Breaking: Charities to lose charitable status if they fail to join the National Redress Scheme
November 2020 | News | Sam Burnett and Jon Cheung
Today the Commonwealth Government has announced that it will pass new laws to empower the Australian Charities and Not-for-profits Commission (ACNC) to deregister a charity that has not taken steps to participate in the National Redress Scheme for Institutional Child Sexual Abuse (National Redress Scheme) in circumstances where it has been named, or is likely to be named, in an application to the National Redress Scheme.
New Governance Standard
The Government will conduct consultation from 7 December 2020 to 9 January 2021 in relation to including a new Governance Standard to be introduced at Division 45 of the Australian Charities and Not-for-profits Regulations 2013 (Cth).
The proposed Governance Standard will require that the registered charity take all reasonable steps to join the National Redress Scheme where the charity has been named, or is likely to be named, in an application to the National Redress Scheme.
In the event a charity fails to meet the proposed Governance Standard, the ACNC will be able to exercise its regulatory powers which include:
- directions to the charity to take certain steps;
- enforceable undertakings;
- suspension, removal or appointment of responsible persons; and
- revocation of registration of the charity (with the result that the charity will not be able to access the relevant tax concessions provided by the Australian Taxation Office).
Basic Religious Charities
The Governance Standards do not apply to Basic Religious Charities, so the Government is also proposing amendments to the definition of Basic Religious Charities at section 205-35 of the Australian Charities and Not-for-Profits Commission Act 2012 (Cth) (ACNC Act). The Government proposes to introduce the amendment via the Treasury Laws Amendment (2020 Measures No. 6) Bill 2020 (Cth) before the end of the year.
The effect of the proposed amendments will be to remove Basic Religious Charity status from any entity who would be a Basic Religious Charity but for the fact of them being named in an application to the National Redress Scheme and failing to join the National Redress Scheme. Consequently, they would be subject to the Governance Standards and subject to the regulatory powers set out above.
Our preliminary view is that the mechanism to deregister a registered charity for failure to join the National Redress Scheme may more appropriately be addressed by including it as a requirement of registration at section 25-5 of the ACNC Act.
The reasons why a new Governance Standard may not be the most suitable mechanism to require charities to participate in the National Redress Scheme include that:
- the Governance Standards are designed to apply to all registered charities (that are not Basic Religious Charities);
- the ACNC is already able to revoke the registration of Basic Religious Charities under the ACNC Act including with reference to section 25-5 of the ACNC Act; and
- the proposed new Governance Standard would only be applicable to those institutions that have provided services to children prior to 1 July 2018.
Although there may be circumstances where a charity may reasonably determine not to join the National Redress Scheme, large numbers of charities have joined out of recognition of the importance of access to the scheme for those that have experienced abuse. This includes charities that do not anticipate being named in an application, but have nonetheless joined out of recognition of the civic importance of the scheme.
If you would like to discuss joining the National Redress Scheme or making a submission to the consultation in relation to the proposed Governance Standard please do not hesitate to contact Jon Cheung or Sam Burnett.
Prolegis Lawyers have:
- assisted a participating group of around 100 charities join the National Redress Scheme;
- assisted individual charities join the National Redress Scheme; and
- provided advice to charities in relation to particular applications made under the National Redress Scheme.
Please see the media release from Senator the Hon Anne Rushton, Minister for the Department of Social Services, and Senator the Hon Zed Seselja, Assistant Minister for Finance, Charities and Electoral Matters.