External conduct standards for registered charities

Treasury is seeking submissions on draft regulations for the proposed external conduct standards (ECS) that charities registered with the Australian Charities and Not-for-profits Commission (ACNC) will need to comply with when operating outside Australia.

The draft regulations are a principles-based set of minimum standards of conduct, governance and behaviour that ACNC-registered charities must comply with when operating outside Australia.

The purpose of the standards is to ensure the public has confidence that an ACNC-registered charity has appropriate governance systems and processes in place to reasonably address risks that arise in their overseas activities.

There are four external conduct standards:

• a standard on the activities and control of resources (including funds);
• a standard on the annual review of overseas activities and record keeping;
• a standard on anti-fraud and anti-corruption; and
• a standard on the protection of vulnerable individuals.

The Government is aiming to have the regulations introducing the standards made this year and operational by 1 July 2019.

All charities that operate outside Australia, or work with third parties that operate outside Australia, must comply with the ECS in order to be registered (and remain registered) as a charity.

If a charity engages in intentional misconduct that would breach, or likely to breach, the external conduct standards, the ACNC will have a range of enforcement powers, including deregistering the charity, issuing directions to the charity, entering into enforceable undertakings or removing or suspending its responsible persons.

All registered charities covered by the ECS will need to provide an annual overseas activities statement as part of its Annual Information Statement.

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