Introduction

On 21 March 2013, a motion to disallow the Australian Charities and Not-for-profits Commission Amendment Regulation 2013 (No 1) (Regulations), which contains the Governance Standards (Motion), was presented to the Senate.

On 27 June 2013, the Motion to disallow the Regulations was withdrawn.

Date of effect

Accordingly, the Governance Standards came into effect on 1 July 2013. These Governance Standards establish a minimum level of requirements for governance, which charities must comply with to remain registered with the Australian Charities and Not-for-profits Commission (ACNC).

What are the ‘Governance Standards’?

The five Governance Standards under the Regulations apply to all registered charities, except basic religious charities. They are:

  • Standard One: Purposes and not-for-profit nature of a charity
  • Standard two: Accountability to members
  • Standard three: Compliance with Australian laws
  • Standard four: Suitability of directors
  • Standard five: Duties of directors.
  • What does that mean for the charities?

Best practice measures which charities could consider implementing or undertaking include:

  • introducing board charters (signed by each director), or reviewing and amending existing board charters, so the documents incorporate best practice governance. A charter should detail:
    • board composition and process, including notifications required if the director becomes disqualified as well as a requirement to resign
    • board role and responsibilities, including the new directors’ duties
    • the relationship and interaction between the board and management
    • the authority delegated by the board to management and board committees, and
    • board procedures.
  • creating procedures regarding vetting and ongoing review of directors –  this should include at least annually searching the disqualified directors register, conducting a working with children check (if applicable) and reviewing and considering the desired or ideal skills and experience of directors
  • board and management training on the new Governance Standards, especially standard 5 (duties of directors), and
  • developing, or reviewing and amending, processes and procedures regarding:
    • provision of information to members about the charity’s purposes and finances, and
    • avenues for members to raise concerns about the operations or governance of a charity, in order to be accountable to members.