Key points:
- Generally speaking, all charities must meet the ACNC Governance Standards in order to be registered, and remain registered, with the ACNC.
- The Governance Standards are a set of six core minimum standards that deal with how charities are run.
- The Standards require charities to remain operating in a lawful manner and with a charitable purpose, and be run in an accountable and responsible way.
- The Governance Standards are a set of high-level principles, not precise rules, and each charity needs to decide what reasonable steps it needs to take to comply with them.
Governance Standard 1 requires charities to:
- demonstrate they are not-for-profit with a charitable purpose and that they are working towards that charitable purpose
- share information about their charitable purpose with the public.
Common steps your small charity can take to meet this Standard are:
- including charitable purpose and not-for-profit clauses in your governing document – also known as a charity's constitution, rules or trust deed – and then uploading the governing document to the ACNC’s Charity Register
- running your organisation as a charity by following its purpose and being a not-for-profit.
Small charities can use their website or social media to provide information about their aims and work.
Governance Standard 2 requires charities to:
- take reasonable steps to be accountable to their members
- allow their members adequate opportunity to raise concerns about how the charity is run.
Common steps your small charity can take to meet this Standard are to:
- organise and stage annual general meetings (AGMs), where members will have the opportunity to ask questions and vote on resolutions
- provide information to members on your charity’s activities and finances
- have clear processes for appointing Responsible People (board or committee members).
Governance Standard 3 requires charities to not act in a way that, under Commonwealth, state or territory law, could be dealt with as either an indictable offence or a breach of the law that has a civil penalty of 60 penalty units or more.
In other words, this Standard compels charities to comply with Australian laws. You can take some simple steps to reduce the risk of your charity breaching this Standard by:
- familiarising yourselves with relevant regulations and laws
- having processes to protect your charity’s finances and assets
- having processes to ensure your charity meets its legal obligations.
Governance Standard 4 requires charities to take reasonable steps to ensure their Responsible People are not disqualified from managing a corporation under the Corporations Act 2001 (Cth).
It also directs charities to ensure the ACNC has not banned any of their Responsible People from taking up a role as a Responsible Person in the previous 12 months.
Your charity should understand how a person could become disqualified, and double-check the Registers of Disqualified People held by the ACNC and by the Australian Securities and Investments Commission (ASIC).
Small charities should also ask prospective Responsible People to confirm they are not disqualified. This may involve them signing a declaration.
Governance Standard 5 requires charities take reasonable steps to ensure their Responsible People are ‘fit and proper’ and comply with several duties. These include:
- acting with reasonable care and diligence
- acting honestly and fairly in the best interests of the charity, and for its charitable purposes
- not misusing their position or information they gain as a Responsible Person
- disclosing conflicts of interest
- ensuring the financial affairs of the charity are managed responsibly
- not allowing the charity to operate while insolvent.
Generally, the duties mean that Responsible People should act with standards of integrity and common sense.
Governance Standard 6 requires charities to take reasonable steps to become a participating non-government institution if the charity is, or is likely to be, identified as being involved in the abuse of a person either:
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in an application for redress made under section 19 of the National Redress Scheme for Institutional Child Sexual Abuse Act 2018 (Cth) (Redress Act), or
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in information given in response to a request from the National Redress Scheme Operator (Secretary of the Department of Social Services) under section 24 or 25 of the Redress Act.
This could include, for example, a registered charity that was named in the Royal Commission into Institutional Responses to Child Sexual Abuse but may not have been identified so far in a redress application.
The purpose of this Standard is to maintain and enhance public trust and confidence in the Australian charity sector by ensuring that a registered charity’s governance enables it to be accountable for its past conduct relating to institutional child sexual abuse. A registered charity will be impacted only if it is, or is likely to be, identified as being involved in the abuse of a person.