Some charities face review of their governance and income use

The ACNC will be able to check charities to see if they have appropriate governance structures in place and use their income for charitable purposes. File picture

THE national regulator of charities, the Australian Charities and Not-for-Profits Commission, will be able to conduct risk reviews of charities after it receives money from the federal government.

The federal Budget included $2.9 million – to roll out over three years – for the ACNC to conduct risk reviews of charities.

The funding will allow the ACNC to undertake field-based compliance reviews to assess risk in the sector, intervene with charities before significant issues arise and where possible and appropriate, provide assurance to the public to maintain confidence in the sector.

In 2020-21 this will amount to $0.474m for the ACNC review program to implement reviews where charities are at risk of failing to meet the governance standards.

This will strengthen assurance that charities have appropriate governance structures in place and use their income for charitable purposes, including when responding to natural disasters.

Acting commissioner Anna Longley said it was a positive move that supported the ACNC to better support the sector consistent with its preferred regulatory approach to provide guidance to help charities comply with their obligations.

“We intend to conduct reviews of charities based on risks and issues that we identify through our engagement with the sector, compliance work and intelligence analysis,’’ she said.

“How we select each cohort will depend upon the risks that we seek to address.

“In future we may decide to produce educational resources for the sector to improve governance more broadly.

“We may also undertake further compliance activity if significant issues are identified.”

On March 6 the Morrison Government released its response to the 2018 Australian Charities and Not-for-profits Commission Legislative Review, which had recommended that an expansion of the powers to disclose information would increase public confidence that the regulator was actively pursuing misconduct and also provide salutary guidance to other charities about poor behaviour.

Once adopted the changes will allow ACNC via its commissioner the discretion to disclose information about regulatory activities (including investigations) when it is necessary to protect public trust and confidence in the sector.

At present the ACNC secrecy provisions prevent it from making information public about its regulatory activities except to respond to or clarify issues that have already been raised in the public domain by a charity.

If journalists or someone else raises concerns about a charity now the secrecy provisions prevent the commission from providing any information about what action the ACNC may take in relation to a charity.

These secrecy provisions extend even after the conclusion of an investigation and prevent the ACNC from giving an account of its findings.

This makes it difficult for the ACNC to show journalists and the community any action it may have taken.