ACNC’s Firm Hand – Cracking Down on Charity Compliance in 2024-2025

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In the realm of charity governance and regulation, staying compliant with the law is paramount. With the Australian Charities and Not-for-profits Commission (ACNC) taking a firm stance on ensuring transparency, accountability, and integrity within the charitable sector, it’s crucial for charities to understand and adhere to the evolving compliance standards.

In an announcement made on 20 March 2024, the ACNC has unveiled its compliance and enforcement focus for the fiscal year 2024-2025. This announcement serves as a clarion call for charities to buckle up and tighten their compliance frameworks to avoid potential scrutiny and penalties.

Understanding the ACNC’s Compliance Priorities

The ACNC’s compliance and enforcement focus for 2024-2025, as outlined on their website, underscores several key areas of scrutiny:

  1. Financial Accountability: Charities are expected to maintain sound financial management practices, ensuring that funds are used appropriately and in accordance with their charitable purposes. The ACNC will closely monitor financial statements, disclosures, and expenditure patterns to identify any irregularities or mismanagement.
  2. Governance Practices: Strong governance is the bedrock of any reputable charity. The ACNC will assess charities’ governance structures, board oversight, and decision-making processes to ensure adherence to best practices and legal requirements. Any instances of conflicts of interest, nepotism, or breaches of fiduciary duty will be rigorously addressed.
  3. Misuse of Charitable Funds: Charitable funds are intended for advancing the organisation’s charitable objectives, not for personal gain or private benefit. The ACNC will investigate any indications of misappropriation, diversion, or improper use of funds, holding accountable those responsible for such actions.
  4. Compliance with Regulations: Charities must comply with relevant laws, regulations, and reporting requirements. Failure to meet these obligations can result in penalties, sanctions, or revocation of charity status. The ACNC will focus on ensuring that charities fulfill their regulatory obligations promptly and accurately.

The ACNC has stated that they will specifically focus on conduct that harms vulnerable people (particularly children), misuse of charity for terrorist purposes (whether directly or indirectly) and activities that put a charity at risk of having a disqualifying purpose.

Implications for Charities

For charities operating in Australia, the ACNC’s compliance priorities for 2024-2025 carry significant implications:

  • Heightened Scrutiny: Charities can expect increased scrutiny from the ACNC, with a particular focus on areas of potential risk or non-compliance. It is imperative for charities to conduct internal reviews, audits, and risk assessments to identify and address any areas of vulnerability proactively.
  • Investment in Compliance Infrastructure: To navigate the evolving regulatory landscape, charities must invest in robust compliance infrastructure, including policies, procedures, and internal controls. Embracing transparency, accountability, and ethical conduct will not only mitigate regulatory risks but also enhance public trust and confidence in the organisation.
  • Engagement with Regulatory Authorities: Charities should maintain open lines of communication with the ACNC and other regulatory authorities. Proactive engagement, timely reporting, and cooperation with investigations demonstrate a commitment to compliance and may mitigate the severity of enforcement actions in case of any discrepancies.

Conclusion

As the regulatory landscape evolves and public expectations regarding transparency and accountability continue to rise, charities must prioritise compliance with regulatory requirements.

The ACNC’s compliance and enforcement focus for 2024-2025 underscores the importance of maintaining robust governance, financial integrity, and ethical conduct within the charitable sector. By embracing a culture of compliance and adopting proactive measures to address potential risks, charities can navigate regulatory challenges effectively and uphold their commitment to serving the public good.

If you’re considering if you need help regulating your charity or not-for-profit, contact our team today.

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