CHARITIES ALERT – Various important ACNC developments for charities

Aug 3 2017

Publications

Below is a list of various Australian Charities and Not-for-profits Commission (ACNC) developments which we consider are important for charities to consider:

Crowdfunding by charities

The ACNC has released a Charities and crowdfunding guide to assist charities, donors and fundraisers.  Crowdfunding usually involves an individual or an organisation setting a fundraising target online and then asking the ‘crowd’ of the internet for donations to reach that target.

For charities, the guide particularly emphasises:

  • doing homework on who the charity intends to use to run the online campaign – donors are likely to associate a charity with the crowdfunding website it uses, and the charity’s board needs to be comfortable that the website reflects the values of the charity itself;
  • be clear on terms and conditions of the exercise.  Things like cost to the charity and what happens if the campaign falls short of the target amount sought should be considered; and
  • charities must also comply with state and territory laws on fundraising – a national campaign will require compliance with multiple legislative requirements.

Donors considering responding to a crowdfunding request are advised to:

  • check that the charity concerned is registered with ACNC;
  • be clear on what donations will be used for; and
  • consider if the donation will be tax deductible – not all charities have deductible gift recipient status.

The guide is restricted to situations where pure donations are sought by charities.  If there is any element of benefit back to the donor (other than a tax deduction, where applicable) then the fundraising provisions of the Corporations Act 2001 Cth will apply and considerable other requirements will need to be complied with even if the charity is using a crowd-sourced funding intermediary.  Thomson Geer can assist charities considering issuing social bonds or raising funds with other tied ongoing benefits for donors.

The guide can be accessed here:
http://www.acnc.gov.au/ACNC/Edu/Crowdfunding.aspx

The ACNC Tick of Charity Registration

The ACNC has introduced the ACNC Tick of Charity Registration (the Registered Charity Tick).

The purpose of the Registered Charity Tick is to allow registered charities to display the Registered Charity Tick to confirm to the public their charity registration status.  Donors can be confident that they are giving to charities that are registered and regulated.

The charity tick is available to registered charities to download from the ACNC Charity Portal.  If they want to use the charity tick, they must accept terms and conditions of use and usage guidelines.

The following charities are not eligible to display the charity tick:

  • charities that are overdue in providing their yearly reporting to the ACNC; and
  • charities that have had compliance action taken against them by the ACNC.

For more information, refer to the ACNC’s ‘Tick of Charity Registration’ instructions: https://www.acnc.gov.au/ACNC/FindCharity/Charity_Registration_tick/ACNC/Reg/Charity_Registration_tick.aspx?hkey=a1b2ec62-58f7-47bb-ab3b-ad6f3d9edcf1.

ACNC’s updated audit templates

The Auditing and Assurance Standards Board (AuASB) issued Amendments to Australian Auditing Standards as a result of changes made by the International Auditing and Assurance Standards Board in December 2015. These changes apply to financial reporting periods ending on or after 15 December 2016.  These changes include enhancements related to auditor reporting and addressing disclosures in the audit of the financial statements.

The ACNC has reviewed these updates from the AuASB and has amended the publicly available audit templates on the ACNC website.  These templates should be used by those parties responsible for auditing large charities for reporting periods ending on or after 15 December 2016.

ACNC’s Interpretation Statement: Public Benevolent Institution CIS 2016/03

The ACNC approved the Interpretation Statement: Public Benevolent Institutions on 19 December 2016.  The purpose of the statement is to provide guidance on the ACNC’s view on the meaning and scope of ‘public benevolent institution’.

The statement covers a number of issues arising from the meaning of a public benevolent institution (PBI), such as meaning of ‘public’, meaning of ‘benevolent’, and meaning of ‘institution’, how the ACNC will assess whether an entity is a PBI, a PBI’s duty to notify the ACNC in certain circumstances, examples of organisations that may be PBIs and examples of organisations that are unlikely to be PBIs.

For example, organisations that may be PBIs include not-for-profit hospitals, aged care facilities and community legal services.

Appendix A of the statement provides various hypothetical examples of how the ACNC will apply the Interpretation Statement in practice.

Below is the link to the statement:
http://www.acnc.gov.au/ACNC/Publications/Interp_PBI.aspx.

ATO’s alert – NFP sector

The ATO has published ‘Encouraging NFP participation in the tax system’ on its website, and highlighted a number of areas relevant to charities that attracts its attention.  These areas include:

  • Private ancillary funds which lodge their annual return late, or enter into related party transactions, or don’t comply with the regulatory guidelines.
  • Charities or deductible gift recipients (DGRs) which do not apply income and assets solely for the purpose for which the organisation is established (eg private benefits to individuals), or which make incorrect claims for franking credit refunds.
  • Organisations that incorrectly self-assessing income tax exempt status, or don’t meet the requirements of an exempt category.
  • Organisations that incorrectly advertise that donations to them are tax deductible when they are not endorsed as DGRs.
  • Organisations that incorrectly claim FBT rebates and exemptions that don’t meet the requirements of the law.

For more information, refer to the below link to the ATO’s publication:
https://www.ato.gov.au/Non-profit/Your-organisation/In-detail/Encouraging-NFP-participation-in-the-tax-system/

 

Written by:

Philip De Haan | Partner | +61 2 9020 5703 | pdehaan@tglaw.com.au

Jim Baillie | Special Counsel | +61 9020 5746 | jbaillie@tglaw.com.au

Yat To Lee | Senior Associate | +61 2 9020 5742 | ylee@tglaw.com.au