Governance standards for charities registered with the Australian Charities and Not-for-profits Commission (ACNC), commenced operation 1 July 2013.

What are the standards?

Standard 1: Purposes and not-for-profit nature of a registered entity

Charities must be not-for-profit and work towards their charitable purpose. They must be able to demonstrate this and provide information about their purpose to the public.

The most common steps your charity can take to meet this standard are to:

  • have clauses in your governing documents setting out your charitable purpose and not-for-profit nature
  • run your organisation as a charity (by following its purpose and being a not-for-profit)
  • provide your governing documents to the ACNC to be uploaded on the ACNC Register.

Standard 2: Accountability to members

Charities that have members must take reasonable steps to be accountable to their members and provide their members adequate opportunity to raise concerns about how the charity is governed.

 

The most common steps your charity can take to meet this standard are to:

 

  • organise a meeting at least annually with your members (such as an annual general meeting) with opportunities to ask questions and vote on resolutions
  • give information to members on the charity’s activities and finances
  • have clear processes for appointing responsible persons. This can include setting out the process in your governing documents.

 

Charities should keep records of their members and keep this list updated.

Standard 3: Compliance with Australian laws

Charities must not commit a serious offence (such as fraud) under any Australian law or breach a law that may result in a penalty of 60 penalty units (currently $10 200) or more.

There are some simple steps your charity can take to reduce the risk of breaching this standard. In most cases, this relates to common sense and good practice, such as being familiar with the main areas of regulation relating to your charity, having some basic financial controls, and having a process to ensure your charity meets its legal obligations. The extent and type of processes and controls that are reasonable for each charity will vary depending on their situation (size, activities and so on).

Standard 4: Suitability of responsible persons

Charities must check that their responsible persons (such as board or committee members or trustees – called ‘responsible entities’ under the ACNC Act) are not disqualified from managing a corporation under the Corporations Act 2001 (Cth) (Corporations Act) or disqualified from being a responsible person of a registered charity by the ACNC Commissioner. Charities must take reasonable steps to remove any responsible person who does not meet these requirements.

Your charity meets the first part of this standard if, before it appoints a responsible person, it:

  • searches the ASIC Disqualified Persons Register 
  • searches the ACNC Register of Disqualified Persons 
  • requires all its responsible persons to sign a declaration relating to disqualifying offences.

You should also take these three steps for existing responsible persons.

Standard 5: Duties of responsible persons

Charities must take reasonable steps to make sure that responsible persons understand and carry out the duties set out in this standard.

The most common steps your charity can take to meet this standard are to:

  • bring these duties to the attention of responsible persons such as outlining their duties in their letter of appointment
  • provide information to responsible persons on their duties to refresh their knowledge
  • encourage responsible persons to attend, prepare for, and participate at meetings
  • have processes in place to manage conflicts of interests
  • if it comes to your attention that a responsible person may not be carrying out their duties, take reasonable action.