How are non profits regulated in Australia?

When it comes to Australia’s non profits and their regulation, it is critical to know which organisations to turn to. The administration of not-for-profit organisations (NPOs) is a complex business. Whether an organisation is regulated by a state-based or Commonwealth body will largely depend on its legal structure. Certain organisations may face additional regulation based on their activities, for example, if they are a charity or part of a highly regulated sector such as aged care. Consequently, dozens of statutory bodies are involved in the regulation of governance of non profits across Australia and it can be difficult to ensure your board is meeting all of its necessary requirements and to know where to seek advice if something goes wrong.

How are Australia’s non profits regulated?

It isn’t always clear who regulates non profits because many possible legal structures and laws are at play. At Better Boards, we receive many enquiries regarding governance, internal disputes or concerns of misconduct at the board level. Often, our clients are unsure where their organisation should turn to for advice to resolve issues or, in more serious cases, to report an incident of wrongdoing. These types of issues are many and varied and often the best starting point is to check in with your organisation’s regulator. They can guide your board regarding how the issue should be properly resolved for your type of organisation.

In some cases, the regulator will have a process for resolving each type of issue, in others, they may refer you to another government body, such as the police. Here are six of the most common non profit structures and a description of the authorities that regulate them.

Companies limited by guarantee

Companies limited by guarantee (CLGs) are incorporated under the Corporations Act 2001 (Cth) and federally regulated by and report to Australian Securities and Investments Commission (ASIC). ASIC regulates non profits structured such as CLGs by providing clear guidance on their powers and processes. For example, they may need assistance in dealing with complaints and disputes relating to a company or director’s misconduct. Governance decisions such as a change of name, corporate status, the resignation of an auditor, or closing the organisation may also arise. More information can be found in our company limited by guarantee fact sheet.

Incorporated associations

Incorporated associations are regulated at the State level and the regulatory body differs in each State, as do the processes for reporting misconduct and resolving disputes. In most States, such as Victoria, the State regulator will be the relevant authority for issues relating to fundraising. In others such as the Northern Territory, fundraising will be regulated by a separate body.

Incorporated associations may only operate inside their state or territory, unless they register as a charitable organisation with the Australian Charities and Not-for-Profit Commission. Registered charities operating under the legal structure of an incorporated association as registered Australian bodies must meet the ACNC’s obligations to maintain their charitable status. More information can be found in our incorporated association fact sheet.

Cooperatives

In most States Cooperatives are regulated by the same statutory body as associations. On 1 May 2017, Australia’s Co-operatives National Law Act (CNL) was passed into law in an effort to reduce red tape and business costs for cooperatives. The Act means cooperative organisations no longer need to register in multiple states or territories to operate. This makes it easier for members to operate outside of their own jurisdiction. It also simplifies financial reporting, making it easier for organisations to meet their objectives. Australia’s Uniform Co-operative Laws Agreement outlines the responsibilities of the Ministerial Council represented by Ministers from each State and Territory. Council members are responsible for co-operative legislation and consumer protection. The agreement ensures the way each region regulates non profits is aligned across Australia. For information about each state registration body, see the Resources section below.

Organisations formed by Royal Charter or by Special Act of Parliament

Organisations formed by Royal Charter or by Special Act of parliament must comply with their specific Act or Charter developed at the time of their establishment. This is often called their constituting documents or by-laws. If the organisation is not registered as a charity, complex questions or complaints relating to their governance are best directed to the relevant Attorney General in each State. Organisations formed by Royal Charter of Special Act of Parliament are often incorporated under a State Act but may be regulated by the Commonwealth Attorney General if they are incorporated under a Commonwealth law. See our fact sheet for more information on this type of organisation.

Indigenous Corporations

Indigenous Corporations are overseen by the Office of the Registrar of Indigenous Corporations (ORIC), an independent statutory officer holder appointed by the Minister for Indigenous Affairs under the Corporations Aboriginal and Torres Strait Islander Act 2006 (CATSI). Indigenous corporations can be for profit or not-for-profit and can register as a charity if they meet the criteria. Before 3 December 2012, some Indigenous corporations operating as not-for-profit charities were endorsed by the Australian Taxation Office and required to register with the ACNC. However, the ACNC and ORIC now work in collaboration. Aboriginal Torre Strait Islander (ATSI) organisations registered as corporations with ORIC do not need to report to the ACNC.

Non-Government Organisations

Non-Government Organisations (NGOs) are regulated by different federal and state entities, depending on their legal structure. The Department of Foreign Affairs and Trade regulates the accreditation of NGOs, including assessing organisational structures, policies and practices, as well providing support for managing risks. In Australia, NGOs are non profit organisations and can register as charities with the ACNC. There is also a voluntary code of conduct and collaborative agreements in place intended to improve transparency and accountability and address issues such as the financing of terrorist activities abroad and human trafficking. The ACFID Code of Conduct is self-regulated but overseen by the Australian Council for International Development.

Regulations for charities in Australia

Charities have additional rules beyond those of other non profits when it comes to how the governments regulates their activities and governance Information about charities and their regulatory body, the Australian Charities and Not-for-profits Commission, appears lower down in this fact sheet. You can also read our article on the difference between a charity and a not-for-profit organisation.

Since 2012 charities have been administered by the Australian Charities and Not-for-profits Commission (ACNC). The ACNC is responsible for the registration of charities and requires that they maintain various ongoing obligations as well as meet reporting requirements. The ACNC has the power to cancel the registration of a charity where some of these obligations are not met or to pass on a complaint to another government regulator. The ACNC’s powers to investigate and avenues for addressing complaints are outlined on their website and include multiple methods for submitting a complaint.

Australian charities are regulated in part through the collection of information from activities in the non profit sector and the maintenance of a Charity Register. There is also a national registration process and compliance and legal rules for governance is monitored. The ACNC is tasked with making sense of data, research, complaint reports, and past investigation results, which it uses to develop guidelines and solutions for Australia’s non profits. It also works with other regulators and industry stakeholders to address common problem areas and risks.

Resources

Companies limited by guarantee:

ASIC’s How to complain page provides a starting point for determining what type of issue you are dealing with.

They also provide guidance on which laws ASIC does not enforce such as tax law, and where you can go to seek advice on non-ASIC matters relating to companies and directors. ASIC also provides a helpful list of other Commonwealth regulators that may be able to assist in resolving your dispute.

Incorporated associations:

Below is a list of the “starting point” pages for resolving disputes relating to Incorporated Association in each State:

• Victoria – Consumer Affairs Victoria: Resolving disputes & incorporated associations

• New South Wales – Fair Trading NSW: Resolving issues and Lodging a Complaint

• Queensland – Office of Fair Trading: Managing Association Disputes

• South Australia – Consumer and Business Services: Suspected Breaches

• Tasmania – Office of Consumer Affairs and Trading (TAS): Disputes

• Western Australia – Department of Commerce: Disputes related to the rules of association

• Northern Territory – Consumer and Business Affairs: Resolving Disputes

• Australian Capital Territory – Access Canberra: Incorporated Associations Frequently Asked Questions

Cooperatives:

Below is a list of the “starting point” pages for resolving disputes relating to cooperatives in each state:

• Victoria – Consumer Affairs Victoria: Cooperatives

• New South Wales – Fair Trading NSW: Resolving issues and Lodging a Complaint

• Queensland – Office of Fair Trading: Dealing with cooperative disputes

• South Australia – Consumer and Business Services: Contact Us about Cooperatives

• Tasmania – Office of Consumer Affairs and Trading (TAS): Cooperatives

• Western Australia – Department of Commerce: Cooperatives

• Northern Territory – Consumer and Business Affairs: Cooperatives

• Australian Capital Territory – Access Canberra: Cooperatives Frequently Asked Questions

Indigenous Corporations:

More information about Indigenous Corporations can be found in our indigenous corporations fact sheet. Most but not all Indigenous Corporations are not-for-profit organisations. Complaints regarding misconduct can be made through ORIC – Making a Complaint.