Registered Charities and Governance Standard 5: An Evaluation

Abstract

Most Australian charities must comply with a set of five governance standards to be registered as a charity by the Australian Charities and Not-for-profits Commission (‘ACNC’). The authors focus on governance standard 5, which outlines the duties of the individuals who govern registered charities — the ‘responsible entities’ of the charities (typically directors or management committee members). The authors analyse the multiple obligations that now apply to those individuals deemed by the ACNC Act to be responsible entities. They also examine the remedies that are available for breaching these obligations, including highlighting how the ACNC governance framework has affected members’ remedies, the remedies available to regulators and to the charity itself. The authors argue that governance standard 5 has introduced increased complexity to the obligations of registered charities and to the duties of the individuals who are deemed to be responsible entities. They also argue that the ACNC governance framework has reduced the accountability of the individuals who work for registered charities that are incorporated under the Corporations Act.

Keywords: Charities; not-for-profit companies; corporate governance; directors' duties