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External Conduct Standard 1 requires a charity to:

  • take reasonable steps to ensure its activities outside Australia are consistent with its not-for-profit purpose and character

  • maintain reasonable internal control procedures to ensure that funds, equipment, supplies and other resources are used outside Australia in a way that is consistent with the charity’s not-for-profit purpose and character, and

  • take reasonable steps to ensure that funds, equipment, supplies and other resources provided to third parties outside Australia (or within Australia for use outside Australia) are applied:

    • in accordance with the charity’s not-for-profit purpose and character, and

    • with reasonable controls and risk management processes in place.
       

It also requires charities comply with Australian laws in the following areas while operating overseas:

  • money laundering

  • financing of terrorism

  • sexual offences against children

  • slavery and slavery-like conditions

  • trafficking in individuals and debt bondage

  • people smuggling

  • international sanctions

  • taxation, and

  • bribery.
     

A charity is required to maintain reasonable internal control procedures to ensure compliance with these laws.

Purpose of the standard
 

The purpose of External Conduct Standard 1 is to give the public confidence that a registered charity is managed in a way that ensures:

  • it remains solvent

  • any risks to its assets are minimised

  • the charity and its resources further its purposes

  • its operations are consistent with its purpose and character as a not-for-profit.
     

The Standard is intended to promote legitimacy and transparency and ensure a registered charity and its resources are not misused for non-charitable or illegal purposes overseas.

Consistent with not-for-profit purpose and character

A not-for-profit is an organisation that does not operate for the profit, personal gain or other benefit of particular people (for example, its members, the people who run it or their friends or relatives).

All registered charities must operate on a not-for-profit basis.

External Conduct Standard 1 requires a registered charity to take reasonable steps to ensure its operations outside Australia are consistent with its not-for-profit purpose and character.

It also requires a registered charity to take reasonable steps to prevent its resources from being used by other parties in a way that is inconsistent with its not-for-profit purpose and character.

Compliance with the Standard will help charities minimise the risks they face when operating overseas. These risks include:
 

  • funds or other resources being stolen or misappropriated

  • payments or other benefits being given to individuals who do not qualify as beneficiaries

  • funds inadvertently being used to finance terrorism or other criminal activities

  • funds being used for purposes other than the charity’s purposes

  • an illegitimate donor using the charity for:

    • money-laundering (including disposing of the proceeds of crime)

    • tax avoidance

  • a third party collaborating with the charity not using funds appropriately, not undertaking agreed actions, or not having procedures in place to prevent the types of risks listed above.
     

Compliance with Australian laws

Acting lawfully helps protect a charity’s assets, reputation and the people it works with.

External Conduct Standard 1 does not impose a new burden because a registered charity is already required to follow Australian laws. However, it does require a registered charity to take reasonable steps to ensure it complies with these laws.

In most cases, common sense and good practice will reduce the risk of a charity breaching the Standard. For example:

  • keep a list of the laws that affect the charity's overseas activities and the relevant requirements under those laws

  • periodically review the list to ensure legal obligations are factored into plans for projects and activities

  • have regulatory obligations as a standing item on meeting agendas as a way of monitoring changes

  • maintain a register of completed and outstanding compliance activities (for example, mandatory reports, submissions, licenses and permissions) and review the register at each board meeting.
     

Each charity should make its own enquiries about the laws it must comply with.

We have included a list of some of the laws a charity may need to comply with at the bottom of this page.

Reasonable steps
 

The ACNC does not prescribe what a charity must do to meet External Conduct Standard 1. Based on its own circumstances, each charity must decide the appropriate action required.

The ACNC expects a charity to have considered the risks associated with its overseas activities and funding – including those done in collaboration with a third party – when making decisions.

The reasonable steps that a charity must take, and the reasonable procedures it must maintain, will depend on its particular circumstances and the associated risks. These considerations will be different for each charity.
 

To decide these steps, a charity should consider:

  • the nature, scale and complexity of its overseas activities or funding

  • the locations in which it operates

  • its work with third parties

  • its size and the number of staff and volunteers it has

  • its level of knowledge and experience in managing similar projects or activities

  • the effectiveness of current policies and procedures that govern its activities or funding

  • any issues or difficulties it has experienced with previous overseas activities or funding
     

The nature and location of a charity's activities will determine the level of risk it faces and what it will need to do to comply with the Standard.

A large charity with operations in several countries and formal partnerships with several third parties will likely need to do more to comply with the Standard than a small charity providing a small amount of funding to one charity overseas.

Ways to meet the standard

The ACNC does not prescribe what a charity must do to meet External Conduct Standard 1. The actions your charity takes will depend on its individual circumstances.

As a first step, a charity should identify how its overseas activities or funding could be at risk of misuse. It can then develop a plan to manage these risks.
 

The reasonable steps to manage the risks of activities outside Australia may include some of the following:

  • Ensure all overseas activities and funding requests are properly approved. Have clear policies outlining the approval process and keep records of decisions.

  • Make sure the charity's funds and projects are approved by more than a single person.

  • Use secure, monitored services when transferring funds – for example, formal banking systems – and ask recipients to confirm receipt of the funds.

  • Check the reputation and experience of third parties to decide whether they are suitable and whether they share the the charity's values.

  • Make sure third parties have appropriate management policies and procedures.

  • Have written agreements with third parties that clearly set out the functions and responsibilities of everyone involved.

  • Have thorough recruitment procedures for staff and volunteers that include appropriate background checks.

  • Monitor overseas projects – including those undertaken by third parties – and ask for regular reports on progress and finances. Review the progress reports at each board meeting.

  • Establish procedures to detect wrongdoing – keep records of transactions and review them to ensure they're accurate and consistent with approved funding levels.

  • Keep a register of the charity’s equipment and monitor its use. Make sure the equipment is stored securely.

  • Monitor the continued eligibility of the charity’s beneficiaries.

  • Make sure the charity has a process that allows people to report suspected wrongdoing without fear, recrimination or disadvantage.
     

Most of these actions are simple and, where appropriate, most charities will be able to do them. But if you think your charity doesn’t have anyone available with enough knowledge and experience, it is a good idea to seek expert help or advice.

Relevant legislation

Commonwealth legislation that may be relevant to External Conduct Standard 1 includes:

Money laundering

Terrorism financing

In 2017, AUSTRAC and the ACNC together published a report that assessed money laundering and terrorism financing risks affecting Australian not-for-profits.

Sexual offences against children

  • Criminal Code Act 1995 (Cth) – including, but not limited to, Divisions 271A and 272

  • Crimes (Overseas) Act 1964

Slavery and slavery-like conditions

  • Criminal Code Act 1995 (Cth) – including, but not limited to, Division 270

  • Modern Slavery Act 2018 (Cth)

  • Crimes (Overseas) Act 1964 (Cth)

Trafficking in individuals and debt bondage

  • Criminal Code Act 1995 (Cth) – including, but not limited to, Division 271

People smuggling

  • Criminal Code Act 1995 (Cth) – including, but not limited to, Division 73

  • Migration Act 1958 (Cth)

International sanctions

Taxation

Laws for which the Commissioner of Taxation has the general administration, including, but not limited to:

For more information about charities’ taxation obligations, see to the ATO’s website.

Bribery

  • Criminal Code Act 1995 (Cth) – including but not limited to, Division 70 and Part 7.6

  • Crimes (Overseas) Act 1964 (Cth)

In 2017, the Australian Federal Police and the Commonwealth Director of Public Prosecutions published guidelines to help corporations with self-reporting foreign bribery.

Further information can be found via the links contained in the Other Resources section on this page.

If things go wrong...

While good planning and the presence of good policies and procedures will reduce the chances of something going wrong, they will not entirely eliminate the risk.

A charity might have a plan to help manage the consequences of something going wrong. But if not, it should act to:

  • prevent or minimise any further loss or damage

  • report the incident to the responsible authority (for example, the police) if required

  • plan any statements to the media, the public or its own staff and volunteers

  • update its risk management plan and take reasonable steps to prevent the incident from re-occurring.

 

 

 

 

 

External Conduct Standard 2 requires a charity to obtain and keep records for its operations outside Australia.

The records must include information necessary for a charity to be able to prepare a summary of its activities and related expenditure outside Australia on a country-by-country basis.
 

The records must be kept for each financial year in which a charity:

  • operates outside of Australia, or

  • gives funds or other resources to third parties for use outside Australia.

 

Purpose of the Standard
 

The purpose of the Standard is to ensure a charity’s operations outside Australia are transparent and that registered charities are accountable to the public.

Keeping records

A charity must keep records for all of its operations outside Australia.

This includes activities and programs it runs itself – or in collaboration with a third party – as well as funds it sends for use overseas.

Because keeping records is also a requirement of registration with the ACNC, a charity that operates overseas should already have many of the practices and processes in place to enable it to meet this Standard.

Ways to meet the Standard

A charity’s records need to include information necessary for it to prepare a summary of its operations outside Australia if required.

Generally, a summary would be a brief but comprehensive presentation of key facts explaining a charity’s operations outside Australia.
 

A charity is likely to meet External Conduct Standard 2 if it has records that contain the following information:

  • the types of activities it conducted outside Australia on a country-by-country basis

  • details of how its activities outside Australia enabled it to pursue and achieve its purpose on a country-by-country basis

  • details of all expenditure relating to its activities outside Australia on a country-by-country basis

  • details of any procedures and processes it used to monitor its overseas operations

  • a list of the third parties it worked with outside Australia

  • details of any documented claims of inappropriate behaviour by its employees or Responsible Persons outside Australia, and actions it took in response. This might involve documenting information if it breaks Australian or overseas laws, or breaches its own code of conduct.
     

A charity’s records should be:

  • complete, accurate and legible

  • prepared on a timely basis

  • kept in English or in a form that can be easily translated to English

  • stored safely

  • kept for at least 7 years.
     

A charity can keep records in any format, including in electronic form, as long as specific information contained in the records is easy to find if a request is made.
 

Most of these actions are simple and most charities will be able to do them. But if you think your charity doesn’t have anyone available with enough knowledge and experience, it is a good idea to seek expert help or advice.

Providing information to the ACNC
 

The ACNC does not require a charity to provide records for its operations outside Australia. However, we may request this information from a charity as part of an enquiry or investigation.

And if the ACNC requests records of operations outside Australia, a registered charity should be able to provide them in a timely manner.

 

 

 

 

External Conduct Standard 3 requires a charity to take reasonable steps to:

  • minimise any risk of corruption, fraud, bribery or other financial impropriety by its Responsible Persons, employees, volunteers and third parties outside Australia, and

  • identify and document any perceived or actual material conflicts of interest for its employees, volunteers, third parties and Responsible Persons outside Australia.
     

Purpose of the Standard

 

The purpose of External Conduct Standard 3 is to give the public confidence that a registered charity with operations outside Australia is managed in a way that ensures:

  • it is solvent

  • risks to its assets are minimised

  • the charity and its resources are furthering its purposes

  • it is operating in a way consistent with its purpose and nature as a not-for-profit.
     

The Standard is intended to ensure a charity takes steps to minimise the risks that come with operating outside Australia, and particularly the risk of resources being stolen or misused for illicit or illegal purposes.

What are fraud, corruption and bribery?

Fraud occurs when someone acts in a dishonest or deceptive way to gain a benefit, or so that someone else experiences a loss. Fraud can occur when:

  • making decisions

  • handling information

  • managing and using funds

  • managing property and other assets
     

Corruption refers to dishonest or illegal behaviour for private gain, especially by people with power or influence. Some charities may operate in countries or regions with a high degree of corruption.

For the External Conduct Standards, bribery occurs when someone offers money or something of value to a public official to persuade them to do something in their official duties that they would not otherwise do for an advantage. (See the definition of bribery as used in the Criminal Code Act 1995 (Cth).)
 

Fraud, corruption and bribery can occur in any organisation, including a charity. But having suitable policies and procedures to combat these threats will help a charity reduce the chance of:

  • losing money through fraud or other financial misconduct

  • contributing payments or other gifts, knowingly or unknowingly, to corrupt people or organisations

  • damaging its reputation and losing funding

  • regulatory action being taken against the charity
     

Conflict of interest

Conflict of interest occurs when someone’s personal interests conflict with their responsibility to act in the best interests of their charity.

A conflict of interest in a charity can involve Responsible Persons, employees, volunteers or third parties working with the charity.

A conflict of interest may be actual, potential or perceived, and may be financial or non-financial.

Governance Standard 5 requires a registered charity to take reasonable steps to ensure its Responsible Persons disclose any perceived or actual conflicts of interest.

Some conflicts of interest are unavoidable, especially in situations where activities are carried out within a small community.

The Standard does not require a charity to completely avoid or remove a conflict of interest. Each charity should identify and document a conflict of interest and then manage the issue so it does not affect the charity’s decision-making.

The ACNC website has resources to help charities manage actual, potential and perceived conflicts of interest.

Reasonable steps

The ACNC does not prescribe what a charity must do to meet External Conduct Standard 3. Based on its own circumstances, each charity must decide the appropriate action required.

The ACNC expects each charity to consider the risks of fraud and other financial impropriety associated with its overseas activities – including those conducted in collaboration with a third party.

The reasonable steps that a charity takes, and the procedures it maintains, will depend on its particular circumstances and the associated risks. These considerations will be different for each charity.

To decide these steps a charity should consider:

  • its size and the number of staff and volunteers it has

  • the effectiveness of policies and procedures that govern its activities

  • the nature, scale and complexity of its overseas activities or funding

  • its level of knowledge and experience in managing similar projects or activities

  • the location of its activities, and actual or perceived corruption levels in those regions

  • its need for permissions, licenses or other approvals from overseas government bodies

  • its work with third parties, particularly arrangements for third party payments

  • how it identifies and manages conflicts of interest

  • issues with previous overseas activities.
     

For some charities, the nature and location of their activities means that there are more risks and a greater need for comprehensive measures. For others, there may be fewer risks and it may be adequate to implement a limited number of measures.
 

For example, a charity that wants to build a school in a region known for government corruption faces a greater risk of dealing with corrupt officials than a charity that operates in an area with more transparent processes and less corruption.


Ways to meet the Standard
 

The actions a charity takes to meet External Conduct Standard 3 will depend on its individual circumstances.

As a first step, a charity should identify and assess the risks of fraud or other financial impropriety it faces when carrying out its work overseas, and develop a plan to manage these risks. Some things that a charity can do to manage risks include:

  • Have clear policies and adequate controls for proper and ethical financial management. Ensure staff, volunteers and others that work with the charity are familiar with them

  • Establish thorough and appropriate recruitment procedures for staff and volunteers, particularly for anyone with financial or project oversight

  • Supervise staff involved in fundraising, managing money or financial reporting

  • Keep detailed financial records and regularly check financial statements for any signs of financial wrongdoing

  • Have a way for staff, volunteers and others that work with the charity to report suspected wrongdoing without fear, recrimination or disadvantage

  • Implement a clear conflicts of interest policy, and keep an updated conflicts of interest register. Address any conflicts of interest when selecting third parties.

  • Thoroughly check a third party's reputation and experience before choosing to work with them. Make ethical conduct and good financial oversight a key criterion when selecting partners

  • Ensure there is a clear written agreement with each third party that sets out the functions and responsibilities of the people involved, and properly monitors activities.
     

Most of these actions are simple and, where appropriate, most charities will be able to do them. But if you think your charity doesn’t have anyone available with enough knowledge and experience, it is a good idea to seek expert help or advice.

If things go wrong...

While good planning and the presence of good policies and procedures will reduce the chances of something going wrong, they will not entirely eliminate the risk.
 

A charity might have a plan to help manage the consequences of something going wrong. But if not, it should act to:

  • prevent or minimise any further loss or damage

  • report the incident to the responsible authority (for example, the police) if required

  • plan any statements to the media, the public or its own staff and volunteers

  • update its risk management plan and take reasonable steps to prevent the incident from re-occurring.

 

 

 

 

External Conduct Standard 4 requires a charity to take reasonable steps to ensure the safety of vulnerable individuals overseas. It applies where individuals are:

  • being provided with services or accessing benefits under programs provided by the charity (whether directly or through collaboration with a third party)

  • engaged by the charity, or a third party in collaboration with the charity, to provide services or benefits on behalf of the charity or third party.
     

‘Vulnerable individuals’ are defined as people under the age of 18, or those who may be either unable to take care of themselves – due to their age, an illness, trauma, disability, or some other disadvantage – or unable to protect themselves against harm or exploitation.
 

The vulnerability may be permanent (for example, an aged related vulnerability) or temporary (for example, a woman forced to move to a shelter due to personal circumstances).

A charity’s own workers and volunteers may be vulnerable, particularly if living and working in remote communities or countries experiencing conflict or disaster.

Purpose of the Standard

The purpose of the Standard is to ensure that a charity’s operations outside Australia are undertaken in a way that minimises the risk of harm, exploitation or abuse of a vulnerable person.

This is consistent with the community’s expectations of charities.

Reasonable steps

The ACNC does not prescribe what a charity must do to meet the Standard. Based on its own circumstances, each charity must decide the appropriate action required.
 

The ACNC expects a charity to have considered the risks to vulnerable people associated with its overseas activities, including those carried out in collaboration with a third party.

The reasonable steps that a charity must take, and the reasonable procedures it must maintain, will depend on its particular circumstances and the associated risks. These considerations will be different for each charity.

To decide what these steps should be, a charity should consider:

  • the nature and degree of the vulnerability of the people it works with

  • its size and the number of staff and volunteers it has

  • its level of knowledge, and how experienced its people are in working with vulnerable people

  • the nature, scale, complexity and location of its overseas activities

  • the effectiveness of the current policies and procedures governing its activities

  • the working and living conditions of staff and volunteers overseas

  • how disasters or conflict could affect the vulnerability of people in the area

  • cultural issues and local practices

  • its work with third parties.
     

By not taking the appropriate steps to protect vulnerable people, a charity risks:

  • abuse or harm to vulnerable beneficiaries

  • health and safety issues, including injury to beneficiaries, staff and volunteers

  • compensation claims and legal action due to stress or harassment

  • damage to its reputation as well as the reputation of the wider charity sector.
     

For charities with more interaction with vulnerable people, there are more risks and a greater need for comprehensive measures. For charities with fewer risks, it may be adequate to implement a limited number of measures.

For example, a charity that provides medical care and residential care services to children in a disadvantaged community overseas will be expected to have stronger controls in place to protect the vulnerable people it helps than a charity that works to save endangered wildlife.

Ways to meet the Standard

The actions a charity takes to meet External Conduct Standard 4 will depend on its individual circumstances.

As a first step, a charity should identify and assess the risks to vulnerable people associated with its activities overseas. It should pay special attention to high-risk activities linked to children and vulnerable people, such as overseas volunteering and child sponsorship.
 

From there, a charity should develop a plan to manage those risks. Some things that a charity can do to manage risks include:

  • Develop a policy that commits the charity's staff, volunteers, third parties and visitors to protecting vulnerable individuals. Make the safety of vulnerable people an important criterion when selecting third parties.

  • Develop a code of conduct outlining appropriate behaviour when working with vulnerable people.

  • Ensure staff, volunteers and visitors are aware they must report suspected abuse within the charity.

  • Ensure the privacy of vulnerable people is always protected.

  • Establish thorough staff and volunteer recruitment processes, including adequate background checks.

  • Ensure staff and volunteers are suitably qualified in safeguarding vulnerable people and properly supervised when working with them.

  • Have a procedure for confidential complaints that is accessible for all vulnerable persons, staff, volunteers and third parties. Deal with complaints appropriately, sensitively and promptly.

  • Ensure staff and volunteers working overseas have access to suitable housing, food, insurance, medical services and communications. Establish an emergency exit plan for staff and volunteers working in conflict zones or other dangerous locations.

  • Thoroughly check the legal status, reputation and procedures of third parties. Ensure they have the appropriate registrations and licenses to conduct activities with vulnerable people, and that they meet required standards. Have written agreements that clearly set out roles and responsibilities of third parties, and monitor third parties’ activities through regular reporting and checks.
     

A charity must meet safeguarding requirements, or relevant minimum standards, as set out in both Australian law and the laws of the host country.
 

Most of these actions are simple and, where appropriate, most charities will be able to do them. But if you think your charity doesn’t have anyone available with enough knowledge and experience, it is a good idea to seek expert help or advice.

If things go wrong...

While good planning and the presence of good policies and procedures will reduce the chances of something going wrong, they will not entirely eliminate the risk.

A charity might have a plan to help manage the consequences of something going wrong. But if not, it should act to:

  • prevent or minimise any further loss or damage

  • report the incident to the responsible authority (for example, the police) if required

  • plan any statements to the media, the public or its own staff and volunteers

  • update its risk management plan and take reasonable steps to prevent the incident from re-occurring.

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