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Each month the Australian Charities and Not-for-profits Commission (ACNC) registers and publishes a list of new charities on our website. A new group of people set out on a path to pursue a charitable cause. Our role is to ensure that charities meet their obligations set out in the law. Unfortunately, the charity path does not work out for every organisation and a small number may wish to exploit the benefits that come with being a registered charity, which is why charity regulation is essential.

Charities hold a special place in Australian society. They deliver significant public value in a wide range of areas such as health, housing, development, emergency relief, education, and faith based services (to name a few). To support this valuable work registered charities are granted generous tax concessions. With this privilege, donors, government and the broader community expect that charitable funds will be applied toward charitable purposes.

Most charities do the right thing and take their responsibilities seriously, carefully using their resources and being accountable to donors, the community and beneficiaries. However, there are a small number of charities that do the wrong thing and abuse their position and privileges. There are also a number of charities that set out with good intentions but, due to poor governance or mismanagement, place charitable funds and assets at risk of misuse.

Poor governance continues to be the common theme to emerge from our investigations. Of the concerns assessed by our Compliance team, the most common issues related to poor financial controls, inadequate due-diligence of employees and partners and a failure by the charity’s responsible persons to act in the best interests of the charity.

In instances of serious mismanagement and abuse the ACNC must and does act swiftly. The misuse of charitiable assets or funds not only impacts on the charity involved, it diminishes the public’s trust and confidence in the entire charity sector.

In 2017, the ACNC received 1,695 concerns about charities, which is an increase of more than 40 per cent on the previous year. The increase in concerns is in part due to the public’s increased awareness of the ACNC and the important role we play in addressing non-compliance and regulating the sector.

The ACNC continues to increase its capabilities to proactively identify charities at greater risk of misuse and non-compliance. In 2017, the ACNC partnered with the Australian Transaction Reports and Analysis Centre (AUSTRAC), in collaboration with the Australian Taxation Office (ATO) and the Australian Criminal Intelligence Commission (ACIC), to conduct a national risk assessment identifying the potential for money laundering and terrorism financing in Australia’s not-for-profit sector. The assessment is the most comprehensive analysis of Australian Government intelligence holdings and data sets in relation to Australia’s not-for-profit sector.

We also strengthened our connection with the private sector, working closely with AUSTRAC’s FINTEL Alliance, a world first public-private partnership that brings together 19 public and private sector organisations to combat money laundering and terrorism financing. Through the Alliance, we raised awareness of not-for-profit risks with Australia’s banking sector as well as improving information exchange with partner organisations.

The use of ACNC data and the data of other agencies assists us to identify emerging risks or risks that may otherwise go unreported. It is an effective way to focus on our compliance priorities, tailor our compliance initiatives and allocate our limited resources to have the greatest regulatory impact. In 2018, we will continue to build our intelligence capabilities, and establish a dedicated outreach function to engage early with charities that may be at increased risk of misuse.

Where we can, we share compliance data and information we have collected about charities. The purpose of this is twofold. Firstly, it allows us to share the lessons that can be learned from our investigations and support charities to better understand and mitigage similar risks. Secondly, it increases the level of transparency in the work of the ACNC and the investigations we undertake. We believe that by sharing our data, we can help prevent charities from not only making genuine mistakes, but also deter those who have more sinister intentions.

Our secrecy and privacy provisions limit the information that can be publicly released. Currently, we are unable to publish information about the reasons why we decided to revoke a charity’s registration. In our submission to the five-year review of the ACNC’s legislation, we raised this as an issue we feel needs to be addressed.

We would like the ability to disclose information where it is in the public interest – for example, confirming if an investigation has commenced, disclosing action the ACNC took in relation to a registered charity, and publishing why we decided to revoke a charity’s registration.

In this report, we have shared as much information as our secrecy and privacy provisions currently allow. We have included case studies which illustrate the types of investigations we undertake; however, it is important to note that these case studies are not based on individual charities, rather, they are a fictional amalgamation of the types of concerns we identify. As such, any likeness to real charities is coincidental.

In the future, we hope we can bring you real stories of not just the charities that do the wrong thing, but also success stories where the ACNC was able to help charities get back on track. Ultimately, we would like to see all charities succeed and fulfil the intentions they were set up to achieve.

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