The ACNC announced on 11 March 2020 that it will review approximately 500 charities with DGR endorsement per year.

Starting in July 2020 the ACNC’s focus will be on PBIs. The ACNC intends to select and review approximately 500 PBIs for review on the basis of the following risk criteria:

• Where the PBI’s record on the ACNC Charity Register as at February 2020 shows that it:
  • had no governing document, or
  • had only one or no Responsible Person listed.
• The PBI was registered as a PBI before 3 December 2012 (that is, those in existence before the commencement of the ACNC).
• The PBI is not regulated by the Office of the Registrar of Indigenous Corporations (ORIC).

The ACNC may also review the registration of a PBI if a concern brought to the ACNC’s attention.

The following Q&A may be helpful to PBIs at this time:

1. Will I be contacted if my PBI is being reviewed?
Generally, no. The ACNC will only contact you if they have an issue with your charity’s registration.  This also means that your PBI may be reviewed without you knowing about it.

2. Can I specifically seek a review or an exemption from the review?
No.

3. What information will be used in the review?
The ACNC says that for its review, it will use the information it already has (this will include information you have previously submitted to them for example, in Annual Information Statements, financial statements and other documents you have uploaded) or is publicly available (this will include information on your PBI’s website, for example).

4. I am responsible for a PBI – What should I do?
We strongly recommend that in the first instance, you use the ACNC’s self-assessment tool as the first step to identifying if there is an issue.  We suggest that you seek legal advice if you have any questions as you undertake the self-assessment and also in respect of any issue that is identified in the self-assessment.  Finally, you should address any issue comprehensively ahead of the commencement of the ACNC review (that is, by 30 June 2020

The matters we particularly recommend you review carefully and where necessary seek advice about are:

• • Your PBI’s charitable purpose – Typically this will be in your constitution or equivalent document.  To be a PBI you must have the main purpose of providing benevolent relief to people in need.
  • Your PBI’s constitution and other information provided to the ACNC – we suggest that any constitution that has not been reviewed for some years should be reviewed now.  You should ensure that all documents about your PBI is on the ACNC register is up to date.
  • Your charity’s public information as well as other information the ACNC may request such as:
    • Your PBI’s website, annual report and other online documents (on your website or other websites)
    • Your PBI’s business or strategic plan – do these align with its charitable purposes?
    • Your PBI’s communication with donors.
    • Your PBI’s policies and procedures and other practices – how do these support your PBI’s compliance with the ACNC governance standards and if you operate overseas, the ACNC external conduct standards?
    • Your PBI’s records, noting that if you operate overseas, it is an external conduct standard that you obtain and keep records necessary to provide a summary of your activities outside Australia on a country by country basis for each financial year.

5. What will the ACNC do if there are issues following a review of my PBI?

The ACNC will contact you if it identifies an issue and it says that in such cases, it will work with the charity to resolve the issue.

Note that the ACNC also says the review is to enhance confidence in the charity sector by ensuring that DGR endorsements are for eligible charities.  If it finds that your PBI is no longer eligible for registration as a charity, the ACNC has the power to deregister your PBI.

6. What are the consequences if my PBI loses charity registration?
Loss of charity registration will mean that your PBI will cease to have income tax exemption, GST concession, FBT rebates and DGR endorsement.

If you have questions or require assistance, please contact Jae Yang (jyang@prolegis.com.au) or Jon Cheung (jcheung@prolegis.com.au). We regularly advise on PBI registration and compliance, and also on investigations by the ACNC.

The ACNC’s statement is available here: https://www.acnc.gov.au/for-charities/charity-tax-concessions/deductible-gift-recipients-dgrs-and-acnc/deductible-gift