ACNC Governance Standards: the five standards every registered charity must meet

What the Standards are

The Australian Charities and Not-for-profits Commission Act 2012 and ACNC Regulation 2013 establish five Governance Standards that every registered charity must meet. These standards provide a framework for charities to operate with accountability and integrity.

The Governance Standards are principles-based, meaning they outline desired outcomes rather than prescriptive rules. They are also scaled to the size and risk profile of each individual charity, recognising that a small, local organisation will have different governance needs than a large, national one.

These standards are not a one-off checklist to be completed and then forgotten. They are ongoing requirements, demanding continual assessment and improvement in a charity’s governance practices. Separate External Conduct Standards apply to charities that operate overseas.

The five Standards

Registered charities must meet five governance standards to maintain their registration with the Australian Charities and Not-for-profits Commission (ACNC). These standards outline fundamental requirements for how a charity is structured and operated. Each standard addresses a different aspect of governance, from the charity’s core purpose to the responsibilities of those in leadership positions.

The first standard confirms that the charity is established for charitable purposes and functions as a not-for-profit organisation. Subsequent standards focus on transparency and legal compliance. Standard 2 ensures accountability to members by providing access to information regarding the charity’s operations and finances. Standard 3 requires adherence to Australian laws, preventing conduct that constitutes a serious offence or a breach of law with a financial penalty exceeding a defined level.

Finally, Standards 4 and 5 relate to the individuals responsible for governing the charity. Standard 4 concerns the suitability of Responsible Persons, ensuring they are not disqualified and have not been convicted of serious offences within specified timeframes. Standard 5 details the duties of Responsible Persons, including acting with care and diligence, good faith, and in the charity’s best interests, while also managing conflicts of interest.

The Annual Information Statement

Registered charities are required to lodge an Annual Information Statement (AIS) with the ACNC. This statement provides key information about the charity’s operations and governance. Medium and large charities are also required to submit financial reports alongside the AIS.

The AIS is due six months after the end of the charity’s reporting period. For most charities that have a 30 June year-end, the lodgement deadline is 31 December.

Failure to lodge the AIS for two consecutive years can result in the revocation of the charity’s registration.

Non-compliance

The ACNC’s regulatory approach to charities is risk-based and graduated. This means the ACNC’s response to concerns about a charity’s governance will depend on the assessed level of risk. Initial responses may involve education and guidance. If concerns persist, the ACNC may issue direction notices. Further escalation can involve suspension or removal of Responsible Persons.

Ultimately, failure to meet the governance standards can lead to revocation of a charity’s registration. Revocation has significant financial consequences, as it results in the loss of charity tax concessions, including income tax exemption, FBT concessions, and GST concessions.

Breaching Standard 5 carries the potential for personal liability for Responsible Persons. Charities may find it helpful to use the whistleblower policy builder to ensure compliance.