If your organisation is a public benevolent institution (PBI), it could be subject to an Australian Charities and Not-for-Profits Commission (ACNC) review. Your organisation will be of particular interest to the ACNC if your ACNC record is out of date, if you are late with your annual reporting requirements or if important information is missing. We recommend all PBIs undertake the ACNC’s self-assessment and to get in touch with us if it reveals any questions or concerns you need help with.   

The ACNC is scheduled to commence a review of deductible gift recipient (DGR) endorsed charities from 1 July 2020, with an initial focus on PBIs.

The review is intended to further the ACNC’s goals of increasing trust and confidence in the charity sector and ensuring that charities with DGR status are correctly registered and endorsed.

The ACNC notes many charities were endorsed before the formation of the ACNC and as a consequence may not have assessed their ongoing compliance with the specific eligibility requirements in recent times.

While not directly linked to the ACNC review, it is important to note the Commonwealth Government does revisit the BGR regime from time to time with a view to reform. For example, see here. And while some of these reforms have been postponed due to COVID-19, we can still expect the reform agenda to be pursued in the coming months and years. 

What will the ACNC be reviewing?

From 1 July 2020, the ACNC will be reviewing charities with DGR endorsement. For the 2020-21 financial year the ACNC has specifically earmarked PBIs.

With approximately 3,200 registered PBIs, this means as many as 15% of all PBIs will be reviewed by the ACNC this financial year. Other DGR endorsed charities (such as health promotion charities) will not be included in this current review round.

The ACNC has stated that it will select approximately 500 PBIs using the following criteria:

• By February 2020, the charity’s record on the Charity Register:
  • had no governing document, or
  • had only one or no Responsible Person listed;
• The charity was registered as a PBI before 3 December 2012;
• The charity is not regulated by ORIC.

The ACNC will only be reviewing publicly available information or information that has already been provided to the ACNC, and charities won’t be required to provide further information unless an issue is identified by the ACNC.

The ACNC will continue to review the registration of charities, including PBIs, if a concern is brought to the ACNC’s attention.

What should you do?

Review your charity’s record on the ACNC Register

As a first step we recommend that you review your charity’s entry on the ACNC Charity Register and check all of your charity’s details are up to date. This includes making sure your Annual Information Statements are submitted, details of all current responsible persons (directors) are entered and the most recent version of your governing document(s), such as your constitution, is uploaded.

Ensure your charity understands and is compliant with its registration obligations

Charities are required to comply with the ACNC legislation including the External Conduct Standards and ACNC Governance Standards. Furthermore, the ACNC has published a Commissioner’s Interpretation Statement relating to PBIs (PBI CIS). We recommend that you review the PBI CIS and ensure ongoing compliance with its contents. We recommend that your board (or equivalent governing body as appropriate) undertake a review of compliance with these obligations and implement a policy to do so periodically.

Undertake the ACNC Self-Assessment Tool

The ACNC has prepared a self-assessment tool for charities to check whether your charity is complying with the key components of registration with the ACNC. The results from this assessment tool do not need to be submitted to the ACNC.

Ensure your charity’s constitution is compliant. To be eligible for endorsement as a PBI, your charity’s constitution must contain:

• a statement of your charity’s PBI purpose;
• a properly drafted not-for-profit rule;
• a properly drafted winding up rule; and
• a properly drafted rule describing what happens if DGR endorsement is revoked.

How G+T can help

Please get in touch with our charity experts if you have any questions in relation to the ACNC review process, need assistance with the recommended steps above, uncover a question or issue when self-assessing or have been contacted by the ACNC as part of the review process. We are here and happy to help.

Proper compliance is part of good governance which is essential for the longevity of a successful charity. Ensuring your charity understands and is compliant with its obligations will allow your charity to better focus on its charitable purpose!