable funds may have been used by responsible persons to purchase private property.

What action we took: The ACNC commenced an investigation and worked with the charity to establish how it had used its charitable funds.

What we found: The ACNC investigation found that the responsible persons had taken charitable funds for private use by taking out a personal loan. The charity had not met the requirements of Governance Standard 5, as it had failed to take reasonable steps to ensure that its responsible persons acted in good faith and in the charity’s best interests, managed financial affairs responsibly and did not misuse their position.

What were the consequences: The ACNC reached the conclusion that there had been a serious breach of the governance standards and charitable funds had been misused, and therefore charity status was revoked.

Our regulatory approach

The ACNC takes a proportionate approach to compliance, and this is guided by the regulatory pyramid.

Figure 3.1: Regulatory pyramid of support and compliance

The ACNC’s regulatory pyramid of support and compliance. The pyramid has 5 sections. The base of the pyramid starts with education and support then moves upward through the pyramid to assisted compliance, proactive compliance, graduated and proportionate sanctions and suspension and deregistration at the peak.

The ACNC’s regulatory approach reflects our belief that the overwhelming majority of people involved with charities are honest and want to do the right thing. However, we 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.

The ACNC uses a risk-based approach to allocate its compliance resources to address concerns about charities. This is consistent with objects of the ACNC Act, which require the Commissioner to have regard to, among other things, the principles of regulatory necessity, reflecting risk and proportionate regulation (section 15-10 of the ACNC Act).

All concerns raised with us about charities are evaluated to determine whether the concern is credible and the potential consequences. There are five factors we consider when assessing the concern.

Figure 3.2: Factors

Infographic - 5 factors we consider in prioritisation - Nature of the concern, persistence, harm to sector, other factors specific to concern and specific to the charity.

2. Case study - Concern identifies school's governance issues

About the charity: The charity was established for the purpose of operating an independent non-government school.

Why we got involved: A concern was raised with the ACNC over governance-related issues, including that the principal was exercising excessive control over the management committee. Assistance was sought from the ACNC to improve the responsible persons’ understanding of their regulatory obligations and the charity’s compliance with the governance standards.

What action we took: The ACNC reviewed the concern and provided regulatory advice to the responsible persons regarding their obligations under the ACNC Act and Regulation, via both written communication and face-to-face meetings. The charity worked with the ACNC to identify the areas of improvement and the best option available to address the compliance concerns. The charity acknowledged that it required some assistance in enhancing its record keeping procedures and governance framework and offered to address the concerns.

Lessons for other charities: It is important that charities have an appropriate and tailored governance framework to ensure that decisions are being made in the best interests of the charity and that the charity is working towards its charitable purposes.

In this case, the lack of governance resulted in the principal of the school exercising excessive control over the management committee, effectively preventing them from fulfilling their obligations as responsible entities. This created the risk that the charitable purposes were not being pursued.

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Supporting charities to be healthy and sustainable

The second object of the ACNC Act is to support and sustain a robust, vibrant, independent and innovative Australian not-for-profit sector.

The ACNC helps charities to understand and meet their obligations through education, guidance, advice and other support. We use our understanding of charities to develop practical resources that help charities practise good governance, and reduce the risk of charity resources being misused.

We provide information to the public to help them understand how charities work, and how to use information about charities to inform their decisions when giving or volunteering. The analysis of data we collect about charities allows us to paint a clear picture of the critical role charities play, the valuable services they deliver, and their nature and diversity.

Helping charities understand their obligations

We know that 67% of charities registered with the ACNC are small, and a significant proportion are unincorporated associations (groups of people working together on a common cause who have not taken the step of creating a separate legal structure). Some of these charities may not have knowledge or experience in charity regulation. Our experience tells us that a lack of understanding is a key factor in non-compliance. This drives our guidance and education approach, which is to provide all of our resources in plain language, and to support charities to meet their obligations in as simple a way as possible. To this end we provide checklists, online self-assessment tools, and simple as well as more detailed guides (such as on registration and reporting).

Where appropriate, we refer charities to resources created by other agencies to explain legal or other complex issues to avoid duplication of guidance materials.

During 2014–15, our guidance work has focused on supporting charities to transition to new charity subtypes and on financial reporting to the ACNC (for the first time). Informed by analysis of the enquiries to Advice Services and from the previous year's experience, we were able to identify points of confusion and the 2014 Annual Information Statement guidance included a checklist, a guide, a sample form and a worksheet to help charities understand the requirements and prepare for reporting.

The reporting guidance was supported by the series of 36 Ask ACNC sessions held in 32 locations across Australia in 2014–15. We encouraged all registered charities to attend and 3 434 registered for a session.

Other guidance resources developed during the year included:

  • a package of guidance templates, including a model constitution for charitable companies limited by guarantee and sample charitable purpose clauses (see feature), as well as templates for the ongoing management of a charity (template AGM agenda and notices, meeting minutes and reporting templates).
  • a series of monthly webinars focusing on compliance with ACNC obligations, such as the governance standards and reporting, and which also included a tour of the ACNC Charity Portal.
  • Factsheets and videos translated into 17 different languages to support charities being operated by people from culturally and linguistically diverse backgrounds (published in 2015–16)

Infographic - 4 million views of acnc.gov.au

Feature - Companies Limited by Guarantee template constitution

One of the significant achievements of this year has been our development of a template constitution for charitable companies limited by guarantee. This template is supplemented by a detailed clause-by-clause guide, a quick checklist for completing the constitution and a table that sets out which sections in the Corporations Act 2001 (Cth) may be relevant to clauses in the template constitution. It was created through extensive consultation, including with charity representatives.

The template resource was developed for use by companies with a reasonably straightforward membership, to enable them to adopt rules that meet ACNC requirements for registration, as well as covering off on ASIC and ATO requirements.

Approximately 10% of registered charities have this legal structure. Before this template was released many of these charities would have needed to seek legal advice to develop a draft constitution, and ensure it met all of the requirements of the relevant regulators.

Feedback from the sector

The new template constitution removes a significant barrier for organisations considering becoming a charitable company, and provides an excellent precedent for an easy-to-use, contemporary set of rules that meets legal requirements.”

“This invaluable resource shows how greatly the ACNC continues to support the organisations it regulates – charities can now easily ensure that their structure facilitates their mission.”

Personalised advice

The Advice Services directorate provides support via phone and email. More than 60% of the enquiries received by Advice Services through the year were related to supporting charities to complete the Annual Information Statement, and updating their charity's details.

The remaining enquiries, approximately 1 330 per month, were about starting charities, charity law, concerns about charities and updating charity details.

Table 3.9: Personalised advice provided to charities

  Calls answered Correspondence (email/post)
2013-14 41 433 37 911
2014-15 39 835 32 110

Infographic - 39,835 calls answered, 32 thousand emails/letters

Maintaining high quality service

To ensure we are maintaining a high quality and accurate service, the Advice Services directorate operates an ongoing learning and development program for its staff. During 2014–15 these covered:

  • health promotion charity law
  • the Hunger Project case
  • policy and procedural changes, new forms and Annual Information Statements
  • Australian privacy principles and ACNC privacy policy
  • charity scams and scam regulation
  • ACNC governance standards.

We also engage guest speakers from the charitable sector and other regulators who work with charities to ensure staff remain engaged with the sector and the challenges faced by charities. In 2014–15 these sessions featured speakers from charities, peak bodies and other regulators including RedR Australia, the Dispute Settlement Centre of Victoria, Fundraising Institute of Australia, Consumer Affairs Victoria and Justice Connect.

Charity Portal – self-service for charities

The ACNC is a national regulator based in one physical location. Therefore we are very reliant on charities and the public accessing our services online.

To assist, our website is regularly updated with new guidance materials, we hold monthly webinars, and in 2013–14, we opened the Charity Portal.

The Charity Portal is a secure ‘self-service’ system charities access via our website. It allows charities to log in and complete tasks that would have previously required them to submit a form via email or post, saving significant time and effort.

Using the Charity Portal, charities can:

  • submit the Annual Information Statement online
  • print a copy of their charity certificate or request an original charity certificate
  • change their address for correspondence
  • change the charity’s legal name
  • change other contact details such as phone, email and website
  • update responsible persons and their details
  • upload the charity’s governing documents
  • select a new subtype.

Infographic - 3 million charity portal usage

Use of the Charity Portal has grown steadily over time, from 1.5 million sessions in 2013–14 to three million sessions in 2014–15. In 2014–15 the ACNC continued to improve the Charity Portal with the addition of an online password reset function. Following the first reporting cycle (the 2013 Annual Information Statement), the ACNC now holds enough information about registered charities to allow them to verify their identity online. The new password reset function has dramatically reduced the amount of time required for a new password to be issued.

Engaging the sector

Face to face

The ACNC is committed to ongoing engagement with charities, peak bodies and professional advisers. Maintaining and strengthening these relationships helps preserve a two-way flow of communication between the sector and the ACNC.

Much of the ACNC’s engagement with charities is through online communications such as the Commissioner’s Column, email correspondence with our Advice Services directorate, our social media presence, acnc.gov.au, and the ACNC Quarterly newsletter.

However, given that not all charities are able or want to engage with the ACNC online, we regularly accept invitations for senior staff to present at not-for-profit sector events, conferences and seminars. In 2014–15, our staff presented at 104 sector events.

At large not-for-profit sector conferences we also operate booths staffed by ACNC team members. This face-to-face engagement gives charities an opportunity to speak directly with ACNC staff to better understand their obligations.

Table 3.10: ACNC sector events, 2014–15

State/territory City Number of events
Australian Capital Territory Canberra 6
Northern Territory Darwin 1
  Regional 1
New South Wales Sydney 18
  Regional 5
Queensland Brisbane 11
  Regional 6
South Australia Adelaide 4
  Regional 2
Tasmania Hobart 2
  Regional 1
Victoria Melbourne 32
  Regional 8
Western Australia Perth 5
  Regional 2
Total 104

The ACNC aims to increase visits outside of Victoria in 2015–16.

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Feature - Ask ACNC

We are committed to offering charities an opportunity to come and hear from us and ask questions in person, where possible, given that charities are located right across Australia, including in the farthest reaches of the country.

A series of Ask ACNC sessions were held across Australia in the second half of 2014. At the conclusion of the first reporting period there was a substantial minority of charities that had not submitted their 2013 Annual Information Statement, a requirement for ongoing registration.

The sessions were designed to help charities understand their reporting obligations, including providing financial information as part of the 2014 Annual Information Statement. The sessions also discussed the Charity Register and how to use the Charity Portal and provided an overview of the charities in their region.

The Ask ACNC sessions resulted in an increase of Annual Information Statement submissions.

Overview

  • 36 sessions in 32 locations across the country with 3 434 participants registered
  • 11 Introduction to the National Standard Chart of Accounts (NSCOA) sessions delivered
  • 4 Sessions included staff from the ATO's not-fo-profit group providing advice services
  • 2 Aboriginal and Torres Strait Islander organisation sessions delivered
  • 2 Sessions included Consumer Affairs Victoria providing advice services.

“The whole session was very useful. Including finding out information I was unaware of, asking questions and staff working with me to work through my questions and updating details. The staff were very friendly, approachable and helpful. Thankyou to you all.”

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Feature - Roundtables

The ACNC Stakeholder Engagement Program for 2014–15 included a program of roundtable events, where our focus was on targeted and effective engagement with specific charity subsectors.

In 2014–15 the ACNC held four roundtable events for faith-based charities, and culturally and linguistically diverse charities.

We provided an overview of our recent work and future directions, presented new data on faith-based charities using a dedicated analysis of the Australian Charities 2013 Report, explained the meaning and implications of the Basic Religious Charities category, and discussed major challenges for faith-based charities with a view to identifying opportunities for the ACNC to reduce red tape for this sector.

Participants indicated high satisfaction with the roundtable approach and valued the opportunity to keep abreast of ACNC policy, research results and current issues. The sessions allowed us to promote the value of compliance and get support to encourage charities to address any outstanding compliance issues.

User groups

The ACNC has established two user groups, the Professional Users Group and the Sector Users Group, as regular, structured vehicles to engage with representatives of the charity sector and other stakeholders.

Both groups meet in Melbourne three times a year.

The Professional Users Group comprises professional advisers to the charity sector, representatives of other agencies involved in regulating charities, and the ACNC. Members are invited to comment on matters of procedure, new guidance and publications, and sector interaction to enable the ACNC to continuously improve its regulation of the sector.

The Sector Users Group is made up of representatives of peak bodies and of small, medium and large registered charities, other government agencies, and the ACNC. The purpose of this group is to seek feedback on ACNC procedures, guidance and publications, and on our interactions with, and regulation of, registered charities.

By hosting the Professional Users Group and the Sector Users Group the ACNC is ensuring that it is open and accountable in the way we operate and the thinking behind our processes.

On 31 March 2015, the Professional Users Group and Sector Users Group were approved by the Assistant Treasurer as the formal combined mechanism of consultation under the new Regulator Performance Framework.

Online

The ACNC is an online organisation and our website, acnc.gov.au, is the primary channel for the delivery of guidance and support to charities. The vast majority of charities use our online self-service system, the Charity Portal (see page 59), to meet their obligations under the ACNC Act.

Page views of acnc.gov.au grew in 2014–15 to four million, up from 3.6 million in 2014–13, reflecting the increased awareness of the ACNC and the Charity Register among members of the public, and more charities accessing our guidance and support materials.

In March 2015 the ACNC added online webinars to the range of guidance and education materials available on acnc.gov.au. The series of four webinars were popular with charities across Australia and covered topics such as meeting the governance standards, reporting to the ACNC and using the Charity Portal. In 2014–15, 252 representatives of charities registered to attend the webinars.

The webinars will continue into 2015–16 to allow more charities, particularly those in regional areas, to participate and interact with ACNC staff.

The ACNC’s social media presence continued to grow in 2014–15. The growth is likely due to increased awareness of the ACNC in general, and also our commitment to provide information via these channels and engage with our followers. We have endeavoured to provide relevant and informative content, and respond to enquiries and comments in a timely manner.

We use our social media accounts to:

  • remind charities of their reporting obligations
  • remind charities of upcoming deadlines and due dates
  • promote new education and guidance materials
  • share research findings
  • support days and weeks of note (such as ANZAC Day and Volunteer Week)
  • encourage members of the public to always check the Charity Register
  • alert the public to scams that we’ve become aware of
  • distribute ACNC media releases.

The most popular topics of discussion relating to the ACNC on social media during 2014–15 were the 2014 Annual Information Statement, particularly the reporting of financial information, and the ACNC’s compliance activity (specific revocations and the Compliance Report).

Whilst our social media following remains modest, we are committed to growing this and our subsequent reach in 2015–16.

Infographics - Facebook likes 1051 in 2013-14, 2970 in 2014-15, Twitter follows 2514 in 2013-14, 4591 in 2014-15, linked in members 2439 in 2013-14, 3395 in 2014-15

Research – creating a detailed picture of the charity sector

As well as the Australian Charities 2013 Report and online dataset, we also published reports on public trust and confidence in charities and red tape, and helped sector researchers to meet and share their work.

Australian Charities 2013 Report

The Australian Charities 2013 Report, published in September 2014, was produced by Curtin University of Technology, and based on the data provided by charities in their 2013 Annual Information Statement.

The report analysed the Annual Information Statements of more than 38 000 charities that were submitted by 30 June 2014. In 2015–16 the ACNC will provide Curtin with the Annual Information Statements that were submitted past the due date, which will allow the report to be updated to fully represent the activities of the sector for that period.

The 2013 Annual Information Statement collected data about charities, their activities, beneficiaries, staffing and reporting obligations. For the first time, comprehensive information about the sector was available for analysis. Curtin’s report is the first single-source, evidence-based research of its kind, and is valuable for anyone wanting to understand more about the charity sector, including the general public, policy makers and charities.

The key findings were

  • Charities undertook a broad range of activities in 2012–13, ranging from religious, community development and research activities to emergency relief, animal protection and international pursuits.
  • Religious activities were the main the activity for more than 25% of charities, followed by primary and secondary education for 6% of charities.
  • 10% of charities accounted for 90% of full time jobs and nearly $90 billion of income in the sector.
  • 75% of small charities do not employ full time staff.
  • The peak number of volunteers employed by organisations is between five and 19.
  • Nearly 1 million people are employed across the sector.

Submissions to NFP sector inquiries

In 2014–15, the ACNC made six submissions to government inquiries that impacted the not-for-profit sector.

Commonwealth Government

Competition Policy Review (the Harper Review)
The ACNC made a submission to the comprehensive review of Australia’s competition laws and policy, led by Professor Ian Harper, on 28 November 2014.

Senate Economics Legislation Committee
The ACNC made a submission to the Inquiry into the Corporations Legislation Amendment (Deregulatory and Other Measures) Bill 2014 on 19 January 2015. The ACNC did not appear at the hearings.

Senate Select Committee on Wind Turbines
The ACNC made a submission to the Inquiry into the application of regulatory governance and economic impact of wind turbines on 20 February 2015. The ACNC submission was in response to an invitation from the Committee.

Productivity Commission Inquiry into Business Setup, Transfer and Closure
The ACNC made a submission to the Productivity Commission public inquiry into barriers to setting up, transferring and closing a business and identifying options for reducing barriers on 20 February 2015.

House of Representatives Standing Committee on the Environment
The ACNC made a submission to the Inquiry into the Register of Environmental Organisations, on 21 May 2015. ACNC Commissioner, Susan Pascoe AM, Murray Baird, Assistant Commissioner – General Counsel and Susan Quinn, Senior Policy & Education Officer attended the hearing on 18 June 2015.

New South Wales Government

NSW Office of Liquor, Gaming and Racing Consultation on the Proposed Charitable Regulation 2015
The ACNC made a submission to the New South Wales Government’s consultation on proposed changes to its Charitable Regulation 2015, including the Regulatory Impact Assessment, on 24 June 2015.

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Driving regulatory and reporting simplification

The third object of the ACNC Act is to promote the reduction of unnecessary regulatory obligations on the Australian not-for-profit sector.

  • The ACNC’s approach to red tape reduction is two-fold:
    limiting its own regulatory requirements to those necessary to maintain, protect and enhance public trust and confidence in the sector and to support a robust and innovative sector
  • working with other agencies to reduce unnecessary or duplicative administrative requirements imposed on the sector.

The ACNC works with other agencies at national and state/territory levels to remove unnecessary regulatory obligations. Work at the national level is focused on sharing charity data with government agencies through the Charity Passport to reduce the number of times charities have to report the same information to multiple agencies. The ACNC has also been working to implement streamlined reporting arrangements for charity subsectors that already have high levels of reporting to another government agency.

Work with states and territories is focused on harmonising or aligning the national, state and territory regulatory frameworks for charities. This work had been hindered by uncertainty about the ACNC’s future. However, it was prioritised in the second half of 2014–15 and will be a focus throughout 2015–16. The dialogue is progressed on a bilateral basis, and is led by the Commissioner and Assistant Commissioners.

Deregulation agenda and savings

The ACNC contributes significantly to the Australian Government’s deregulation agenda. Key elements of the agenda implemented by the ACNC are the Regulator Performance Framework (RPF) and costing of deregulation savings.

The ACNC contributed $10 million of annual deregulation savings during 2014–15.

The Commissioner’s decision to accept financial reports lodged with state and territory regulators in place of ACNC reports was highlighted in the Treasury Portfolio Annual Report on Deregulation as a key saving. Other measures included streamlined reporting arrangements and a template constitution for organisations that are, or wish to become, a charitable company limited by guarantee . The ACNC’s guidance products also continue to make it easier for charities to understand and comply with their regulatory obligations.

Regulator Performance Framework

The RPF is a core element of the Australian Government’s deregulation agenda. The RPF is designed to drive cultural change in the way regulators administer regulations (their regulatory approach). It consists of outcomes-based key performance indicators that articulate the Government’s expectations of regulator performance, and accountability through stakeholder-validated self-assessment and reporting.

The Assistant Treasurer endorsed our user groups, the Sector User Group and Professional User Group , as the ACNC consultative mechanism under the RPF. The ACNC consulted with both groups to review our regulatory approach against the RPF, and to draft our RPF metrics, which are published on acnc.gov.au.

We will report on our performance against these metrics in the 2015–16 Annual Report

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Feature - Red Tape Report 2014

An independent report has found that Commonwealth funding obligations impose a much greater burden on charities than legislative obligations.

The estimated average annual cost of reporting obligations imposed by the ACNC was $150, or 0.1% of the total annual burden for charities.

The report was prepared by Ernst & Young, which was engaged by the ACNC to research the regulatory and reporting burden on Australian charities. The report provided the ACNC with an independent insight into the source and scale of government requirements on charities, and identified which of them constituted red tape.

The report examined the experiences of 15 charities drawn from subsectors in which there was anecdotal evidence of significant red tape, and where research on the regulatory burden was lacking, namely social welfare, other education (excluding schools and universities) and health and aged care.

Ernst & Young also surveyed nearly 400 charities and analysed publicly available data.

Key recommendations were that the ACNC should work together with other government agencies to encourage the early adoption of available tools to reduce red tape (such as the Charity Passport) and should consider taking an ‘honest-broker’ role to drive government reforms.

Charity Passport

The ACNC’s Charity Passport is a mechanism that allows us to electronically share the information we collect from registered charities with authorised government agencies. It is designed to reduce reporting duplication – multiple reporting of the same core information and reports to different government agencies.

As the Charity Passport is adopted across government agencies, charities will be able to report once to the ACNC, and other authorised government agencies will then access that information from the ACNC electronically – the ‘report once, use often’ approach.

This will result in considerable time and administrative savings for charities interacting with government agencies, particularly in relation to grants administration.

Adoption of the Charity Passport by other government agencies was hindered in 2014–15 owing to uncertainty over the ACNC’s future. Nevertheless, several officials from Commonwealth, state and territory agencies have been granted access to the Charity Passport to consider incorporation into their agencies’ reporting processes.

Working with other government departments and agencies

The ACNC works closely with Commonwealth agencies that also have a role in regulating the not-for-profit sector. Our aim is to ensure that the interaction of the various laws works to achieve the objects of the ACNC Act, particularly in relation to simplifying regulation and reporting requirements.

Office of the Registrar of Indigenous Corporations (ORIC)

Under a memorandum of understanding with ORIC, organisations that lodge reports with ORIC under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) and remain eligible to be registered as a charity will meet their ongoing obligations with the ACNC until at least the 2014–15 reporting period. The ACNC is in discussions with ORIC about extending this arrangement into the future.

Deductible Gift Recipient (DGR) registers

The streamlined registration process for organisations applying for registration with the ACNC that also intend to apply to one of the DGR registers continued through 2014–15. The ACNC’s registration form allows registration applicants to indicate an intention to apply to any of the four DGR registers:

  • Register of Environmental Organisations, administered by the Department of the Environment
  • Register of Cultural Organisations, administered by the Ministry for the Arts, Attorney-General's Department
  • Register of Harm Prevention Charities, administered by the Department of Social Services
  • Overseas Aid Gift Deduction Scheme, administered by the Department of Foreign Affairs and Trade.

Threshold eligibility questions are included in the registration form which, if satisfied, trigger the transfer of the applicant's registration data to the relevant register to be considered for listing. This means that administrators of the registers then need only ask for any additional data not already collected by the ACNC.

In 2015–16, the ACNC intends to work with the DGR registers to further simplify the registration process as well as streamlining annual reporting

Department of Education and Training

The ACNC worked closely with the Commonwealth Department of Education and Training (DET) throughout 2014–15 to implement streamlined reporting arrangements for non-government schools that are charities registered with the ACNC.

Under the streamlined arrangements, non-government schools will not have to directly provide any financial information to the ACNC for the 2014 and 2015 reporting periods. The ACNC will instead extract the relevant data from responses to financial questionnaires lodged by non-government schools with DET.

To consult on these arrangements, a working group was established encompassing the ACNC, DET, the Independent Schools Council of Australia, and the National Catholic Education Commission. The ACNC also conducted more detailed consultation with sector bodies separately. These will continue as we implement the data extraction and population mechanism.

Aligning and harmonising state and territory legislation

The ACNC is committed to working with the states and territories to align regulatory frameworks and reporting obligations on charities.

The ACNC has established project teams to progress alignment with each state and territory in the following key areas:

  • incorporated association (and cooperative) regulations
  • fundraising licensing and regulation
  • taxation concessions (including alignment of the definition of charity)
  • grants and procurement.

Mapping of regulatory and reporting obligations across jurisdictions is underway, and Deloitte Access Economics has been commissioned by the ACNC to produce a report on inter-jurisdictional alignment. The report will identify options for alignment and estimates of the potential savings for charities associated with each option.

While pursuing alignment, in 2014–15 the ACNC accepted financial reports lodged with state and territory regulators in place of ACNC reports. This means that incorporated associations, cooperatives and charitable fundraising organisations that currently submit financial reports to their state or territory regulator will be able to electronically submit the same financial reports to the ACNC.

However, the Commissioner’s ability to exercise this discretion, as set out in the ACNC C&T Act, is due to expire in 2015–16 and the matter has been raised with Government.

Highly regulated subsectors

In 2014–15, the ACNC re-established dialogue with highly regulated subsectors including non-government schools, hospitals, aged care providers, and universities, with a view to removing or minimising reporting duplication.

Significant progress was made for non-government schools registered with the ACNC during 2014–15. The ACNC worked with the sector to implement a streamlined approach to financial reporting, reducing the burden on non-government schools.

The ACNC worked closely with peak sector bodies, including the Independent Schools Council of Australia and the National Catholic Education Commission, to implement these arrangements and develop the associated guidance.

In the coming year, the ACNC will continue to streamline reporting for non-government schools and will actively pursue similar arrangements for the other identified subsectors.

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