Governance Standard 3 requires charities to not act in a way that, under Commonwealth, state or territory law, could be dealt with as:
- an indictable offence (being a serious crime that is generally tried by a judge and a jury), or
- a breach of law that has a civil (not criminal) penalty of 60 penalty units (currently $12,600) or more.
Purpose of this standard
Acting lawfully helps protect a charity’s assets, reputation and the people it works with.This standard does not impose a new burden on charities as they are already required to follow Australian laws. The standard allows the ACNC to investigate potentially serious breaches of law.
Ways to meet this standard
You can take some simple steps to reduce the risk of your charity breaching this standard. In most cases, common sense and good practice will reduce risk, such as:
- being familiar with the main areas of regulation for your charity
- having some processes to protect your charity’s finances and assets, 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 its situation.
How the ACNC will approach this standard
The ACNC will not investigate every alleged breach of law by a charity.
The ACNC will only investigate serious offences (for example, fraud, money laundering or terrorist financing) that are likely to affect public trust and confidence and where this is necessary to protect the assets of the charity and the people it serves.
The ACNC will not investigate breaches of law or issues that other regulators or the police are better placed to handle. The ACNC will work with those agencies where appropriate.
Hands for Friends is a self-help group for people recovering from substance abuse.
The group has 20 members and five of those members form the charity’s board. They don’t often have legal issues and as far as they know, the charity has not acted in any way that could be a serious offence under Australian law.
Hands for Friends meets this standard.
The Red Tree is a charity that provides childcare services. Because the organisation must follow laws across a number of areas (including employment, working with children and food-handling), the agency had developed a document that sets out the areas of law that they need to comply with and what they are doing to meet these legal obligations. The board reviews this document regularly and considers whether any changes need to be made. As far as the board is aware, the charity has not acted in any way that could be a serious offence under Australian law.
The Red Tree meets this standard, and has taken reasonable steps to help ensure it does not commit serious offences.
The Good Kitchen operates a charity that gives food to people experiencing poverty. It has some paid staff but mostly relies on volunteers.
The ACNC receives evidence Good Kitchen is breaching health and safety laws. The ACNC refers the complaint to the relevant health and safety regulator as the issue more appropriately falls within their expertise. The breach is found not to be serious.
The Good Kitchen meets this standard.
Global Earth is established to provide training to the community on environmental issues.
It receives a large donation from one person. Global Earth contracts with another organisation to conduct training on its behalf.
The ACNC receives evidence that training was never conducted, the funding has been used fraudulently and that this organisation is controlled by Global Earth’s donor.
The ACNC does not need to wait for charges to be laid to start investigating this as a case of potential fraud committed by the charity. We may also consider whether it’s appropriate to notify other government agencies, such as the police if this relates to potential criminal offences.