Governance a key issue in first report on charity compliance

Posted by on 12/05/2015

In the first report issued by the ACNC on compliance activity by charities, Charity Compliance Report: December 2012—December 2014 and Beyond, 72 per cent of concerns that were substantiated and addressed by the ACNC were about breaches of the ACNC governance standards.

Of 1,307 concerns raised with the ACNC, 786 were resolved by the ACNC Advice Team, 521 were addressed in detail by the Compliance Team and 96 were the subject of a compliance case. With 67 per cent of complaints made by members of the public, it is clear that protecting public trust and confidence in Australia’s not-for-profit sector remains a high priority. The report shows that $100 million in charitable assets were protected.

However, revealing how clarity about good governance frameworks is yet to permeate the sector, issues such as charitable resources being used inappropriately for the private benefit of individuals controlling the charity or their associates; charities failing to follow their constitutions and not being transparent or accountable to members; and possible financial mismanagement and fraud within a charity were the most common concerns.

The analysis shows that while the majority of complaints came from the public, a further 18 per cent of concerns raised came from other government agencies and 15 per cent were identified from ACNC internal processes. While large charities only make up 17 per cent of registered charities, one-quarter (26 per cent) of concerns were raised about such charities (with revenue greater than $1 million). This reveals a specific area of focus for improving governance standards.

Sixty-two per cent of the charities subject to complaints have Deductible Gift Recipient status or operate a DGR fund, but only 32 per cent of registered charities have DGR status or operate a DGR fund.

Other issues that gave rise for concern included charities that appear to be harming their beneficiaries and sham charities soliciting funds, and fundraising scams generally.

By early 2015, nine charities had their charity status revoked through investigations. The ACNC gave one warning, issued one direction and entered into one enforceable undertaking.

The report is available on the ACNC website.

The ACNC has also released to the public the financial information of nearly 23,000 Australian charities. The public can access the information that has been provided by registered charities as part of their 2014 Annual Information Statements on the Charity Register. The ACNC is keen to increase the transparency of the sector. Accompanying the release is a new factsheet on interpreting the data, as the ACNC is keen that the public understand how to interpret the information available. For example, administration costs have always been a point of interest for donors and researchers and the factsheet aims to explain administration costs and why they are not a comprehensive or reliable measure of a charity’s work and its outcomes.

To search the ACNC Charity Register, visit acnc.gov.au/findacharity.

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