Introducing The ACNC

The Australian Charities and Not-for-profits Commission (ACNC) is the independent national regulator of charities. It commenced operations on the 3rd of December 2012.

It was established under the Australian Charities and Not-for-profits Commission Act 2012 (Cth) (refer to section 10-5) and the Australian Charities and Not-for-Profits Commission (Consequential and Transitional Act) 2012 (Cth) (together, the Act) following a series of reviews and inquiries into the not-for-profit (NFP) sector in the mid-1990s.

Who is responsible for administering the ACNC?

The ACNC is overseen by Commissioner Hon Dr Gary Johns and a supporting leadership team. The Minister responsible for the ACNC is The Hon Michael Sukkar MP.

The ACNC is also supported by staff made available by the Commissioner of Taxation and is funded by the ATO’s departmental appropriations. In the 2018-19 income year, it had an annual budget of $16.2 million to carry out its objects and activities.

What are the objectives of the ACNC?

According to the ACNC, its key objectives are to:

• maintain, protect and enhance public trust and confidence in the Australian NFP sector;
• support and sustain a robust, vibrant, independent, and innovative NFP sector; and
• promote the reduction of unnecessary regulatory obligations on the sector.

These objectives are achieved by the Act, which:[1]

• establishes a national regulatory framework for NFP entities that reflects the unique structures, funding arrangements, and goals of such entities; and
• establishes the ACNC Commission, which:
  • is responsible for registering entities as NFP entities according to their types and subtypes;
  • administers the national regulatory framework; and
  • assists registered entities in complying with and understanding the Act, by providing them with guidance and education.

It is important to note that the ACNC does not regulate all NFPs, but rather, only those registered as charities. According to the Australian National Audit Office, the ACNC regulated 57,600 charities as of 3 February 2020.

[1] Refer section 15-5(2) of the Act

It is important to note that the ACNC does not regulate all NFPs, but rather, only those registered as charities.

What does the ACNC do?

In order to achieve its key objects, the ACNC performs the following activities:

• registers entities as not-for-profit entities according to their types and subtypes;
• helps charities understand and meet their obligations through information, guidance, advice and other support;
• helps the public understand the work of the NFP sector through information, guidance, advice and other support;
• maintains a free and searchable public register so that anyone can look up information about registered charities; and
• continuously works with state and territory governments and agencies to develop a streamlined reporting framework for charities.

The ACNC does not perform the following activities:

• regulate NFPs that are not charities;
• look into complaints about charities; or
• make decisions about which Commonwealth tax concessions a charity can receive.

What information is included in the ACNC register?

The online and searchable ACNC register contains information that charities have put in their Annual Information Statement, and some other documents.

The register allows potential donors and funding bodies to find accurate and reliable information about a charity, such as:

• what its purpose is;
• where it operates;
• what it does; and
• the names and roles of its responsible persons.

We will shortly be releasing an article, which considers in more detail the roles and responsibilities of responsible persons.

What are an organisation’s ACNC obligations?

Regardless of a charity’s size or annual revenue, if it is registered with the ACNC, it will have ongoing obligations to:

• maintain appropriate records;
• report annually via submission of the Annual Information Statement;
• notify the ACNC of any changes to its key details (within 28 or 60 days of becoming aware of the change, depending on the charity’s size); and
• remain eligible to be registered, by meeting minimum governance standards and other requirements.

Medium (>$250,000 annual revenue) and large charities (>$1m annual revenue) will also be required to submit an annual financial report to the ACNC.

In November 2020, the ACNC revoked the registration of 303 charities for twice failing to submit their annual information statements. This made these entities ineligible for charitable Commonwealth tax concessions. More than 10,600 organisations have lost their charity status for twice failing to submit their AIS since the ACNC commenced its review process in 2014-2015.

Accordingly, it is important to ensure that your charity continues to comply with each of the above obligations on an ongoing basis in order to ensure continued registration and access to concessions.

“REVOKING CHARITIES THAT ARE NO LONGER ACTIVE OR FAIL TO MEET THEIR OBLIGATIONS IS AN IMPORTANT PART OF THE ACNC’S ROLE AS THE REGULATOR”
— ASSISTANT COMMISSIONER, ANNA LONGLEY – NOVEMBER 2020

ACNC and Governance

The ACNC has also established five governance standards for charities that deal with how charities are to be run. At its broadest, these standards require charities to operate lawfully and with a charitable purpose, and be run in an accountable and responsible way.

These standards include:

• Purposes and NFP nature (requires charities to demonstrate they are NFP with a charitable purpose and that they are working towards that charitable purpose);
• Accountability to members (requires charities to take reasonable steps to be accountable to their members);
• Compliance with Australian laws (requires charities to not act in a way that, under Commonwealth, state or territory law, could be dealt with as either an indictable offence or a breach of the law);
• Suitability of responsible persons (requires charities to take reasonable steps to ensure responsible persons are not disqualified from managing a corporation); and
• Duties of responsible persons (requires charities to take reasonable steps to ensure their responsible persons are fit and proper and comply with requisite duties).

All charities, including small ones, must continuously meet these governance standards in order to be, and remain, registered with the ACNC.

Further information on these standards can be found at: https://www.acnc.gov.au/for-charities/manage-your-charity/governance-hub/governance-standards

Why is registration with the ACNC important?

Whilst registration with the ACNC is voluntary, it is a necessary precondition for an entity to access certain Commonwealth taxation concessions.

Registration is also a prerequisite for other exemptions, benefits and concessions provided under other Australian laws.

Compliance with other regulatory bodies

Finally, it should be noted that a charity must continue to comply with requirements that it has under other laws or regulatory regimes. For example, if your charity is an incorporated association, it will still need to meet obligations owed to the relevant state or territory association. Similarly, if your charity is public company limited by guarantee, certain ASIC requirements may apply.

The ACNC has announced that it is continuing to work to “streamline reporting and reduce red tape- for example, by accepting some reports submitted to other agencies”.

According to the Australian National Audit Office (which conducted a review of the ACNC over the 2019-2020 income year): within its remit and authority, the ACNC has been largely effective in promoting the reduction of unnecessary regulatory obligations on registered charities, but was less able to demonstrate its effectiveness in supporting and sustaining a robust, vibrant, independent and innovative not-for-profit sector.

How can we assist?

We can assist you in registering your organisation with the ACNC (provided relevant criteria are satisfied) and meeting your annual reporting and compliance requirements. We can also assist in updating your organisation’s details within the requisite timeframe in order to ensure that no penalties arise/your charity continues to remain eligible for registration with the ACNC.

Please contact us if we can assist you with any of the above, or if you have any other questions about the nature and role of the ACNC.

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