ACNC Activities

The Australian Charities and Not-for-profits Commission is urging charities to check that they are maintaining their entitlement to registration.

They must ensure that they are still not-for-profit, their purposes are charitable, their activities lawful, that they are operating for the public benefit, and have an ABN.

ACNC commissioner Gary Johns said charities must maintain their entitlement to registration to avoid revocation. He said the ACNC recommended that charities build in a way of regularly checking their entitlement to registration. The ACNC had a tool to help charities make that assessment, he added.

Each registered charity has a record on the ACNC charity register and is obliged to have a governing document attached as well as a list of current responsible people.

Dr Johns said, ‘Common lapses include charities not keeping their records of responsible people up-to-date, or not having enough responsible people listed as required, and not having a governing document attached to their record [...].’

Charities must also ensure that their purposes and activities are aligned with their registered- charity subtype.

The seventh Australian Charities Report published in May showed that, on average, registered charities had been operating for 32 years.

Dr Johns said, ‘Over the long life-cycle of a charity many things can change, including boards and staff, so it’s crucial charities have an established process for [...] entitlement checks.

‘Our [...] register provides key information about Australian charities to the public. It is critical that this information is up to date because that demonstrates the integrity of the sector and its willingness to be transparent.

‘It is always of public interest to know how charities are run and by whom, how their funds are accrued and spent. Keeping those details accurate is therefore an important [...] task.’

The ACNC has information about maintaining charity registration and a checklist.

Go to charities/manage-your-charity/obligations- acnc/keep-charity-status.

MVA Bennett can provide assurance to those charged with governance of compliance with the ACNC rules.

Hundreds of charities struck off

The ACNC has revoked the registrations of 420 Australian charities that have failed to submit two or more annual information statements.

ACNC assistant commissioner Anna Longley said the organisations were no longer eligible for certain Commonwealth tax concessions.

‘It is important that we keep the ACNC [...] register up-to-date and accurate,’ Ms Longley said.

The commission notified in August more than 600 charities that they risked being struck off the register.

‘We take steps to allow charities that are still active to have every opportunity to maintain registration,’ Ms Longley said.

‘Some charities have since submitted their overdue statements, [...] retained registration, and will continue to access generous commonwealth [...] tax concessions.’

Solvency Essentials

The ACNC’s governance requires a charity’s responsible persons to ensure that their charity is not operating while insolvent.

Charities must take reasonable steps to ensure its responsible persons fulfil duties set out in the standard.

For a charity that is a company, in addition to standard 5, duties set out in the Corporations Act 2001 apply to responsible persons (directors), including the duty to prevent insolvent trading. If a charity that is a company continues to operate while insolvent, its directors may be subject to legal action.

Charities incorporated as associations might also have responsibilities to their state and territory regulators.

The ACNC wants charities to be aware of warning signs that might indicate a charity is facing financial trouble.

The commission nominates:

  • Difficulty in paying bills for goods and services
  • A history of financial losses in consecutive financial periods
  • Trouble producing accurate and timely information about performance and financial positions
  • Overdue tax debts (for example, superannuation guarantee contributions, PAYG withholding, and GST)
  • Late payments to creditors that have resulted in stricter credit terms and creditors requiring cash-on-delivery payment
  • Payments being declined (for example, payments by credit cards and cheques)
  • Loan applications being declined o Trouble paying staff on time
  • Loss of a major income source or significant funding
  • Relying on funding from unreliable sources
  • A noticeable increase in costs or decrease in income compared with budget projections
  • Creditors threatening or commencing legal action for unpaid debts, and
  • Board members or staff raising concerns about the charity’s financial situation.

Annual Information Statement

The ACNC’s 2021 Annual Information Statement Guide aims to help charities complete their annual information statements.

The commission recommends that you use the AIS checklist before filing your statement.

Unlawful behaviour

The federal government has tabled regulations in Parliament that strengthen governance standards, ensuring that registered charities do not engage in or actively promote unlawful activity.

The regulations reaffirm that compliance with Australian laws sets a minimum benchmark by which registered charities should govern themselves.

The changes will empower the ACNC commissioner to investigate registered charities engaging in or actively promoting theft, vandalism, trespass, and assault and threatening behaviour, and to take appropriate enforcement action if warranted.

Registered charities that act lawfully and do not use their resources to promote others to engage in unlawful activities already comply with the amended standards.

Charities will not be deregistered for inadvertent or unintentional non-compliance. Education underpins the ACNC’s regulatory approach, and revoking registration is reserved for serious and deliberate contraventions.

The ACNC will provide guidance to registered charities once the amended standard comes into effect to help them to understand and comply.