NFP & Charity Governance – ACNC Governance Standards – June 2013

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The ACNC Governance Standards provides effective governance structures for not-for-profit and charities in Australia.

These standards commenced on 1 July 2013 and applies to both not-for-profit and charities.

Our Brisbane lawyers have presented at a few seminars and in this paper, Andrew Lind also discusses how NFP’s and Charities are governed, the purpose of the standards as well as the nature of entities that are registered.

The presentation on the ACNC Governance Standards as presented by Andrew Lind was made to the annual Christian Management Australia conference on June 2013.

Andrew Lind discusses the legislation which is the Australian Charities and Not-for-Profits Commission Act 2012 (the “Act”) as it establishes a new regulator for the sector, the Australian Charities & Not-for-Profits Commission (” ACNC”).

The ACNC will act as the point of first registration and compliance of registered charities in Australia.

ACNC Government Standards

The new standards are intended to apply to all charities regardless of the type of entity.  When registered with the ACNC, they are federally regulated and are bound by the standards, no matter what its type.

We look at the Explanatory Statement of the proposed governance standards regulations to understand the context and reasons for these governance standards:

  • Section 200-5 of the Act provides that the Governor-General may make regulations, prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
  • Subsection 45-10(1) of the Act provides that the Regulations may specify standards (the governance standards) which an entity must comply with in order to become registered under the Act and to remain entitled to be registered under the Act. (emphasis added)

The purpose of the Regulation is to amend the Australian Charities and Not-for-Profits Commission Regulation 2013 to specify governance standards which registered entities must comply with in order to become registered under the Act and to remain entitled to be registered under the Act.

How do governance standards apply?

The governance standards will ensure registered entities meet the expectations of the community in the way that they are managed.

The Community expectations of the entity may include the following:

  • managing its affairs
  • the use of public monies
  • volunteer time
  • donations provided to it
  • how the entity manages the risks that it faces
  • how the entity promotes the effective and responsible use of its resources and
  • how the entity goes about demonstrating that it is operating transparently and for a proper purpose.

There are steps a registered entity will need to take to comply with the governance standards and this will vary according to its particular circumstances, such as:

  1. its size
  2. the sources of its funding
  3. the nature of its activities and;
  4. the needs of the public (including members, donors, employees, volunteers and benefit recipients of the registered entity).

Governance standard – Purposes and not-for-profit nature of a registered entity

Object

 The object of this governance standard is:

  • to commit a registered entity, its members and its responsible entities to the registered entity’s purposes; and
  • to give the public, including members, donors, employees, volunteers and benefit recipients of the registered entity, confidence that the registered entity is acting to further its purposes.

Standard

A registered entity must:

  • be able to demonstrate, by reference to the governing rules of the entity or by other means, its purposes and its character as a not-for-profit entity; and
  • make information about its purposes available to the public, including members, donors, employees, volunteers and benefit recipients; and
  • comply with its purposes and its character as a Not-for-Profit

Note: Information in relation to the purposes of a registered entity would be available to the public if it appears on the Australian Charities and Not-for-Profits Register or in an Australian law on www.comlaw.gov.au or www.austlii.edu.au, or is otherwise made available on request.

How will the entity be governed?

The Board is the body responsible for governance. There could also be some ‘government tasks’ delegated by the full board to: Committees of the Board; and in some cases, management.

Andrew Lind further explains the role of Board Committees and its Charter/rules in the presentation. He also discusses how committees can work well together with a clear charter and rules in place and recommends Committee Reports to be adopted by the Board.

Still have questions regarding ACNC governance?

Contact our client engagement team for an appointment with one of our Brisbane not for profit & charity lawyers.  Call (07) 3252 0011 or email: enquiry@corneyandlind.com.au