Australian charities that operate overseas will soon have a new set of standards to help guide their behaviour and work in other countries. The Australian Charities and Not-for-profits Commission(ACNC) explains what the new External Conduct Standards mean for the country’s registered charities.
An important part of the great work many of Australia’s registered charities do each day involves helping people in other countries.
According to the ACNC’s most recent Australian Charities Report, nearly 10% of Australia’s charities operate overseas.
For some charities, this might involve actually setting up an operation in another country, or directly providing services to people overseas. For others, it might mean they fund the work of an organisation in another country, or that they send money to overseas beneficiaries.
There can be significant challenges for charities operating overseas in these ways:
- How do charities know that their money and services are being directed where they should be, or that their work is aiding their intended beneficiaries?
- How can charities be assured that their work or financing isn’t subject to fraud, and that its efforts overseas don’t fall victim to corruption?
- How do charities properly and adequately keep track of their overseas work and activities?
- What can charities do to protect those vulnerable people overseas it aims to help or support, and how can it protect any staff or volunteers it has operating overseas?
A new set of standards to be introduced later this month aim to provide guidance on charities’ overseas operations and work.
The External Conduct Standards (ECS) are a set of four standards that will govern a registered charity’s operations outside of Australia.
They aim to provide firm guidance and direction around some of the issues that charities operating overseas face, as well as set out baseline expectations for the behaviour and conduct of charities operating overseas.
The ECS promote transparency and provide confidence that the resources a charity sends overseas – or the services it provides overseas – reach those they are intended to benefit and are used only for charitable purposes.
They also set out to protect vulnerable people overseas, be they a charity’s beneficiaries, or its staff or volunteers.
Which charities must comply with the ECS?
Generally, registered charities that ‘operate outside Australia’ will have to comply with the ECS.
Importantly, this requirement is not limited simply to major programs, projects or activities a charity might be involved with overseas.
Even if a minor portion of a charity’s activities occur overseas, or if a charity only sends a small amount of money overseas, it may be considered to operate outside Australia and therefore must comply with the ECS.
Also registered charities that are classed by the ACNC as Basic Religious Charities will be subject to the ECS if they operate outside Australia.
The steps a charity takes to comply with the standards need only be ‘reasonable’, based on their size, overseas activities and other circumstances. For small charities, or other charities with only minor overseas activities, it is unlikely that these obligations will be onerous.
The four ECS are:
Standard 1: Activities and control of resources, including funds
The standard covers the reasonable steps charities must take to manage their activities, funding and other resources overseas, including when operating in collaboration with a third party, to ensure they are being directed towards their intended not-for-profit purpose. The standard also requires charities to take steps to comply with applicable Australian laws.
Standard 2: Annual review of overseas activities and record-keeping
This standard outlines the requirements for charities to keep sufficient records for their overseas activities.
Standard 3: Anti-fraud and anti-corruption
This standard covers the reasonable steps charities should take to combat fraud and corruption when operating outside Australia. This includes situations when charities collaborate with a third party on overseas operations, and also requires charities to identify and document conflicts of interest.
Standard 4: Protection of vulnerable individuals
Standard 4 covers charities’ need to take reasonable steps to protect the vulnerable people they work with – as well as staff and volunteers – when providing services or benefits overseas. Again, this includes times charities collaborate with a third party on overseas operations.
Regulating the standards
The ACNC will be responsible for regulating the ECS in line with our regulatory approach.
Our aim will be to provide education and guidance to charities that need to comply with the Standards. An important part of this work will be extensive information that we will publish on the ACNC website.
We expect charities that need to comply with the ECS will take the time to understand the Standards and how they affect their operations. We also expect these charities will take steps to ensure they meet the Standards.
Charities will not need to submit management plans, policies or procedures to the ACNC to show they meet the standard. But they must be able to provide evidence of meeting the Standards if the ACNC requests them to do so.
Keep an eye on acnc.gov.au/externalconductstandards for more on the implementation of the ECS.
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