Good governance is an area of concern for newer charities, a recent review by the Australian Charities and Not-for-profits Commission (ACNC) has found.
In examining its 15 most significant current compliance cases, the ACNC said it found that every case involved governance issues. One-third of these cases involved charities less than 5 years old, all were charities of varying size, and they were from every state and territory except the Northern Territory.
The most common problem encountered is when charities use funds inappropriately, in ways that do not comply with the charity’s not-for-profit purposes, such as using charitable funds to purchase private assets for board members.
The ACNC has also seen a number of cases where there is a lack of accountability to members. In some cases, charities have failed to convene meetings as required in their constitution or have failed to follow the appropriate process to amend constitutions.
The third most common theme is where responsible persons fail in their duties. This includes failing to declare conflicts of interest, not maintaining accurate records or operating while insolvent.
Source: ACNC media release No 76, 17 April 2014
[LTN 75, 22/4/14]