1. ACNC community presentation January - February 2013

2. Not-for-Profit Sector Reform Office for the Not-for-Profit Sector Department of the Prime Minister and Cabinet

3. So why reform?  To recognise the growing significance and contribution of the NFP sector  Current regulation is unnecessarily complex and burdensome  Excessive red tape in Government contracts and grants  Need to support the long-term sustainability and growth of the sector to continue to provide vital services

4. 4 Government Reform Agenda

5. Reform achievements to date Achievements of the NFP reform agenda  Office for the Not-for-Profit Sector and Compact Advocates  NFP Satellite Account  Low-risk procurement and grant templates and National Standard Chart of Accounts  Changes to Commonwealth Grant Guidelines  National Volunteering Strategy

6. Priorities for 2013 (NFP reform) Next steps (NFP reform)…  Draft Consultation Code under the National Compact – March 2013  Anti-gag legislation – early 2013  Better delivering the support currently provided through tax concessions to the sector  Statutory definition of ‘charity’ – mid 2013  Fundraising reform – options paper expected early 2013  Ongoing work with states to territories to reduce regulatory burden on NFPs

7. Useful contacts and resources ACNC - www.acnc.gov.auwww.acnc.gov.au Sign up to the Commissioner’s Column for regular updates Twitter - @acnctaskforce Facebook - Facebook.com/acnctaskforce LinkedIn - Aussie Charities and NFPs YouTube - www.youtube.com/acnctaskforcewww.youtube.com/acnctaskforce You can also contact the ACNC on: Phone: 13 ACNC (13 22 62) Email: advice@acnc.gov.auadvice@acnc.gov.au Office for the Not-for-Profit Sector - nationalcompact@pmc.gov.aunationalcompact@pmc.gov.au Phone: 1800 607 839 TTY: 1800 555 677 and ask for 1800 607 839. Not for Profit website - www.notforprofit.gov.auwww.notforprofit.gov.au National Compact website - www.nationalcompact.gov.auwww.nationalcompact.gov.au Treasury website - www.treasury.gov.auwww.treasury.gov.au Staying up to date

8. ACNC community presentation January - February 2013

9. Overview of Topics Introduction to the ACNC Key activities of the ACNC Benefits of registration Obligations of charities to the ACNC Ways the ACNC will inform and support charities Comments and questions

10. What is the Australian Charities and Not-for-profits Commission? The ACNC is the independent national regulator of charities. Established on 3 December 2012 56,606 registered charities. The ACNC: registers organisations as charities helps charities understand and meet their obligations through information, guidance, advice and other support maintains the ACNC Register works with governments and government agencies across jurisdictions to develop a simplified reporting framework.

11. ACNC object 1: Maintain, protect and enhance public trust and confidence in the Australian not-for-profit sector. Online charity registration – 100% take-up 52 new charities registered with the ACNC Average registration time: 10 days 31 complaints / concerns about charities received by ACNC Advice Services Basic ACNC Register established – 20,000 visits Increased public awareness of the Register

12. ACNC object 2. Support and sustain a robust, vibrant, independent and innovative Australian not-for-profit sector. 13 ACNC open for 12 hours on weekdays (8 am to 8 pm AEDST) 2173 calls answered in 11 seconds (on average) Enquiries: 644 emails, 201 written queries and 25 faxes responded to in 1 day (on average) acnc.gov.au 53,000 visits On our website: Factsheets Guide to the ACNC Act in plain language Detailed guides, quick tips, frequently asked questions.

13. ACNC object 3. Promote the reduction of unnecessary regulatory obligations on the sector. ACNC Reporting and Red Tape Reduction Directorate ACNC Chair Reducing Regulatory NFP Duplication Working Party with the PM&C Data Standardisation – adoption of the National Standard Chart of Accounts (NSCOA) and alignment with Standard Business Reporting (SBR) Charity Passport – progressively implemented from July 2014 - ACNC collect data from registration and AIS and provide to authorised Cwlth agencies = key element of report-once, use often.

14. Progress in red tape reduction continued Streamlined Reporting Working Groups across Cwlth (eg DEEWR, ISCA, ACARA, NCEC for non-govt schools) Commonwealth Grant Guidelines have been amended to improve and simplify interactions around grants between the Government and the sector Working with other regulators (eg ASIC and ORIC) to remove or minimise duplication Collaborating with State and Territory government agencies to minimise duplicated regulatory obligations wherever possible (eg SA) Annual Report to Parliament to map progress in achieving meaningful red-tape reduction for charities.

15. The ACNC Register free, online, public register of ACNC registered charities at acnc.gov.au. Initial information on the ACNC Register includes the charity’s: legal name Australian Business Number (ABN), which links to their record on ABN Lookup. This record includes basic information such as the types of tax concessions your organisation receives and whether it has the deductible gift recipient (DGR) status state or territory of registration. – continued…

16. The ACNC Register In future, the ACNC Register will also list: business address and contact details the type of charity it is registered as registration date responsible person details (including names and positions) a copy of the governing rules the annual information statements provided to the ACNC, including financial reports and audit reports if the charity is medium or large and thereforerequired to provide these enforcement action taken by the ACNC (such as warnings, directions, or removal of director)

17. ACNC Mailout Staged mailout to 56,606 charities previously registered with the ATO Commencing 29 January 2013 Form to capture information from you in one interaction The form is also available online as a fillable pdf Information we receive will help us update the ACNC Register Please call us if you do not receive the letter by mid-March 2013

18. Obligations to the ACNC Obligations vary depending on the charity’s size Small charities do not need to provide as much information as medium or large charities. A charities size is determined by its annual revenue small – annual revenue less than $250 000 medium – annual revenue between $250 000 and $1 million large – annual revenue is $1 million or more.

19. Obligations to the ACNC continued To maintain ACNC registration, all registered charities need to: notify us of certain changes, such as: – service address, legal name, governing body members, governing rules keep records – financial records, operational records report to us each year meet governance and external conduct standards from 1 July 2013. Some exemptions for basic religious charities and non-government schools.

20. Reporting to the ACNC Annual information statement (AIS) All registered charities have to submit an annual information statement The AIS will be brief and it will cover information that charities already know, such as: – how the charity works towards its charitable purpose – the number of volunteers and paid staff – the type of people (or animals!) who benefit from the charity's activities. Where we already have information from you we will pre-populate the AIS The first AIS is due six months after the 2012–13 reporting period (for most this will be December 2013)

21. Transitional Annual Information Statement (TAIS) 2012-2013 What you need to do this year. Plan to file your TAIS electronically after July 2013 Don’t forget: - Your answers will be published on the ACNC register There are penalties for not filing the TAIS or for deliberately providing misleading information Tips to help you prepare for the TAIS: - Research - Grouping - Financial year-end What happens next?

22. Timeline for reporting December 2012 July 2014 Financial reporting, governance standards and external conduct standards regulations come into effect under the ACNC Act Registered charities have six months from July 2013 to submit a basic annual information statement (non-financial information) to the ACNC ACNC commenced operation as the national charities regulator July 2013 January 2014 First financial reporting year Registered charities have six months from July 2014 to provide first full annual information statement (including financial report for medium and large charities) to the ACNC

23. Finding out more: www.acnc.gov.au Providing you with access to information is a priority for us Weekly Commissioner Column (sent to 6,193 subscribers) Media alerts and releases and newsflashes Aboriginal Liaison officers podcasts and videos – coming soon Phone: 13 ACNC (13 22 62) 8 am to 8 pm AEDST Email: advice@acnc.gov.auadvice@acnc.gov.au Social media: facebook.com/acnc.gov.au twitter.com/acnc_gov_au youtube.com/ACNCvideos

24. ACNC Regulatory Approach Consultation

25. Preliminary regulatory approach Tell us what you think of our regulatory approach including: - online survey https://www.surveymonkey.com/s/ACNCregulatoryapproachonline survey - call us on 13 ACNC (13 22 62) on Wednesday 20 February Formally closes 1 March 2013 Feedback from today’s sessions Focus on case studies

26. Online results so far …

27. When and how we will act Act based on risks and evidence Begin by assuming honesty Use least coercive powers to address concerns Options include: advice, education, support no-action letters referrals – collaborating with other regulators administrative penalties warnings directions enforceable undertakings injunctions suspension/removal revocation

28. Regulatory pyramid of compliance and support Examples: Misuse of charity for serious criminal purposes (including financing terrorist activities) or significant private benefit Examples: Entry into financial transactions that risk insolvency; Involvement in illegal activity; Private benefit obtained by a board member. Examples: Evidence of excess financial benefit to owners; evidence of tax evasion. Examples: Repeated failure to lodge documents on time; innocent mistake as to how many board members are needed to make a decision. Examples: Forgetting to lodge a statement or report; making a minor mistake in a financial report; common mistakes or misunderstandings.

29. Factors to consider Type of problem What/who at risk Likelihood and frequency Potential impact Risk profile Behaviour of those responsible What other factors should we consider? What do you see as the key risks to public trust and confidence that we should focus on?

30. Case studies Six case studies with examples of how we might approach them In groups, discuss examples Half should focus on Examples 1, 3, 5 Other half to focus on Examples 2, 4, 6 Tell us whether you agree with our approach or what you might do differently.

31. Example 1: Internal disputes The ACNC receives a complaint from the treasurer of a charity about the election of board members. The ACNC is satisfied that the problem centres on personal difficulties between board members and that the charity’s funds, assets and clients are not at risk. We think: We should not take further action, as it is not the ACNC’s role to intervene in internal disputes. We would, however, refer them to relevant resources on our website and suggest that they consider a mediation service, such as the free service provided by their state government. We would also ask if they are a member of a peak body, which may be able to assist.

32. Example 2: Concerns about service delivery The ACNC receives a complaint that a charity that provides accommodation and meals to people experiencing homelessness is not meeting mandatory food quality standards. However, the complaint does not appear to raise any larger issues concerning the running of the charity. We think: We should not take further action, as we do not have power to regulate service quality. We would, however, give the person who made the complaint details of the regulatory authority monitoring food quality and health standards.

33. Example 3: Natural disasters A natural disaster strikes overseas. The ACNC circulates educational materials to explain to charities how they can lawfully help disaster victims. Through media monitoring, the ACNC becomes aware that several charities are fundraising for the disaster although the purposes of these charities are established to address disadvantage in Australia. We think: We should talk to the charities and give them advice as to how they can lawfully raise funds for the disaster. If we are satisfied that they will follow our advice and there are no other risk factors, we would not take further action, except to check at a later date that had followed our advice.

34. Example 4: Failure to file annual information statements The ACNC publicises the need for registered charities to lodge their annual information statement. However, it becomes aware through its regular monitoring that a number of charities are late in lodging their statements. We think: We would talk to the charities and ask them why their statements are late. If they are unaware that they need to lodge them, we would explain how to do it and give them a reasonable time to do so. If there have been circumstances outside their control that have made them late, we will usually give them a reasonable time to do so and follow up afterwards. If a charity simply refuses to lodge their statement for no good reason, it will need to pay administrative penalties. If the charity continues to fail to lodge, we will consider using our enforcement powers in a graduated way.

35. Example 5: Conflict of interest The ACNC becomes aware that a number of board members on a charity have failed to disclose a conflict of interest to other board members. The conflict of interest relates to a supply contract for new equipment. The contract has resulted in the board members receiving material personal benefits. The charity is a federally regulated entity under the ACNC Act. We think: We would first talk to the charity and the board members to find out how this happened and what the consequences are. If other board members can think of ways to address the issue, the ACNC may agree to a proposed course of action and follow up. If not we may take further action.

36. Example 6: Non-charitable purposes The ACNC receives a complaint that a charity registered for the purposes of research has conducted no research. After an investigation, the ACNC learns that the main expenses are for luxury items for the personal use of the staff and, after assessing all the evidence, it becomes clear that the charity's activities do not match their stated purpose. We think: This organisation is not and was never intended to be a charity, so there is no reason to use our powers to ‘get them back on track’. So, after giving them notice and a chance to explain, and not receiving an acceptable explanation, we would revoke their ACNC charity registration retrospectively and refer the matter to the Australian Taxation Office (ATO).

37. How to give us your feedback www.acnc.gov.au (under Contact us)www.acnc.gov.au email consultations@acnc.gov.auconsultations@acnc.gov.au call us on 13 ACNC (13 2262) on Wednesday 20 February or send completed form to: Level 1, 747 Collins St Docklands VIC 3008 Thank you!