Understanding ACNC External Conduct Standards For Australian Charities Operating Overseas

Introduction

For any Australian charity operating outside Australia, understanding and adhering to the ACNC External Conduct Standards is essential. These standards govern how a registered charity must manage its overseas activities and resources, ensuring appropriate conduct, governance, and oversight when working internationally.

Compliance with the ACNC External Conduct Standards is mandatory for all ACNC-registered charities that operate outside Australia, including those with minor overseas activities or Basic Religious Charities exempt from ACNC Governance Standards. This guide provides clarity on these requirements, helping your charity ensure its overseas conduct meets these crucial benchmarks and maintains public confidence in its international work.

What Are The ACNC External Conduct Standards

The ACNC External Conduct Standards are a specific set of regulations under the Australian Charities and Not-for-profits Commission Act 2012 (Cth). These standards govern how registered Australian charities must manage their activities and resources when they operate outside Australia.

These regulations require charities to take reasonable steps to ensure appropriate standards are maintained during overseas operations, including:

• Behaviour
• Governance
• Oversight

They establish minimum expectations for charities that operate internationally or partner with others to conduct work abroad.

The purpose of the ACNC External Conduct Standards is multi-faceted. They aim to promote transparency and ensure that valuable donor funds and resources are genuinely used for a charity’s stated charitable purposes overseas.

Furthermore, the standards seek to protect vulnerable individuals involved in overseas programs and activities. Ultimately, they work to provide the Australian community with greater confidence that:

• Resources sent abroad reach legitimate beneficiaries
• Funds support lawful activities

Which Charities Must Comply With External Conduct Standards

Defining Operating Outside Australia

Charities registered with the Australian Charities and Not-for-profits Commission (ACNC) must comply with the ACNC External Conduct Standards if they operate outside Australia. This requirement applies regardless of the size or significance of the charity’s overseas operations. Even minor activities or sending small amounts of money overseas generally means a charity is considered to operate outside Australia.

The definition of operating outside Australia is broad and includes various activities conducted by the charity or through third parties. These activities encompass:

• Sending funds or other resources overseas
• Dispatching staff, volunteers, members, or beneficiaries overseas
• Conducting programs or activities directly in other countries
• Working with individuals or organisations located overseas, including suppliers

Furthermore, activities managed from within Australia but closely related to overseas matters, such as managing overseas projects remotely, also fall under this definition.

Regulation 50.4 of the Australian Charities and Not-for-profits Commission Regulation 2013 (Cth) clarifies that operating outside Australia means operating there in whole or in part. However, the standards may not apply if a charity’s overseas activities are merely incidental to its Australian operations and are intended to benefit people within Australia.

Basic Religious Charities And External Conduct Standards

Basic Religious Charities (BRCs) are also required to comply with the ACNC External Conduct Standards if they engage in operations outside Australia. This obligation exists even though BRCs are exempt from the standard ACNC Governance Standards that apply to most other registered charities.

Therefore, any BRC involved in overseas activities must adhere to the specific requirements outlined in the External Conduct Standards.

Understanding The Four External Conduct Standards Your Charity Must Meet

Standard 1 Activities And Control Of Resources

This standard focuses on how an Australian charity manages its activities and resources when it operates outside Australia. Your charity must implement reasonable internal control procedures to ensure that:

• Funds, equipment, supplies, and other resources used overseas align with the charity’s not-for-profit purpose and character
• Resources provided to third parties operating outside Australia are properly managed

Furthermore, the standard mandates compliance with specific Australian laws during overseas operations. These laws relate to crucial areas such as:

• Money laundering
• Financing of terrorism
• Sexual offences against children
• Slavery and slavery-like conditions
• Trafficking in individuals and debt bondage
• People smuggling
• International sanctions
• Taxation
• Bribery

Standard 2 Annual Review And Record Keeping

This ACNC External Conduct Standard requires charities to maintain thorough records of their overseas activities. Your charity must obtain and keep records for each financial year detailing its operations outside Australia, which is essential for transparency and accountability.

The records must specifically cover:

• Activities conducted overseas
• Related expenditure, broken down on a country-by-country basis
• Activities undertaken in collaboration with any third party

For instance, if your charity funds an overseas partner (not registered with the ACNC) to distribute aid, and that partner works with other local organisations, your charity must comply with this standard concerning its own activities, its partner’s activities, and the activities of the other organisations involved in the project.

Standard 3 Anti Fraud And Anti Corruption

This standard mandates that your charity takes reasonable steps to mitigate risks associated with financial impropriety overseas. It requires procedures to minimise the likelihood of corruption, fraud, and bribery involving:

• The charity’s Responsible Persons
• Employees
• Volunteers
• Any third parties operating outside Australia

A key part of this standard involves identifying and documenting any perceived or actual material conflicts of interest.

The overall goal is to ensure the charity remains solvent, protects its assets, and uses its resources solely to further its charitable purposes, consistent with its not-for-profit nature. This standard helps prevent resources from being misused for illicit purposes.

Standard 4 Protection Of Vulnerable Individuals

This standard addresses the duty of care charities have towards vulnerable people involved in their overseas operations. Your charity must take reasonable steps to ensure the safety and protection of these individuals from harm, exploitation, or abuse. This is a critical aspect of responsible conduct overseas.

‘Vulnerable individuals’ are defined within the standards and include:

• Children under the age of 18
• Individuals who may be unable to care for themselves or protect themselves against harm or exploitation due to factors like age, illness, trauma, disability, or other disadvantages

This standard applies to individuals receiving services or benefits from the charity’s programs, whether directly or via a third party. It also covers individuals engaged by the charity (or a collaborating third party) to deliver services overseas.

How The ACNC Regulates External Conduct Standards Compliance

The ACNC regulates the External Conduct Standards according to its published regulatory approach. The ACNC expects every charity required to comply with these standards to:

• Understand the standards and how they affect its operations
• Take reasonable steps to ensure it meets the standards

What constitutes ‘reasonable steps’ can vary depending on the charity’s size and the complexity of its overseas operations. Larger charities with more intricate international activities will likely need more comprehensive measures than smaller charities with simpler overseas involvement.

The ACNC anticipates that most charities are already meeting the External Conduct Standards through good governance and oversight. Their regulatory focus is primarily on charities that have seriously or deliberately breached the standards, and they will take action where necessary.

Charities do not need to proactively submit documentation to the ACNC to demonstrate compliance with the External Conduct Standards. However, a charity must be able to provide evidence that it is meeting the standards if the ACNC requests it.

To assist charities in assessing their compliance, the ACNC provides a self-evaluation tool. This tool helps charities:

• Determine if they are meeting their obligations regarding overseas conduct
• Identify potential issues that may need addressing

Conclusion

Understanding and complying with the ACNC External Conduct Standards is essential for Australian charities operating overseas, ensuring proper governance, resource management, and the protection of vulnerable individuals. Adherence to these four standards, covering activities, record-keeping, anti-fraud measures, and safety, is vital for maintaining public trust and fulfilling charitable missions abroad.

To ensure your charity meets these critical obligations and navigates the complexities of international operations confidently, seek expert guidance. Contact LawBridge today. Our not-for-profit lawyers will help your organisation comply with the ACNC External Conduct Standards and achieve peace of mind.

Frequently Asked Questions About ACNC External Conduct Standards