This article provides an update to our article published in November 2020 ‘Breaking: Charities to lose charitable status if they fail to join the National Redress Scheme’.

ACNC Governance Standard 6

 Today, the Australian Charities and Not-for-profits Commission (ACNC) announced the introduction of a new governance standard: Governance Standard 6 – Maintaining and enhancing public trust and confidence in the Australian not-for-profit sector (Governance Standard 6).

The stated object of Governance Standard 6 is to ‘maintain and enhance the public trust and confidence in the Australian not-for-profit sector by ensuring that a registered entity’s governance enables it to be accountable for its past conduct relating to institutional child sexual abuse’ (Section 2 of Schedule 1 to the Australian Charities and Not-for-profits Commission Amendment (2021 Measures No. 1) Regulations 2021 (Cth) (Regulations)).

Governance Standard 6 requires registered charities to take reasonable steps to participate in the National Redress Scheme where the charity has been named, or is likely to be named, in an application (or otherwise) to the National Redress Scheme for Institutional Child Sexual Abuse (National Redress Scheme). This could include registered charities that were named in the Royal Commission into Institutional Responses to Child Sexual Abuse, but may not have been identified so far in a redress application.

 A registered charity will only be impacted if it is, or likely to be, identified as being involved in the abuse of a person in the context of 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). 

The ACNC has indicated that it will investigate breaches of Governance Standard 6 if it is notified, including by the operator of the National Redress Scheme (Department of Social Services (DSS)) that the charity has been named in an application (or otherwise) and has not taken steps to join the National Redress Scheme.

Basic Religious Charities

From 17 March 2021, there is an added eligibility requirement to meet to be Basic Religious Charity.

 From that date, a charity cannot be a Basic Religious Charity if it has been identified as being involved in the abuse of a person, either:

• in an application for redress under the National Redress Scheme; or
• in response to a request for information from the National Redress Scheme Operator (Secretary of the Department of Social Services);
  and
• it has not joined the National Redress Scheme as a participating non-government institution within 6 months of the application being made, or the response for the request for information was given, and
• the application for redress has not been withdrawn.
  (see Schedule 3 to the Treasury Laws Amendment (2020 Measures No. 6) Act 2020 (Cth)).

The ACNC Governance Standards do not apply to Basic Religious Charities. However, if the charity does not comply with this new criteria after 17 March 2021, it may lose its status as a Basic Religious Charity and may then be subject to all Governance Standards.

The ACNC has indicated that a charity may apply to be a Basic Religious Charity again later if it joins the National Redress Scheme and meets the other eligibility requirements.

DSS to name entities that do not join the National Redress Scheme

The above changes to the regulatory regime applicable to registered charities is in addition to the public policy position adopted by DSS which is that they will publicly name entities that fail to join the National Redress Scheme on being named in an application.

 What can your charity do?

Although a large number of registered charities will not need to do anything in response to these changes, if your charity has provided services to children prior to 1 July 2018, and you are aware of the likelihood of claims being forthcoming in the future, you should consider applying to join the National Redress Scheme now.

 Charities can participate in the National Redress Scheme by applying with DSS.

 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. 

If you would like to discuss joining the National Redress Scheme or have any questions in relation to the implications of Governance Standard 6, please do not hesitate to contact Jon Cheung or Sam Burnett.