Beware! Charities Operating Overseas Are Now Under New Scrutiny
By Yoni Ungar
23 April 2019
Are you involved with a charity that operates or sends money from Australia overseas? If so, it is important that you take note of the proposed external conduct standards that could re-define how your operations will be governed.
The new standards are expected to come into effect on 1 July 2019 and will be binding upon all charities operating overseas or working with third parties that are operating overseas. Therefore, it’s important to start creating and implementing new processes and procedures now in order to avoid incurring penalties in the future for non-compliance.
The purpose of the standards are to provide confidence to the public that are carrying out their operations in a manner that is consistent with their purposes. These standards promote transparency and accountability to the public and focus upon ensuring that charities operating overseas act responsibly and in a manner that reduces the risk of any harm occurring.
To assist you in understanding what changes you may need to make, we have provided a brief overview of each standard:
Standard 1 – activities and control of resources
Your charity will need to take steps to ensure that its overseas activities are carried out in a way that is consistent with your charity’s purposes. In pursuing this standard, you must maintain policies and procedures about the use and control of funds and resources. In providing funds or resources to third parties operating overseas, you must take steps to ensure that the third party is acting consistently with your charity’s purposes and character as well.
Procedures must also be put in place to ensure that your charity does not engage in money laundering, terrorism financing, sexual offences against children, slavery, human trafficking, people smuggling, breaches of sanctions, taxation fraud and bribery.
Standard 2 – annual reviews
Your charity will need to keep records of its overseas activities on a country by country basis. The records will need to include details about third party partners, expenditure, policies and procedures and will need to detail about how those have been followed.
Standard 3 – anti-fraud and anti-corruption
Your charity will need to take steps to minimize any risk that many exist of corruption, fraud, bribery or financial impropriety by anyone associated with it, including by third parties outside of Australia. Your charity must also actively identify, document and appropriately deal with any perceived or actual conflicts of interest.
Standard 4 – protection of vulnerable persons
Your charity will need to take steps to ensure the safety of vulnerable individuals, if it is providing services or programs to those individuals (either directly or via a third party) or those individuals are engaged by the charity to provide services (either directly or via a third party).
What can your charity do now
As these standards will soon become binding upon any charity that is operating overseas or that is dealing with third party partners that are operating overseas, your charity should:
- download a copy of the proposed standards and familiarise itself closely with each of them;
- start analyzing your current policies and procedures with regards to overseas operations;
- identify any gaps that may exist and any potential issues for compliance;
- review any agreements that you may have in place with overseas service providers; and
- start drafting and putting in place any relevant policies and procedures.
It is imperative that before any agreement is entered into with third party service providers overseas, your charity should conduct extensive due diligence to ensure that the third party has the capacity and willingness to comply with these standards as well.
We are here to help your charity comply with these standards and obligations moving forward and have a dedicated team of charity law experts who would happily provide your charity with a ‘health check’ in order to identify any areas that need immediate improvement.
Please feel free to get in touch with Yoni Ungar or a member of our Charities Team if you are at all concerned that you do not have the right structures in place or if you would like assistance in putting together a plan that will ensure your compliance with the new regime.