Senate Economics Legislation Committee [Part 2], , 1:59:15 to 2:08:47
Discussion on the revocation of Deductible Gift Recipient (DGR) status for charities and compliance with ACNC governance standards.
Topics: Integrity, Government spending
Speakers: Speaker 5, Senator Susan McDonald, Unknown Speaker
>> uh, hello. Without going into any specifics about charities or individuals, could you outline the number of charities that have had their DGR status revoked in the last 5 years?
>> Uh, over a 5year period, Senator, I'd need to take that on notice. three
years. Is there a period that you would be aware of?
>> Uh I don't believe I would have that in my data partly because uh there's different ways that a charity can be revoked. Some apply voluntarily for revocation. Some are revoked for example for non-report persistent non-reporting. So we call those loosely uh double defaulters. So there's a bigger you know number of those and then some uh a smaller number are revoked as a result of our compliance action. So putting those together it can be you know a couple of thousand in a year uh and then I'd need to get the analysis done to divide that by the DGR category.
and if you could break them into those categories would be helpful. Thank you. how about under the ACNC governance standards? Is that a separate category?
>> Uh, again, sorry, are you asking how many have been revoked for breaching the governance standards? >> Um, again, we can try and do that analysis and it would be helpful to know over what period you wanted it. Uh predominantly we could categorize the revocations by those that were voluntary which if you like >> would of course not be the governance standards >> uh and then we could c categorize them by those that were for non-reporting which um is one of their obligations to the ACNC but not perhaps the governance standard the way that you're talking about. And then when we look at at those that we've done for compliance reasons, we could um look at >> where that's been the predominant reason. Sometimes it will be uh a combination of breaches really that revocation has been exercised, but we could try and get you some more detail.
>> Do you do this process annually? I'm just trying to be helpful in picking a time frame that would fit within your
usual cycle. We could do it most easily from um the annual reporting period. Uh we do report these numbers in our annual report which has just been tabled in parliament. So we do in our annual report indicate the different categories of revocation. But if you wanted further detail about the DGR category and the governance standard point, I would need to take that on notice.
>> What about having their status revoked for breaching the law with more than 60
standard three. >> Uh and within governance standard 3, there's two elements of breaching the Australian law. One is breaching it because of uh a breach by the charity of an indictable offense. And the second element would be a breach by again the charity of a civil matter that had the 60 penalty units. Uh so even within that governor standards there's both the criminal aspect and the s serious si uh civil action and uh we could try to do that. It it gets quite complicated because as I say it might be that they they haven't done their reporting and they haven't done this and they've breached um you know financial mismanagement. It cannot it's not always as neatly as one particular governance
>> Okay. So would you say that breaching the law with more than 60 penalty units something you would see frequently? >> Is it would that be something that would stand out?
it it can be quite rare for us to see a breach by the charity. Um there might be individuals associated with the charity that have committed um criminal offenses or serious civil uh offenses and it's it's not a common thing but obviously uh the governance standards is something that we look at in our compliance work.
>> Okay. You mentioned that there had to be proven behavior by the charity rather than an individual and those situations raise a question whether the charity should main remain registered. How many instances has the ACNC investigated and found breaches to have occurred? Um again let's pick the 5-year period.
Uh, sorry, Senator. Can you just say how many instances has the ACNC in 5-year period seen of charities um breaching
the 60 penalty units?
>> I would have to take that on notice with again the caveat that sometimes it's not just >> as easy as sort of that is the only reason that they were revoked. Uh there could of course be other regulatory action that we may have taken that short of revocation. Uh and that's you know certainly uh revocation is the most serious action we can take because obviously it uh removes their registration and their access access to uh taxation concessions and can in fact mean the charity will struggle to to continue. Uh we may have taken other enforcement action that can include regulatory advice to get them back on track. It could include an enforceable undertaking. It can include other
actions. Sorry to interrupt you, but at the last estimates we had a discussion that 60 penalty units would and I my recollection was that would then be a revoc revocation uh threshold.
Um it's not an automatic revocation. It's a basis for it will constitute a breach of the charity's obligations to the ACNC under the ACNC act. uh not every single breach that someone commits will end in revocation.
>> Okay. Could you outline the breakdown in behavior by a charity versus behavior by an individual? You touched on that earlier. Would that be an individual who's employed by a charity or how what was the difference that you're making there?
>> Uh Senator, the easiest way to explain it is uh the ACNC does not regulate individuals. Our job is to reg uh regulate charities and sometimes obviously the individuals employees volunteers associated with the charity will do acts that are in the name of the charity and therefore are attributed to the charity. Uh there'll be other situations where it might be when we look into it that it's a volunteer who's done something um and it's been in their personal capacity rather than with the authority and authorization of the charity. It's so it's case by case and there are situations uh where it's a penalty against the charity and we have to establish that the charity has um committed the breach.
>> All right. Well, I would uh note that there are approximately 24,800 penalty units in a $9 million court ordered indemnity cost. Has the ACNC ever had to deal with cases which s with such a high number of penalty units acrewed?
sorry, I've not I don't think I've quite understood how the penalty unit supply from a court ordered decision. If you uh
my understanding is is that penalty units uh are also attached to uh a a financial amount. So if you've been if you've had a court ordered fine or penalty that the the amount of that the quantum of that penalty will um equate to a number of uh of penalty
uh all I can refer to is the actual uh provision in the act which by my recollection talks about uh civil matters with a penalty of at least 60 units. So obviously there are um situations where legislation will provide that the civil penalty is greater than 60 penalty units.
So if a charity had a courtordered penalty of $9 million in a civil action, would I be right in assuming that would occur incur more than 60 penalty units?
>> Uh I might get my assistant commissioner legal counselor to come forward on that point. My understanding would be that that a court-ordered um decision where it's an award uh an award of damages or compensation is different to uh civil penalties in legislation, but I might seek my legal counsel's assistance.