30/07/2019

The Australian Charities and Not-for-profits Commission’s External Conduct Standards are now in force. The External Conduct Standards are a set of minimum standards for conduct, governance and behaviour that ACNC registered charities must comply with when operating outside Australia or when they are partnering with others to operate outside Australia.

  • Standard 1: Activities and control of resources (including funds)

This standard aims to give the public confidence that relevant charities are being managed in a way that ensures they:

  • remain solvent;
  • minimise risks to the charity’s assets;
  • ensure the charity and its resources are furthering its purposes; and
  • ensure the charity is operating in a manner that is consistent with its purpose and character as a not-for-profit entity.

It requires relevant charity to:

  • take reasonable steps to ensure that its activities outside Australia are carried out in a way that is consistent with its purpose and character as a not‑for‑profit entity; and
  • maintain reasonable internal control procedures to ensure that its resources (including funds) are used outside Australia in a way that is consistent with its purpose and character as a not‑for‑profit entity; and
  • take reasonable steps to ensure that the resources (including funds) given to third parties outside Australia (or within Australia for use outside Australia) are applied in accordance with its purpose and character as a not‑for‑profit entity and with reasonable controls and risk management processes in place.

In addition, relevant charities must ensure their activities outside Australia comply with Australian laws relating to:

  • money laundering;
  • the financing of terrorism;
  • sexual offences against children;
  • slavery and slavery‑like conditions;
  • trafficking in individuals and debt bondage;
  • people smuggling;
  • international sanctions;
  • taxation;
  • bribery.
     
  • Standard 2: Annual review of overseas activities and recordkeeping

This standard aims to ensure relevant charities carry out their activities in a manner that is transparent and accountable to the public. It requires relevant charities to obtain and keep records necessary to prepare a summary of its activities outside Australia on a country by country basis. The records must be kept for each financial year during which it operates outside Australia or gives resources (including funds) to third parties outside Australia (or within Australia for use outside Australia).

  • Standard 3: Antifraud and anticorruption

This standard has the same aims as for Standard 1 regarding public confidence in the management of relevant charities. It requires relevant charities to take reasonable steps to:

  • minimise any risk of corruption, fraud, bribery or other financial impropriety by its responsible persons (such as directors), employees, volunteers and third parties outside Australia; and
  • identify and document any perceived or actual material conflicts of interest for their employees, volunteers, third parties and responsible persons (such as directors) outside Australia.
     
  • Standard 4: Protection of vulnerable individuals

This standard aims to ensure relevant charities operate in a manner than minimises the risk of exploitation or abuse to vulnerable individuals. It requires relevant charities to take reasonable steps to ensure the safety of vulnerable individuals overseas.

If you want to discuss whether the External Conduct Standards apply to your organisation or how to ensure your organisation is compliant please get in touch with our dedicated Charities and Social Sector Group at Gilbert + Tobin.

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