Findings on charities that operate as groups

The ACNC has released a summary of a review into charities operating with a complex structure, identifying how they practise good governance and manage risk.

‘Complex structure’ isn’t defined and covers various types of arrangements. Typically, it covers several charities operating as a group, often with more than one type of legal structure and/or entities with various purposes (for-profit and charitable).

ACNC commissioner Sue Woodward said that charities operating within a complex structure needed to be mindful that it often involved more complex governance matters to consider and manage.

‘Without careful management, these issues can lead to inadvertent non-compliance with relevant laws’, Ms Woodward said.

The review found charities achieved satisfactory governance by:

• Demonstrating why their use of a complex structure assisted in fulfilling their charitable purposes
• Tailoring their governance practices to their specific structure, often with the support of specialist advice, and
• Periodically reviewing their structure and governance practices to ensure arrangements and practices were fit for purpose.

Some ways charities are managing issues around risk and governance include:

• Holding separate board meetings for each entity within the group and ensuring record-keeping is well managed for each entity
• Establishing group policies and governance frameworks – where appropriate – to apply consistent risk and compliance practices
• Providing on-going training on governance and directors’ duties to ensure obligations are understood
• Obtaining independent, specialist advice for specific legal, financial and governance matters that may affect the entire group or a specific entity within it, and
• Periodically reviewing the structure to ensure that it remained suitable for the charities’ needs, and that governance and compliance requirements were being appropriately managed.

‘Our compliance and enforcement reviews shine a light on practices that demonstrate how charities are managing risks and draw our attention to areas of concern where we need to act. While enforcement is part of our role, our primary focus is on supporting charities to achieve compliance through an education-first approach.’

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