The Australian Charities and Not-for-profit Commission (ACNC) is the national regulator for charities in Australia.

The ACNC Commissioner Sue Woodward AM commented, as published in the Accountant Daily  on 3 May 2024:

‘Our compliance work is critical to our key object of maintaining and protecting public trust in Australia’s multibillion dollar charity sector. There is a lot at stake. Data we comprehensively analysed for the 9th edition of our Australian Charities Report showed the sector generated $190 billion in revenue, employed 10.5 % of the workforce and attracted donations of $13.4 billion’ she said.

As part of the ACNC’s compliance work, during 2024-25, they have placed a specific focus on the emerging risk of the misuse of complex structures. The ACNC have determined in their risk assessment that these complex structures may conceal fraud or non-compliance.

To assist charities using complex structures, the ACNC has released guidance to help charities, operating within a complex structure, review their governance and ensure that they are complying with their obligations.

The term complex structure is not defined within the ACNC Act. However, the ACNC has concluded that a complex structure will typically involve multiple entities with multiply purposes or activities, operations and finances and resources.

Below are two examples of common structures that may be considered complex:

Example 1 A common charity structure with separate entities based on differential purposes/tax concessions

 

 

 

 

Example 2 A common mission organisation structure with separate entities based on differential purposes/ tax concessions

ACNC Guidance

In response to the perceived risks associated with complex structures, the ACNC has issued guidance to assist the governance bodies meet their obligations.

The guidance outlines areas of governance including:

• policies and procedures
• record-keeping
• common boards and directorships
• board meetings
• roles within complex structures
• conflicts of interest
• related part transactions

Sue Woodward AM has also commented publicly that using a complex structure in itself is not an issue, it just raises the risks that charities should consider.  ‘The ACNC’s new guidance on good governance in complex structures is part of our education-first approach. This approach sees us provide practical information to help charities, and the people involved in running them, to get things right, rather than only focus on enforcement,’ she said.

The guidance can be found on the ACNC website.

The team at Saward Dawson are well positioned to offer advice and support in relation to managing Complex Structures, so please contact us if you wish to discuss this further.