Are you an Australian registered charity operating in the Pacific? Part 2

Make sure you’re complying with the ACNC External Conduct Standards

Sarah Johnson

Many Australian not-for-profit organisations operate in the Pacific region. If you are a charity registered with the Australian Charities and Not-for-profits Commission (ACNC), you are required to ensure you carry out your activities in accordance with the ACNC External Conduct Standards (ECS).

In Part 2 of our series on the ECS, we look at ECS 1 - Activities and Control of Resources.

Under this standard, charities must:

1. take reasonable steps to ensure that their:

   1. activities outside Australia are consistent with their purpose and character as a not-for-profit; and

   2. funds, equipment, supplies and other resources provided to third parties outside Australia are applied:

      1. in accordance with their not-for-profit purpose and character; and

      2. with reasonable controls and risk management processes in place; and

2. maintain reasonable internal control procedures to ensure that funds, equipment, supplies and other resources are used outside Australia in a way that is consistent with their not-for-profit purpose and character.

This standard also requires charities operating overseas to comply with applicable Australian laws in connection with:

• money laundering;

• financing of terrorism;

• sexual offences against children;

• slavery and slavery-like conditions;

• trafficking in individuals and debt bondage;

• people smuggling;

• international sanctions;

• taxation; and

• bribery.

The ACNC guidance on compliance with Standard 1 sets out a number of matters which may be considered “reasonable steps” to comply with this standard including:

1. Ensuring all overseas activities and funding requests are properly approved;

2. Having clear policies outlining the approval process for overseas activities and funding requests and keeping records of decisions;

3. Ensuring the charity's funds and projects are approved by more than one person;

4. Using secure, monitored services when transferring funds, for example, formal banking systems and asking recipients to confirm receipt of the funds;

5. Checking the reputation and experience of third parties to decide whether they are suitable and whether they share the charity's values;

6. Making sure the third parties have appropriate management policies and procedures;

7. Having written agreements with third parties that clearly set out the functions and responsibilities of everyone involved;

8. Having thorough recruitment procedures for staff and volunteers that include appropriate background checks;

9. Monitoring overseas projects (including those undertaken by third parties) and asking for regular reports on progress and finances;

10. Reviewing progress reports for overseas projects at each board meeting;

11. Establishing procedures to detect wrongdoing including keeping records of transactions and reviewing them to ensure they are accurate and consistent with approved funding levels;

12. Keeping a register of the charity’s equipment and monitoring its use including making sure the equipment is stored securely;

13. Monitoring the continued eligibility of the charity’s beneficiaries;

14. Developing a procedure for approving all new projects, as well as conducting regular reviews of existing projects, to ensure they are aligned with its charitable purpose;

15. Making sure the charity has a process that allows people to report suspected wrongdoing without fear, recrimination or disadvantage.

For more information on how we can assist your Not For Profit to comply with the ECS, please contact us.