A third party is an organisation or individual that formally or informally collaborates with a charity to advance the charity's purposes.
It includes organisations with which the charity has some form of membership, association or alliance as well as other types of arrangements (including any agreement, promise or undertaking - express or implied - and whether or not legally enforceable).
When the External Conduct Standards apply to work with third parties
Working with a foreign organisation
An Australian charity provides improved sanitation to overseas rural communities. It has a partnership with a foreign charity not registered in Australia to help with sourcing local materials and labour.
The Australian charity must comply with the External Conduct Standards for its own activities overseas, as well as those of the foreign charity that relate to the projects they work on together.
Working with multiple foreign organisations
An Australian charity works with a charity overseas that is not registered with the ACNC. The Australian charity provides funds to help the overseas charity purchase and supply food to villages experiencing drought and other disasters. The overseas charity then works with other organisations overseas that aren't registered in Australia to help it distribute the supplies.
The Australian charity must comply with the External Conduct Standards for its own activities overseas as well as those of its overseas partner charity and the other organisations the partner charity works with on this project.
Working with a related party
An Australian charity raises money to help alleviate hunger in locations around the world. It gives all the funds it raises to a parent charity in the United States. The parent charity then disburses the funds to various causes around the world in line with its mission.
The Australian charity must comply with the External Conduct Standards for the transfer of funds to its parent organisation overseas, as well as the parent organisation's distribution of those funds.
Working with third parties whose work is overseen by another responsible body
A church in Australia is registered as a charity with the purpose of advancing religion throughout the world. It transfers funds to the bank accounts of two ministers based in Thailand to cover their living costs while they carry out their activities to advance religion. The church in Australia does not control how the ministers carry out their activities in Thailand - the ministers and their activities are overseen by a church governing body in Thailand.
The Australian church must comply with the External Conduct Standards for the transfer of funds to the ministers, as well as the ministers' use of those funds.
When the External Conduct Standards do not apply to a charity's work with a third party
There are two circumstances in which the External Conduct Standards do not apply to a charity's work with a third party:
- The third party is a charity registered with the ACNC
Because the third party is a charity registered with the ACNC, it has its own obligation to comply with the External Conduct Standards.
- The collaboration with a third party is not directly related to the charity's purpose
For the External Conduct Standards to apply to a charity's collaboration with a third party, the collaboration must directly advance the charity's purpose. If the third party's activities in the collaboration only support the charity's purpose in an indirect way, the charity does not need to comply with the External Conduct Standards for the collaboration.
Third party registered with the ACNC
Education For Kids is a charity registered with the ACNC and based in Australia. It sends money overseas to another charity, Cambodian Aid Inc, which is also registered with the ACNC. Cambodian Aid Inc works in local communities in Cambodia to provide school children with books and healthy lunches.
Because Cambodian Aid Inc is also a charity registered with the ACNC, it has its own obligation to comply with the Standards for its operations outside Australia.
Education For Kids must comply with the External Conduct Standards for the management of the money it sends overseas. Cambodian Aid Inc must comply with the External Conduct Standards for its activities overseas.
Education For Kids does not need to comply with the External Conduct Standards for Cambodian Aid Inc's activities overseas.
Collaboration not directly related to the charity's purpose
A charity based in Australia provides educational support in remote communities overseas. The charity separately works with a company located in China that provides IT support for its online financial management and reporting systems. The IT support from the Chinese company does not extend to the charity's educational support activities. The Chinese company providing IT support is not considered to be collaborating with the charity in a way directly related to the charity's purpose.
The charity does not need to comply with the External Conduct Standards for the activities of the Chinese company providing IT support.