Corporate Policy: Conflicts of interest

This Corporate Policy 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 Corporate Policy guides ACNC staff on how to identify and manage real, potential and perceived conflicts of interest while performing their functions under the ACNC Act.
2. As Australian Taxation Office (ATO) employees, ACNC staff are subject to the ATO Conflicts of Interest Chief Executive Instruction CEI 2014/06/10 and ATO Conflicts of Interest Guidelines CEI 2014/06/10 (ATO Conflicts of Interest Policy), which should be read in conjunction with this policy.
3. ACNC legislation imposes some additional restrictions and obligations on the Commissioner, with regards to the sort of activities they can undertake outside of their role.
4. ACNC staff are bound by the Public Service Act 1999 (Cth), which includes the Australian Public Service Code of Conduct. Breaching the APS Code of Conduct may result in disciplinary action, including termination. Among other things, the APS Code of Conduct requires that employees must:
   1. take reasonable steps to avoid any conflict of interest (real or apparent)
   2. disclose details of any material personal interest that is connected to their employment, and
   3. not improperly use inside information or the employee’s duties, status, power or authority to gain a benefit for the employee or any other person, or cause detriment for any other person.
5. This policy contains Guidelines for Managing Conflicts in the ACNC Context (the Guidelines).

Definition of conflict of interest

6. The ATO Conflicts of Interest Policy uses the following definition of 'conflict of interest', which applies for this policy:

'A conflict of interest occurs when a person’s personal interests could appear to, or are likely to inappropriately influence the performance of their duties. They may be real, perceived, or potential and may be financial or non-financial.

A key test for identifying conflicts of interest is whether an impartial observer would reasonably question if the personal factors may inappropriately influence the way you carry out your work.'

Principles

• Principle 1: Adoption of ATO Policies
• Principle 2: Avoiding Conflicts of Interest
• Principle 3: Disclosing and Managing Conflicts of Interest

Principle 1: Adoption of ATO policies

7. ACNC staff are ATO employees, and must observe all relevant ATO policies, including the ATO Conflict of Interest Policy. Disclosures of conflicts by ACNC staff should be made using the ATO Conflict of Interest Form. This policy operates in addition to any relevant ATO policies.

Principle 2: Avoiding conflicts of interest

8. The ACNC is committed to best practice in managing conflicts of interest. In performing functions and exercising powers under the ACNC Act or any other law that the Commissioner and ACNC staff must take all reasonable steps to avoid any real, perceived or potential conflict of interest in any aspect of their role as soon as possible.

Principle 3: Disclosing and managing conflicts of interest

9. In the first instance, staff must take all reasonable steps to avoid any conflict. Where avoidance is not possible, they must manage the conflict appropriately, by disclosing it as soon as they become aware of it, discussing it with their manager, documenting and applying actions to minimise the risk, and completing the ATO Conflict of Interest form.
10. The onus is on ACNC officers to disclose any potential conflict, and so if there is any doubt about whether a situation might give rise to a conflict, ACNC officers should err on the side of disclosure.
11. Evolving circumstances may cause a conflict of interest to arise. Managing conflicts of interest is an ongoing obligation and it is important for staff to monitor their situation and report any changes in their circumstances to their manager.

Guidelines for managing conflicts of interest in the ACNC

12. The following guidelines have been designed to avoid conflicts that would pose an unacceptable risk, and to manage conflicts that are low-risk or unavoidable.
13. It is not possible to provide instruction around every scenario where a conflict may arise. These guidelines help ACNC staff meet their obligations as Commonwealth public servants. However, staff are ultimately responsible for avoiding and appropriately managing any conflicts they may have in conjunction with their managers.

When to disclose an association with a charity

14. There is a potential for a conflict to arise for most staff at some time or another. For example, staff members may actively participate in a church that is a registered charity; they might have children who attend a school which has a Parents and Friends association that is a registered charity; or they may be members of an RSL club or community centre. There is no conflict until those personal interests potentially or actually conflict with a person’s work duties.
15. Conflicts of interest need to be disclosed and managed when they arise – in other words, when an ACNC officer is given a task where their work duties may, or may be perceived to, conflict with their personal interests. Service as a Responsible Person for a charity, however, must be proactively disclosed by ACNC staff, in line with the below provisions.
16. Staff should be aware that they may be making a decision that affects a particular charity even if the charity is not specified (for example, blanket reporting extensions).

How to appropriately manage a conflict of interest

17. A conflict of interest cannot be appropriately managed unless it is disclosed. Whenever staff identify a real or potential conflict, they must discuss it with their manager, and in consultation with their manager consider completing the ATO Conflict of Interest form.
18. It is then up to the staff member and their manager to devise a strategy for managing the conflict. There is no prescribed strategy, as different steps may be needed for different situations. The staff member and their manager can seek extra guidance from HR or Legal.
19. The APS Code of Conduct requires staff to “avoid” a conflict. Practically, there are two ways to achieve this:
    1. Removing themselves from the outside interest (by ceasing or suspending their involvement with the charity while they work at the ACNC), or
    2. Removing themselves from the work task which might be affected by their conflict.
20. Sometimes, it may not be sufficient to only take the first option set out at paragraph 19a, as a person may have been so deeply involved with a charity that a reasonable person would question their impartiality when making a decision about the charity as an ACNC officer.
21. When considering the option in paragraph 19b, the matters the staff member and their manager should consider include:
    1. Is there an unconflicted officer in the same directorate who can perform functions in respect of the entity (and, potentially, a second unconflicted officer at the same or higher level who can review any decision)?
    2. Can the conflicted officer be excluded from any conversations about a decision that might affect their charity?
    3. Ensuring there is evidence that any decisions were unaffected by a conflict (such as keeping an accurate record of the ACNC staff involved in a decision, and meeting minutes showing that a conflicted officer is not present when their charity is discussed).
    4. Is the conflict only an issue for a single, point-in-time, case or decision (for example, a registration application)? Where the conflict may affect an ACNC officer’s general duties, the staff member and manager should consider the sustainability of any strategies they adopt. For example, Technical Analysts advising Registration staff, or lawyers drafting Commissioner’s Interpretation Statements, may choose to take one approach over another - doing so may have an impact for several charities, but specifically advantage their charity. It may be unsustainable to avoid this conflict in the long-term. If there is a high degree of risk, the officer may need to cease their involvement with the charity. If there is a low level of risk, it may be sufficient for another officer to confirm that the officer’s approach is objectively reasonable, and in line with how others would approach the same work.

Accessing charity records

22. ACNC records should only be accessed by ACNC officers on a need-to-know basis. Accessing any records associated with a registered charity, applicant, or Responsible Person where the officer may have a conflict of interest does not demonstrate appropriate management of the conflict of interest. An ACNC officer will never ‘need to know’ what is in these records, as they must disclose their conflict and remove themselves from any related work.

Types of potential conflict of interest

Responsible People

23. The Commissioner, Assistant Commissioner General Counsel and directors must not serve as a Responsible Person for any charity. APS1-EL1 staff may only serve as a Responsible Person for a charity in limited circumstances and with the approval of their director. Such approval can be reconsidered, any conditions may be attached to the approval as necessary, and the director may request any further information that they need to be satisfied that appropriate circumstances exist.
24. The limited circumstances might include:
    • Where a staff member is already a Responsible Person for a charity when they join the ACNC, or an existing staff member was a Responsible Person when this policy came into effect. Approval will usually be granted in this situation for the staff member to remain a Responsible Person for no longer than 12 months to allow the charity to find and appoint a replacement Responsible Person, in compliance with any constitutional rules the charity may have.
    • Where the charity has found there is a genuine lack of available individuals with the time, willingness, and competence to serve as a Responsible Person, and where the charity would be unable to function effectively or comply with its own rules if the ACNC Officer did not serve as a Responsible Person.
    • Where the ACNC Officer has unique and special skills that are relevant to the charity, and it is necessary for the charity’s success to have those skills present on its board. In this context, unique and special skills do not include knowledge of charity law or accounting, charity governance obligations, or any field that relates to the duties of an ACNC Officer.
25. If approval is provided, a documented strategy must be put in place to protect the integrity of the ACNC and its decisions. A template is provided for this purpose.
26. Staff acting in a director role may continue to serve as a Responsible Person if they are already doing so when they commence higher duties, as long as that conflict can be managed while they are acting in that role. It may be appropriate for them to step down as a Responsible Person if the acting arrangement is long-term.

Employment with a charity

27. ACNC staff must not engage in paid employment with a registered charity (including being paid-in-kind). Common sense should apply (for example, an ACNC officer is not prevented from accepting free lunch or tea and coffee while engaging in volunteering activity with a charity).
28. Unpaid employment in a legal, strategic, or financial decision-making capacity, such as a Chief Executive Officer, Chief Financial Officer, or General Counsel should be considered similarly to service as a Responsible Person. The considerations around ACNC staff serving as Responsible People are discussed at paragraphs 23-26.

Employment outside the ACNC

29. All ACNC staff that are engaged or intend to engage in paid outside employment with a non-charitable entity or unpaid outside employment with a charity must speak to their manager to determine whether they need to complete the ATO Notice to engage in outside employment form. See the ATO Conflict of Interest Policy for more guidance.
30. Under the ATO Conflicts of Interest Policy volunteer work, whether with a charity or any other entity, is not considered outside employment. However, for the ACNC, a conflict of interest form may be required depending on the circumstances if staff are engaging in any paid or unpaid work outside of their role with the ACNC, including work for charities and not-for-profits.
31. ACNC staff must not provide legal, financial or governance advice to a registered charity. Doing so may make it difficult for the ACNC to fairly execute its compliance functions.

Volunteering for a charity

32. ACNC staff may volunteer for registered charities. This can, however, represent a conflict that should be disclosed if the ACNC officer, in the course of their duties, is called upon to make any decision that would affect that charity.
33. Any volunteer activity must be done outside of work hours or in accordance with leave provisions. Volunteering for a registered charity during work hours is permitted if it is provided for in the ATO Enterprise Agreement (e.g. volunteer emergency services and donating blood).

Being a donor to, or beneficiary of, a charity

34. Registered charities provide valuable services, and no staff are prevented from being beneficiaries of registered charities. Likewise, charities rely on the generosity of donors, and ACNC staff may donate to registered charities and applicants for registration on an ad hoc or regular basis.
35. Being a past or present beneficiary or donor can, however, represent a conflict that should be disclosed by an ACNC officer if they are asked to make a decision that would affect that charity. The donation must be disclosed and managed if it is significant enough that a reasonable person would question the ACNC officer’s impartiality or fairness when making a decision that affects that entity.

Membership of a charity

36. Membership of a registered charity can represent a conflict that should be disclosed if the ACNC officer is called upon to make a decision that would affect that charity.

Family and friends of ACNC officers

37. If an ACNC officer’s family or friends are involved with a charity, in any capacity, the ACNC officer may have a potential conflict of interest. The officer should disclose this association if called upon to make a decision that would affect that charity, and that task should be re-allocated. It is possible that an officer may not know their family member or friend is involved with a charity when they start the task in question – it should be disclosed as soon as it becomes known.

Associations with entities that are not charities

38. An ACNC officer is unlikely to have a conflict if they are involved with a not-for-profit entity that is not a registered charity. However, these guidelines apply if that entity applies for, or is actively considering applying for, registration.
39. There are also non-charitable entities that may be involved in lobbying the ACNC about its broader regulatory approach, or on behalf of a charity or applicant for registration. ACNC officers will have a perceived conflict of interest if they contribute to such external work.

Examples

Example A

An APS6 Compliance Officer is a financial member of a community centre. He is very inactive: he has voting rights, but does not use them; the charity has about 1000 members, and so his membership fees are an insignificant portion of the charity’s revenue; and he does not know any of the charity’s board members.

A compliance concern is raised about the charity. It is possible the officer does not have an actual conflict of interest – he simply is not involved in the charity enough. But, a reasonable third party might genuinely consider that a member of the charity would not be impartial in deciding whether to investigate the charity.

Therefore, there is a perceived conflict. He discusses this with the Compliance Director.

The case can be re-allocated to another APS6 Compliance Officer, and there are other available Compliance Officers who could consider any review. They agree to inform the team that no matters about the case should be discussed in the presence of the officer. Appropriate steps have been taken, and the officer can maintain his membership of the charity.

Example B

An external candidate is recruited as an EL1 Manager in the Registration Directorate. For the past four years he has been a Responsible Person for a charity. As he is one of the charity’s longest-serving Responsible People, and has significant corporate memory, and as he has been overseeing a charity project that is nearing completion, it would cause serious upheaval for the charity if he vacated his position.

The Director of Registration agrees to allow him to continue to serve as a Responsible Person for an additional 12 months, to allow a proper handover. However, nine months into his role with the ACNC, he is asked to act as the Director of Registration for three months.

He knows that the charity will seek PBI endorsement, but it is not yet clear when this will happen. He understands that the acting Director of Registration can influence how that sort of application would be handled, and it would not look right if he had that sort of influence.

He takes it upon himself to decide between:

1. bringing forward his departure from the Charity, and, for the avoidance of doubt, if a PBI application comes in, requesting that the other EL1 Managers handle it, and liaise directly with the Assistant Commissioner where necessary, leaving him out of the process, or
2. requesting that one of the other EL1 Managers be asked to serve as Acting Director of Registration.

Example C

The partner of an officer in Reporting and Red Tape Reduction is a Responsible Person for a charity. She has always been aware that there is potential for a conflict of interest to emerge, however the risk is low since she does not generally consider questions about individual charities.

Part of her role is to consider whether the Commissioner should extend the reporting deadline for groups of charities. In this particular year, she knows that her partner’s charity desperately needs a reporting extension. If she applies the same approach she takes every year, her partner’s charity will be included in the group that receives an extension.

She errs on the side of caution, and discusses the situation with her Director. He agrees the potential conflict exists, but it is low risk, and cannot really be avoided because it is not possible for someone else to do this work every year.

As she has been transparent about the conflict, it may be enough for an independent officer to verify that they would take the exact same approach to making the decision.

Example D

An EPA officer is a regular volunteer with a charity. They are closely involved, and they are friends with the board members.

In the course of their duties, they become aware that the Compliance Directorate will be commencing activity which will target a group of related charities, including her own. They believe that if they alert their friends, those friends may be able to take steps to prevent Compliance uncovering any non-compliance by the charity.

There is a real conflict of interest. They must disclose to their manager, and the Director of Compliance should be informed so that steps are taken to ensure they hear no more information about the proposed compliance activity.

They should also be reminded that the APS Code of Conduct prevents them from misusing any information they obtain as an ACNC Officer. It may be a breach of the Code of Conduct if they share information about the proposed compliance activity with their friends, and could potentially lead to termination.

Example E

An ACNC lawyer volunteers with a charity that supports people experiencing homelessness by providing meals from a food truck. The ACNC lawyer’s volunteer work involves cooking, handing out meals and chatting to recipients.

While the ACNC lawyer does not provide legal advice as part of their volunteer role, the charity’s board is aware they are a lawyer working at the ACNC and there are no other lawyers involved with the charity.

One day the lawyer is approached by a member of the board, who shares details of the conduct of other board members and expresses concern that the charity may not be complying with Governance Standard 5. The board member asks for the lawyer’s opinion on the conduct.

They should decline to assist as this would constitute providing professional advice linked to their role at the ACNC. The approach should be reported to their manager.