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This Commissioner’s Policy Statement is issued under the authority of the Commissioner and should be read together with the ACNC Policy Framework, which sets out the scope, context and definitions common to our policies.

Policy Statement

  1. This policy statement sets out:
    • the scope of our compliance function and powers
    • the principles we adopt in managing risk and addressing compliance concerns about registered charities
    • our general approach to using our powers.
  2. This document supplements the ACNC’s Regulatory Approach Statement, which sets out our general approach to regulating charities. This policy statement will be reviewed regularly.

Principles

  1. The ACNC is guided by four principles when exercising our compliance function and using our regulatory powers:
    • Principle 1: Identifying and responding to risk
    • Principle 2: Proportionate regulation
    • Principle 3: Consistency
    • Principle 4: Regulatory necessity
  2. We also undertake our compliance and enforcement activities in accordance with relevant Australian legislation, regulations, policies and guidelines. For example, if an investigation is necessary, it will be undertaken in accordance with the Australian Government Investigations Standards.

Scope of ACNC compliance function and powers

  1. The ACNC regulates all registered charities and uses a range of methods and powers to encourage their compliance with the ACNC Act and Regulations.
  2. The ACNC has discretion in how we exercise our functions and address non- compliance and its impact. This discretion includes prioritising and allocating resources, how we manage cases and the compliance action we take. We are not resourced to investigate every regulatory concern that is brought to our attention.
  3. When we use our powers, our decisions relate to a charity’s ongoing entitlement to registration and compliance with the ACNC Act and Regulations, including the Governance Standards and External Conduct Standards.
  4. There are three main situations where we may take compliance and enforcement action:
    • when a charity does not meet its obligations under the ACNC Act to report to us, notify us of certain matters or keep proper records
    • when a charity does not comply with the Governance Standards or External Conduct Standards
    • when an organisation is no longer eligible to be registered as a charity.
  5. The ACNC does not act in response to all concerns about charities. It is not our role to run charities. We do not become involved:
    • in internal differences of opinion
    • in employment disputes
    • in regulating the quality of services provided by charities (for example charities that provide health, education or aged care services)
    • where another regulator is better placed to address the issue.

Limitations on the use of ACNC powers

  1. The ACNC cannot use its powers in certain circumstances, as described in the table below.
Enforcement Powers

The ACNC’s enforcement powers are defined in part 4-2 of the ACNC Act. There are two situations in which they can be used: if the entity is a ‘federally regulated entity’ as defined in section 205-15 of the ACNC Act or if the charity is not complying with the External Conduct Standards.

A federally regulated entity is an organisation that meets at least one of these conditions:

  • a ‘constitutional corporation’ (which are either foreign, trading or financial corporations formed within the limits of the Commonwealth referred to under paragraph 51(xx) of the Constitution of Australia, or bodies corporate incorporated in a Territory),
  • a trust where all of its trustees are constitutional corporations,
  • a body corporate that is taken to be registered in a Territory under section 119A of the Corporations Act 2001 (Cth),
  • a trust, if the proper law of the trusts and the law of the trust’s’ administration are the law of a Territory, or
  • an entity, the core or routine activities of which are carried out in or in connection with a Territory.

Basic Religious Charities

The ACNC Act exempts Basic Religious Charities from complying with our Governance Standards, and our enforcement powers do not allow us to suspend or remove a Responsible Person of a Basic Religious Charity.

A Basic Religious Charity is one that meets the requirements of section 205-35 of the ACNC Act. To qualify, the charity must be registered only for the purpose of advancing religion, is not entitled to be registered as any other subtype and not be disqualified under the definition because of their method of incorporation or deductible gift recipient status.

Other exemptions

 The ACNC’s power to suspend or remove Responsible People does not apply to a Responsible Person who is a trustee in bankruptcy, a receiver or receiver and manager of the charity’s property, an administrator, an administrator of a deed of company arrangement executed by the charity, a liquidator, a trustee or other entity administering a compromise or arrangement made between the charity and someone else.

Principle 1: Identifying and responding to risk

  1. We use an evidence-based risk framework to identify issues that warrant our intervention and guide an appropriate response.
  2. We identify risk by:
    • building risk profiles using available data
    • undertaking analysis of specific risks, sometimes with other government agencies
    • evaluating thousands of complaints from many sources, including the public.
  3. The ACNC Legislative Review and the Government’s response identified that the ACNC needed access to criminal intelligence information to prevent the use of registered charities for criminal purposes, the ACNC engages in data exchange and matching activities with other government departments and law enforcement agencies. This may include sharing charity and responsible person information in accordance with relevant legislation, ACNC policies and IT security and data protections to ensure data remains secure. Disclosure of this information is authorised under s 150-40 of the ACNC Act and such disclosure complies with the Privacy Act 1988.
  4. We prioritise breaches that relate to the four key issues outlined below to support good outcomes and improve public confidence in the sector:
    • Fraud and financial mismanagement, including money laundering, tax avoidance and private benefit
    • Terrorism - misuse of a charity for terrorist purposes or to foster extremism. This includes charities that support terrorism (financially or otherwise) and charities’ connections to a listed terrorist organisation or person or entity of concern
    • Failure to safeguard people, particularly children and vulnerable adults
    • Political or unlawful activities, where the charity may be at risk of having a disqualifying purpose.
  5. The type of compliance and enforcement action we undertake is determined by the risk and non-compliance we seek to address. We consider several factors in determining the appropriate action, including the severity and persistence of the breach, the risk of harm to the sector and community, and the willingness of the charity to work with the ACNC to address the non-compliance.
  6. The ACNC uses a combination of education, voluntary compliance and investigative methods to support charities to meet their obligations, and address incidents of non-compliance. Our key methods include:
    • Education: Providing specific regulatory advice
    • Self-evaluation: Requesting a charity evaluate its compliance against the governance standards
    • Self-audit: Obtaining information from a charity about how it complies with the governance standards
    • Review: Assessing charity’s general compliance with their obligations
    • Investigation: Investigating significant breaches of obligations.
  7. Investigating a charity is our most significant response to non-compliance. We will commence an investigation when a charity’s non- compliance appears serious and/or deliberate. The outcome of an investigation will depend on many factors, including the nature of the issue and the willingness of a charity to resolve the problem.
  8. We may also refer a matter to another regulator or agency that is better placed to act.

Principle 2: Proportionate regulation

  1. Our proportionate approach to compliance allows charities a chance to address unintended mistakes while we deal with cases of serious misconduct quickly and firmly. Our response will be proportional to the problem we are seeking to address.
  2. We emphasis education and advice aimed at helping charities meet their regulatory obligations. Much of our work involves preventing problems by providing information, support and guidance to help charities stay on track. When charities have made an honest mistake or oversight, we will work with them to correct the error.
  3. The ACNC will act swiftly when significant non-compliance occurs, including when:
    • vulnerable people or significant charity assets are at risk
    • there is evidence of serious mismanagement or misappropriation
    • there is a serious and/or deliberate breach of the ACNC Act or Regulations
    • the charity is unwilling or unable to rectify breaches.
  4. This approach is reflected in the ACNC’s pyramid of support and compliance.
a pyramid showing areas of compliance - from top down - revocation, graduated and proportionate sanctions, proactive compliance, assisted compliance, education and support
  1. In some situations, we will need to use our formal powers to resolve issues. When this occurs, we will usually give charities a chance to explain their actions and rectify problems before using our formal powers.

Principle 3: Consistency

  1. We aim to ensure charities are treated consistently and can expect consistent compliance and enforcement outcomes. When using any of our powers, the ACNC is bound by section 35-10(2) of the ACNC Act to consider the following factors:
    • the nature, significance and persistence of the contravention or non-compliance
    • any action taken by the Commissioner, the charity or any of the Responsible People, to address or prevent the contravention or non-compliance
    • the desirability of ensuring contributions made to the charity are applied consistently with the charity’s not-for-profit nature and purpose
    • the objects of any Commonwealth laws that refer to registration under the ACNC Act
    • the extent (if any) to which a charity is conducting its affairs in a way that may cause harm to, or jeopardise, the public trust and confidence in the sector
    • the welfare of members of the community (if any) that receive direct benefits from the charity, and
    • any other matter that the Commissioner considers relevant.
  2. Considering the above factors ensures we manage our compliance cases and use our formal powers consistently. We will also apply the principles in the Commissioner’s Policy Statement on Decision-making.
  3. If the ACNC is involved in issues that affect other government agencies, we seek to work collaboratively and cooperatively with the other agencies to ensure that issues are addressed consistently across government.

Principle 4: Regulatory necessity

  1. In undertaking our compliance work and using our powers, we aim to minimise the administrative burden on charities.
  2. The ACNC only asks charities to report the information we need to assess compliance with the ACNC Act and Regulations.

Compliance and enforcement measures

  1. This section describes the ACNC’s compliance powers and the measures we can use when working with charities to ensure their compliance.

Information gathering and monitoring powers

  1. When we commence a case, we may request information or clarification from a charity so that we can assess its general compliance. This initial request will be sent to a charity in writing and will generally rely on the charity disclosing information voluntarily.
  2. If the ACNC needs access to a charity’s premises, we will always seek consent to enter. When our entry to the premises is with consent, we will leave the premises if the consent is withdrawn.
  3. We also have powers to gather information and monitor charities as defined in Part 4-1 of the ACNC Act. These powers allow us to require charities to provide us with information and enter properties to gather information necessary to monitor compliance with the ACNC Act and Regulations.
Information gathering powers

The ACNC can use its information gathering powers to request information and documents, and can require a person to attend and give evidence.

Information gathering powers may also be used to request information from a third party.

The ACNC can obtain necessary information or documents under a formal notice under section 70-5 of the ACNC Act.
Monitoring powers

Under Division 75 of the ACNC Act, the ACNC has the ability to enter premises for the purpose of monitoring compliance with provisions subject to monitoring (as defined in section 75-5) and/or determining whether certain information ‘subject to monitoring’ (as defined in section 75-10) is correct.

Once on the premises, the ACNC can exercise a range of monitoring powers including searching premises, inspecting or examining any thing on the premises, taking photographs or video recordings of the premises or any thing on the premises and taking extracts or making copies of any documents. Section 75-20 of the ACNC Act provides further details of the monitoring powers available to ACNC officers.
  1. In some circumstances, it is appropriate for the ACNC to share information about a charity with other government bodies, even if the ACNC itself is not involved in any compliance activities with the charity. For details on how the ACNC may share information, refer to the ACNC’s:
    • Corporate Policy on information handling
    • Operational Procedure on Information Provision, Referrals and Information Exchange
    • Operational Procedure – ACNC Protected Information Procedure.

Penalties

  1. The ACNC can issue an administrative penalty to charities for failing to submit approved forms or for providing false or misleading information to the ACNC (outlined in Part 7.3 of the ACNC Act). We will send a charity a warning before issuing a penalty. The willingness of the charity to work with the ACNC can affect the amount of the penalty (as outlined in section 175-60 of the ACNC Act).

Enforcement powers

  1. The ACNC’s enforcement powers are specified in Part 4-2 of the ACNC Act. They assist us in maintaining, protecting and enhancing public trust and confidence in the charity sector. The table describes the powers we can use to enforce the law and respond to serious incidents of non-compliance:
Power Description
Warnings

We may formally warn a charity that is not complying with its obligations (or more likely than not to not comply in the future). We will not issue a formal warning if informal advice or education would suffice.

The warning will inform the charity of the the contravention or non-compliance and outline action that we may take in response.
Directions

We can direct a charity to either act, or stop acting in a certain way, to ensure it complies with the law.

Directions may be given to a charity when the Commissioner reasonably believes a charity has contravened the ACNC Act or has not complied with a Governance Standard or an External Conduct Standard (or is more likely than not to contravene or not comply in the future).

A notice will specify the grounds on which the direction is issued and the period of time the charity has to comply.

If the Commissioner gives a direction, or varies it, the Commissioner must consider within a reasonable time after the end of 12 months whether it would be reasonable to vary or revoke the direction. The required statutory review ensures the ACNC considers the appropriateness of the direction at the later time.

Enforceable undertakings

Enforceable undertakings are court-enforceable agreements that a charity agrees to voluntarily.

A written enforceable undertaking will specify an action or a series of actions that a charity has agreed to take, or refrain from taking, to comply with its obligations.
Injunctions

We can ask a court to order a person to do or not do something to ensure they comply with the law. A court can also make these orders with the consent of the ACNC and the person or charity.

Generally, we will only seek injunctions if the contravention or non-compliance is of a serious and persistent nature and urgent action is required, such as when there is an immediate or direct risk to a charity, person or property.

We may also seek an injunction if other enforcement measures were not effective, such as a person or charity not complying with a directions notice.

Suspension and removal of responsible entity (Responsible Person)

The Commissioner may suspend or remove a Responsible Person on the reasonable belief that a charity has contravened the ACNC Act or has not complied with a Governance Standard or an External Conduct Standard (or is more likely than not to contravene or not comply in the future). The Commissioner can also appoint an acting Responsible Person.

The Commissioner will not use the power to remove or suspend a Responsible Person without evidence that indicates serious contraventions or non-compliance.
  1. Any decision to use our enforcement powers can be reviewed or appealed.

Compliance Agreement

  1. A Compliance Agreement is an action plan written by the ACNC in consultation with a charity which sets out what the charity needs to do to ensure it is not in breach of the ACNC Act or Regulations. A Compliance Agreement generally requires a charity to improve its management practices or governance arrangements.
  2. A Compliance Agreement is not a formal enforcement power under the ACNC Act, and a charity’s participation is voluntary.
  3. The ACNC monitors the charity’s implementation of the Compliance Agreement to ensure it improves its practices as required.
  4. The ACNC may take further action if we are not satisfied with the charity’s progress implementing the measures set out in a Compliance Agreement.

Revocation power

  1. In the most serious cases, we will revoke a charity’s registration. Revoking registration is a serious action and may affect a charity’s eligibility for tax concessions and other government benefits, concessions or exemptions. We only revoke a charity’s registration in the most serious of cases.
  2. There are various circumstances in which we may revoke a charity’s registration, including if it:
    • is not entitled to registration
    • is not meeting its reporting obligations to the ACNC
    • has not complied with the ACNC Act or Regulations, including the Governance Standards and External Conduct Standards
    • is insolvent or in administration.
  3. All decisions to revoke the registration of a charity can be reviewed or appealed.

Publication of enforcement action

  1. The ACNC maintains a public register, the Charity Register, that contains information about each charity. The ACNC also publishes details of each warning, direction, undertaking, and injunction on the Charity Register, as well as the suspension or removal of a Responsible Person and revocation of a charity’s registration.
  2. This public disclosure is an integral part of the ACNC’s commitment to maintaining and enhancing transparency and accountability in the sector and contributes to public trust and confidence. It is not intended to punish.
  3. When we use our enforcement powers, the publication of the details will usually include a summary of why the matter arose, including certain charity responses and the resolution (if any) of the matter. Before we publish these details, we will usually give charities a chance to provide a response and context relevant to the information that we plan to publish.
  4. The ACNC cannot publish information relating to the use of enforcement powers until 14 days after the day the power was used, unless the Commissioner considers it in the public interest to be published earlier.
  5. In some circumstances, the ACNC may decide not to publish information until after an internal review period is over or we make a decision on a review. For more information, see the Commissioner’s Policy Statement on Reviews and Appeals.
  6. The revocation of a charity’s registration is shown on the Charity Register but does not include information about the decision or responses from the charity.
  7. The ACNC Act has secrecy provisions that set out the circumstances in which the ACNC can disclose protected information. Broadly speaking, protected information is information we collect for the purposes of the ACNC Act. In some instances, with the charity’s permission, we may release information if it is the charity’s or the public’s interest.

Withholding information

  1. Information may be withheld or removed from the Charity Register in certain circumstances. Primarily, this is if the likely adverse effect of publishing the information outweighs the public interest in publishing it. This includes consideration of whether information is commercially sensitive and has the potential to cause detriment to the charity. Further information about withholding or removing information from the Register is covered in the Commissioner’s Policy Statement on Withholding and Removing Information from the Register.

References

Version Date of effect Brief summary of change

Version 1 – Initial policy

 03/06/2013

Initial policy endorsed by the Commissioner on 03/06/2013

Version 2 – Revised policy

 12/10/2017

Revised policy to include the use of an informal enforcement power – Compliance Agreement
Version 3 – Revised Policy 20/07/2020 Revisions include an update of how Compliance will assess and respond to risk
Version 4 – Minor revision 14/09/2021 Paragraph 13 inserted to capture new project