The 6 ACNC Governance Standards: A Practical Checklist for Australian NFP Boards -

As a director, board member, or 'Responsible Person' of a Not-for-Profit (NFP) organisation in Australia, your responsibilities are significant and multi-faceted. You're not just guiding a business; you're safeguarding a mission and the public's trust. The Australian Charities and Not-for-profits Commission (ACNC) sets the foundational rules for this.

While many know the ACNC for its registration and reporting requirements, the core of its regulatory framework lies in the six Governance Standards. These aren't just legal obligations; they are a principles-based roadmap for embedding a culture of integrity, transparency, and accountability into your organisation. Complying with them protects your NFP, its mission, and the community it serves.

This article provides a practical, deep-dive checklist for each of the six standards. Use it to audit your current practices, identify areas for improvement, and ensure your board is not only compliant but is also operating at its highest potential.

Standard 1: Purposes and Not-for-profit Nature

This standard is the very essence of your organisation. It requires that your NFP genuinely operates as a not-for-profit, is established for charitable purposes, and can prove it. It's the 'why' behind everything you do—and it must be the driving force behind all board decisions and organisational activities.

Your Practical Checklist:

Review your governing document. Does your constitution, trust deed, or set of rules clearly state your charitable purposes and not-for-profit nature? This is the core legal proof that your organisation exists for its mission, not for private benefit.
Act in alignment with your purpose. Ensure all your activities, from fundraising drives to service delivery, are directly supporting your stated charitable purpose. This means avoiding 'mission creep' where you take on activities that are not directly related to your core mission.
Publicise your purpose. Is it easy for the public to find out what your organisation does? Your website, annual reports, and marketing materials should clearly explain your purpose and how you work to achieve it.
Check for prohibited clauses. Your governing document should explicitly prevent any profits, or assets from being distributed to your members, directors, or other 'Responsible Persons' if the organisation is wound up. The only exception is reasonable compensation for services rendered.

Standard 2: Accountability to Members

This standard applies to NFPs that have members. It requires that you provide your members with a meaningful opportunity to hold the board accountable for its actions. An engaged and informed membership is a powerful asset to a healthy organisation and a key part of good governance.

Your Practical Checklist:

Hold regular, accessible member meetings. Are your Annual General Meetings (AGMs) held on a regular basis? Do you provide enough notice and a clear agenda? For many organisations, this may include providing a hybrid in-person and online option to increase member participation and geographical reach.
Provide timely information. Do you send out your annual report and financial statements to members in a timely fashion? Is this information presented in a way that is easy to understand, even for those without a financial background? Transparency builds trust and encourages participation.
Create a safe space for questions and concerns. Do you have a clear, documented process for members to raise concerns about the NFP's governance? This could be a designated email address, a formal complaints policy, or a Q&A session at the AGM.
Document member concerns. Keep clear records of any concerns raised by members and how the board has addressed them. This demonstrates that you take their input seriously and helps with future audits.

Standard 3: Compliance with Australian Laws

This standard is perhaps the most straightforward but also the most critical. It requires your NFP to operate lawfully and not commit any serious offences. The ACNC has a clear mandate to ensure charities are not used for illegal purposes, and it can and will intervene if it finds evidence of serious misconduct, such as fraud, financial mismanagement, or a failure to comply with other Australian laws.

Your Practical Checklist:

Know your legal obligations. Your organisation must comply with all relevant Commonwealth, State, and Territory laws. This includes fundraising regulations, workplace health and safety, employment law, and environmental laws. Don't assume you are exempt because you are an NFP.
Have a system for legal compliance. Do you have a compliance register or a system for tracking legal and regulatory deadlines? This is essential for preventing accidental breaches and demonstrating due diligence.
Protect against fraud and misconduct. Put robust financial controls in place to prevent fraud. This includes having a clear approvals process for all expenses and regular financial reviews by the board.
Report serious breaches to the ACNC. If your organisation commits a serious offence or a breach that could result in a penalty of 60 penalty units or more, you have a duty to inform the ACNC. This demonstrates integrity and is a key part of the governance framework.

Standard 4: Suitability of Responsible Persons

This standard ensures that the individuals governing your charity are suitable for the role. This protects the NFP and the public from people who have been previously disqualified from managing corporations or charities. The board holds a significant position of trust, and the individuals holding those positions must be of good character and integrity.

Your Practical Checklist:

Check for disqualifications before appointment. Before a new director is appointed, you must take reasonable steps to ensure they are not a disqualified person. This includes checking the ACNC Charity Register and the ASIC Disqualified Banned Register.
Implement a robust director induction process. Your induction should include a detailed overview of the NFP's mission, governing documents, key policies, and the legal and ethical duties of an Australian director.
Maintain a register of Responsible Persons. Keep an up-to-date and accurate record of all your Responsible Persons and their contact details.
Have a process for removal. In the unlikely event that a 'Responsible Person' becomes disqualified while in office, your governing document should outline a clear and easy process for their immediate removal.

Standard 5: Duties of Responsible Persons

This standard is the most personal. It outlines the specific duties that each individual 'Responsible Person' must uphold. These duties are similar to those of a director in a for-profit company, but with a clear focus on the NFP's charitable purpose and the public good.

Your Practical Checklist:

Act with reasonable care and diligence. This means you must apply yourself to the affairs of the NFP with the same level of care and diligence that a reasonable person would in your position. This includes being prepared for board meetings, asking informed questions, and actively participating in decisions.
Act in the best interests of the charity. Your decisions must always be in service of the NFP's charitable purpose and the community it serves, not for your personal gain or the interests of a third party.
Disclose and manage conflicts of interest. This is a critical duty. If you have any personal interest that could influence a decision, you must declare it to the board and, in most cases, not participate in the decision-making process. Maintain a conflicts of interest register.
Do not misuse your position or information. You must not use your position as a 'Responsible Person' to gain a personal advantage or cause harm to the NFP. All confidential information you receive must be protected and used only for the purpose for which it was given.
Ensure responsible financial management. As a board, you are ultimately responsible for the NFP's financial health. This includes approving budgets, monitoring financial reports, and ensuring there are sufficient controls in place to prevent insolvency.
Do not allow the NFP to operate while insolvent. You must be aware of the NFP's financial position and take action if there are grounds to suspect insolvency. Continuing to operate while insolvent can lead to personal liability.

Standard 6: Maintaining and Promoting the National Redress Scheme

This standard was introduced to ensure charities involved with child sexual abuse take reasonable steps to join and comply with the National Redress Scheme. This is a critical addition to the ACNC's framework, reflecting a national commitment to a safer society and accountability for past failings.

Your Practical Checklist:

Review your history. Has your NFP or any related legal entity been involved with child sexual abuse in the past? This includes any related organisations, whether they were schools, churches, or other institutions.
If involved, take reasonable steps to join the Redress Scheme. If your NFP has been involved, you must take all reasonable steps to join the National Redress Scheme. This is a crucial step towards healing and accountability.
Provide information to the ACNC. If you are required to join the Scheme, you must provide the ACNC with information about your participation. This includes informing them of your intention to apply, your progress, and your final status in the Scheme.
Ongoing compliance. For those already in the Scheme, you must continue to meet its obligations. This includes making payments and providing non-financial support to survivors. The ACNC has a clear expectation that this commitment is ongoing.

Meeting the ACNC Governance Standards is an ongoing responsibility, not a one-off task. By approaching them with a commitment to continuous improvement, your board can build a strong, resilient, and transparent organisation that is well-positioned to achieve its mission for years to come.

Remember, good governance isn't just about avoiding trouble. It's about empowering your board to make better decisions, attract more funding, and ultimately, have a greater impact on the lives of the people you serve.