Many not for profit organisations or charities established in Australia have a global view to assist people outside of Australia. These charities may receive funding from a variety of sources and there are different issues to consider when running a international charity in Australia including how to set up the charity, compliance issues, risks and difficulties to overcome.
Setting Up Your International Charity in Australia
In respect of the Australian Charities and Not-for-profits Commission (ACNC), these charities are deemed “Overseas aid and development charities”. Even if the majority of the work that the charity does is based overseas, you can still apply to register as an Australian charity. However, you need to meet the following requirements:
- You must be considered a charity under Australian law (taking into consideration both common law and relevant legislation);
- Meet the same standards of any Australian charity registered with the Australian Charities and Not-for-profits Commission; and
- Have an ABN in place.
There are also ongoing reporting standards which are set out here. Charities working overseas may also decide to become a member of the Australian Council for International Development (ACFID), which gives international organisations with a Code of Conduct relating to providing services overseas.
Anti-Money Laundering and Terrorism Laws
One of the major concerns for charities that are working internationally is the issue of money laundering and accidentally funding terrorist operations overseas. Charities can be more susceptible to this risk for a number of reasons:
- Charities move money and fund projects overseas as well as work with partner organisations which may not be subject to the same obligations as Australian charities.
- Charities may be working in a war-zone or danger area which is also very close to areas of terrorist activity and where the methods of transferring funds are much less secure.
- Charities may be subject to less supervision and therefore more opportunity for funds to be misused.
How You Can Protect Your Charity’s Funds
There are several protections you should put in place to ensure that your charity is not inadvertently funding terrorist organisations. Some of the preventative measures you can take are set out in the ACFID Code. The Code provides specific guidance to charities working overseas and the organisation is a good resource for guidance and support if you are working in this space. You can also undertake checks, as your compliance will reduce the risk of terrorist organisations being funded using your charity’s money. We have set some of these out below:
- Your charity should be wary of partners and be sure that the overseas partnerships align with your charity’s goals and purpose and there is sufficient oversight of these projects.
- Your charity should have appropriate accountability processes in place if there is a concern raised about the funding or accounts or if any outcome or project is not clearly presented.
- Your charity should have appropriate investigative steps to ensure that each person or organisation you work with does not support terrorism and that your organisation is not breaching any relevant Australian laws.
- For example, Australia has an obligation not to provide funds and to prevent the transfer of funds to terrorist organisations under a United Nations Security Council Resolution. There are also several Australian federal laws which cover terrorist acts such as funding or supporting terrorism or money laundering. You can also search the Department of Foreign Affairs and Trade (DFAT) for a list of countries that are subject to sanctions or bans.
- Ensure that any person managing or running the organisation is best placed to do so, and they are up to date with all the correct financial reporting and record keeping obligations. The more up to date and correct your accounts are the less likely the charities funds are able to be misused for a wrong purpose.
If you are setting up an international charity in Australia, you should first consider a number of issues around compliance, including meeting your Australian obligations, international obligations and ensuring that your charity is not open to misuse of funds or inadvertently funding terrorist efforts.
Irrespective of where your charity is operating, one of the best protections against misuse of money is to maintain best practice governance standards. Including accounting, oversight and reporting and meeting the ACNC compliance requirements. This will reduce risk and make your charity better placed to protect itself against misuse of funds. Strong relationships with your partner organisations are important as well as being across any on the ground issues that could leave your not for profit open to being taking advantage of.
If you need advice on setting up an international charity in Australia, call LegalVision’s charity lawyers on 1300 544 755 or fill out the form on this page.
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