Section 1
ACNC Annual Report
2015-16

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This annual report covers the 2015-16 financial year, and discusses the Australian Charities and Not-for-profits Commission’s (ACNC) performance against our key performance indicators. These are set out in the Treasury Portfolio Budget Statements 2015–16, under the Australian Taxation Office’s (ATO) outcome and program structure. The priorities set out in our ACNC Strategic Plan 2015–2018 are also addressed.

The ACNC Strategic Plan 2015–2018 draws its vision, mission and priorities from our foundation legislation, the ACNC Act. It is central to our governance and reporting framework. The strategic plan sets out the activities that will enable us to achieve the objects of the ACNC Act – enhance public trust and confidence, support the sustainability of the not-for-profit sector, and ease the regulatory burden on charities.

In 2015–16, we continued with a number of projects to ensure the completeness and accuracy of the ACNC Charity Register, to remove inactive charities and to review the information submitted by charities in the Annual Information Statements. We also released a landmark research report analysing charity financial information, made it easier for charities to transact with us online and made significant progress in reducing red tape for charities.

Certainty for the ACNC and the sector

On 4 March 2016, the Government made the very welcome announcement that it would retain the ACNC. While we managed to achieve a great deal while the Australian Charities and Not-for-profits Commission (Repeal) (No. 1) Bill 2014 (Cth) was before the Parliament, the uncertainty around the future of the ACNC did hamper efforts to reduce red tape for charities.

During this period of uncertainty, the ACNC continued bilateral discussions with state and territory governments to harmonise reporting requirements. Understandably state and territory governments were reluctant to formalise harmonisation commitments while the ACNC had an uncertain future. However, the March 2016 announcement was the catalyst for legislative change.

In May and June 2016 both the South Australian and Tasmanian parliaments passed legislation that will significantly reduce red tape for charities in those states. I applaud the leadership exercised by these jurisdictions, and encourage others to take action to reduce unnecessary regulatory and reporting duplication. Proof

Australian Charities Report 2014

Undoubtedly, one of the highlights of 2015–16 was publishing the Australian Charities Report 2014.

Together with the Centre for Social Impact and the Social Policy Research Centre at the University of New South Wales (UNSW), we analysed the 2014 Annual Information Statements of over 37,000 registered charities to create the first ever comprehensive overview of the financial affairs of Australia’s charity sector.

The Australian Charities Report 2014 was the second census-style annual report on the sector. However, for the first time the financial information provided by registered charities was analysed and included. A unique feature was the development of a data cube displaying the information in an interactive way, which was progressively updated as late lodgements were added to the data set. This resource can be accessed at australiancharities.acnc.gov.au allowing researchers and the public to create their own unique reports. As further financial reports are added each year we will develop an even more robust understanding of the state of finances of Australia’s charitable sector.

Further information on the Australian Charities Report 2014 is available on page 84.

Working with ASIC to address incorrect use of ASIC Register

On page 36 of the ACNC’s 2014–15 Annual Report we noted that we had received over 1,000 complaints from charities caused by confusing and incorrect information on the ASIC register of companies – MASCOT.

I am pleased to report that in 2015–16 we worked with ASIC to address this issue. ASIC added a notice to the MASCOT listing of all registered charities that are companies limited by guarantee (approximately 10% of all registered charities), and we undertook a communication campaign to raise awareness of this amongst bankers and financial services providers.

Since these changes were implemented complaints about this issue have almost ceased.

I would like to thank ASIC for partnering with the ACNC to find a resolution and I would especially like to thank registered charities that are companies limited by guarantee for their patience.

Red tape reduction

Red tape reduction is one of three objects in the ACNC Act and has been a priority since our establishment in December 2012. I’m pleased to report that in 2015–16 there was considerable progress in this area.

As noted earlier, on 24 May 2016 the South Australian Parliament passed the Statutes Amendment (Commonwealth Registered Entities) Act 2016 (SA).

This Act reduces red tape for incorporated associations in South Australia that are ACNC registered charities by no longer requiring them to submit information to the state regulator. They will simply file their Annual Information Statement to the ACNC.

All ACNC registered charities will also no longer need to apply for a fundraising licence in South Australia, nor will they have to file an annual return to the state government.

Shortly after (2 June 2016), the Tasmanian Parliament passed legislation which will also reduce red tape for registered charities – the Associations Incorporation Amendment Act 2016 (TAS).

The Act will mean that Tasmanian incorporated associations registered with the ACNC will no longer be required to provide duplicative reporting to their state regulator. The amendment also harmonises the threshold for a “small” charity in Tasmania, meaning that approximately 3,000 registered charities with annual revenue of less than $250,000 will no longer be required to have their accounts audited.

These landmark announcements are an important step in the right direction and will result in significant saving for charities in those states. The ACNC will continue to work with the other states and territories in 2016–17 to achieve harmonisation across Australia.

We have also been successful in increasing the use of the Charity Passport across a number of state and territory government agencies. This has been aided by establishing two working groups – the State Revenue Officer Working Group and the Fundraising Regulation Reform Working Group. Both bodies are committed to reducing red tape.

Over the course of 2015–16, the ACNC signed new memoranda of understanding with the Australian Business Register and worked with the Australian Transaction Reports and Analysis Centre (AUSTRAC) on formalising an information sharing arrangement. By formally agreeing to share data, these agreements will streamline processes for registered charities, which will reduce red tape over time.

Significant progress was made in 2015–16, and the ACNC will continue to make red tape reduction a priority in 2016–17.

Dealing with non-compliance

The vast majority of registered charities are run by capable people making a real contribution to the community. However since our establishment, we have received over 2,600 concerns about the conduct of charities, including 930 in 2015–16.

Two-thirds of these concerns were addressed by our Advice Services team. Of those that progressed through to the Compliance team, 70% were addressed through educative approaches. Nevertheless for the most serious of cases, the ACNC will revoke the charitable status of an organisation that fails to comply with the ACNC Act or Governance Standards.

In 2015–16 we revoked the charity status of 10 organisations following assessments of concerns relating to 179 registered charities.

Australia is a signatory to the international Financial Action Task Force, which has reported that there is a high risk of charitable funds being misused for terrorism financing, money laundering, or other non-charitable purposes. As part of our proactive approach to address high-risk sub-sectors, in 2015–16 we collaborated with other government agencies to review close to 8,000 charities that reported sending funds overseas. We identified 129 that required further consideration and 10% of these are subject to ongoing review.

Public trust and confidence

The sector faced increased media scrutiny in 2015–16. Governance issues, the number of registered charities in Australia, administration costs and fundraising tactics were all raised in the media. Additionally, high-profile registered charities also found themselves the subject of media scrutiny and reports.

This increased attention undoubtedly has the potential to damage public trust and confidence in Australia’s charitable sector. Recent reports from the United Kingdom have highlighted a fall in the public’s trust and confidence in the charitable sector after fundraising scandals. We are working to avoid a similar decline here.

While the ACNC respects the independence of charities and notes that the vast majority are well run and well governed, in 2015–16 we felt the need to provide further guidance to both charities and the public. To this end we published a suite of guidance for both audiences and held fundraising themed forums across Australia (see more on this topic on page 74).

A wealth of information – the ACNC Charity Register

We are committed to providing a fully populated and accurate Charity Register. In 2015–16 we continued our project to “clean up” the Charity Register by revoking the status of 3,810 charities. This brings the number of charities that have had their status revoked, or that have been removed from the register since the ACNC was established in December 2012, to 14,700.

In addition to only listing active and compliant registered charities, we are also striving to ensure that the Charity Register is providing the public with accurate and up-to-date information.

In 2015–16 we continued our data integrity project, which involved reviewing the financial information of 38,650 registered charities, which identified that over 7,000 charities had made errors. This process resulted in $3.4 billion of income and $17 billion of assets being corrected. More information on the data integrity project is available on page 44.

Digital by default

The Charity Portal allows charities to transact online with the ACNC, complete their reporting and update their public information quickly and easily. There have been over half a million sessions recorded since its launch in November 2013 with an average session time of around 17 minutes. In 2015–16 we added additional forms and improved existing ones as part of our digital by default approach. Charities completed an additional 10,748 forms through the portal in 2015–16, an increase of nearly 50% compared to the previous year. Some 99% charities interact with the ACNC online.

In June 2016, the ACNC’s Charity Portal was nominated for an Institute of Public Administration Australia Public Sector Innovation Award. The award recognised initiatives that provided better and easier services, and the Charity Portal was one of three finalists.

In July 2016, I was extremely proud to accept the award on behalf of the ACNC from the Minister for Industry, Innovation and Science, The Hon Greg Hunt MP. You can read more about the award on page 49.

Sector engagement

It is vital that we maintain links with the range of stakeholders in the charitable sector – from researchers to professional advisers and charities themselves. As well as our Sector Users Group and Professional Users Group, in 2015–16 we also held a number of sector forums.

To address the high risk of sending funds overseas reported by the Financial Action Task Force, we held briefings for charities in Brisbane, Sydney and Melbourne. The sessions were specifically targeted to charities that send funds overseas and featured presentations by the ACNC, the Department of Foreign Affairs and Trade, AUSTRAC, the Australian Federal Police, the ATO and the sector peak body Australian Council for International Development (ACFID).

As media scrutiny of fundraising activity by charities began to intensify, we convened an international fundraising forum. The forum was held in Sydney and repeated in Brisbane and Melbourne during 2015–16 and featured speakers from Canada, the United Kingdom and Australia.

In addition to holding sector events, the ACNC also hosted 13 online webinars and provided speakers and staff for events hosted by charities and peak bodies. In 2015–16, we presented at 72 such events.