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Are Australian Charities At Risk?

31/08/2016 10:20 AM AEST | Updated 31/08/2016 3:39 PM AEST
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Every day we are exposed to requests to help the disadvantaged and vulnerable in our local communities and globally. Australians are very generous people, especially in times of crisis and natural disaster. In 2015, the World Giving Index listed Australia as the 5th most generous country in terms of overall giving.

Many Australians sponsor a child in a developing country, support the construction of infrastructure, such as clean water facilities, or provide food and shelter to refugees.

Recent media reports have raised concerns about the oversight of overseas aid monies. How can we be confident that our Australian dollars are going to a charitable cause on the other side of the world?

In August, the ABC broke the explosive story that Israeli authorities had laid serious charges against Mohammad El Halabi, the Palestine-based employee of World Vision Australia. It is alleged that Mr Halabi siphoned some $7 million US a year, or 60 percent of World Vision's annual budget in the area, to Hamas.

The Australian Department of Foreign Affairs and Trade (DFAT) immediately suspended all further funding to World Vision for Palestine and is understood to be conducting an investigation into the allegations.

The CEO of World Vision Australia Tim Costello said he was shocked and mystified by the allegations. He cited the assurance and integrity measures that World Vision has in place to satisfy themselves that aid monies are being spent for the purposes for which they are given.

Further unspecified allegations have been made by Israeli authorities suggesting that aid funding from other Australian and European charities may have been similarly misused.

Just what assurance measures are in place for Australia's overseas aid organisations and how do our charities follow the money?

Australian overseas aid organisations have multi-layered compliance requirements. They are required to:

  • Comply with Australian law and the laws of the country in which they are operating.
  • Comply with the requirements of the national charity regulator, the Australian Charities and Not-for-profits Commission (ACNC). This includes governance requirements that specify financial management and good governance practices.
  • Be accredited by DFAT as an Australian Non-government Organisation to tender for Australian Government contracts. This is a rigorous process which has to be repeated every five years to retain accreditation.
  • Be approved under the Overseas Aid Gift Deduction Scheme (OAGDS), which includes rigorous eligibility criteria and approval by the Minister of Foreign Affairs.
  • Have stringent conditions built into their contracts with DAFT to follow the money, and have strong assurance measures in place to detect any wrongdoing.
  • Report regularly to the funding agencies and to provide ongoing assurance to their funders.

Clearly, there are many mechanisms in place to ensure that Australian organisations are able to account for the funds they send overseas. In addition, Australian overseas aid charities introduced their own Code of Conduct, which adds another self-imposed layer of assurance requirements. The Code of Conduct, which is administered by the Australian Council for International Development (ACFID), is viewed as best practice around the world. World Vision Australia is a signatory to this code.

To complete the compliance picture, here is the list of basic obligations that all Australian registered charities must meet -- not just overseas aid organisations:

  • All Australian registered charities have to report annually to the ACNC on their finances and governance. These reports are available freely to the public on the Charity Register at acnc.gov.au/charityregister. The wealth of information available on the Charity Register can help the public make informed decisions about those charities they want to support.
  • All registered charities have to meet the five basic ACNC Governance Standards to retain registration.
  • To be eligible for registration charities have to demonstrate that they operate in a not-for-profit manner, have charitable purposes (as defined in the Charities Act 2013) and explicitly are not involved engaged in or supporting terrorist or criminal activity.

What happens if, despite this clear regulatory and reporting environment, and rigorous integrity and assurance measures, donor funds are misused?

The ACNC has the power to investigate concerns about registered charities, and to take strong enforcement action, including revoking their charitable status. Along the way the ACNC can request more information from the charity, issue warnings and directions, enter premises with a search warrant, suspend or remove responsible persons, and require charities to enter into enforceable undertakings.

The ACNC also has an internal forensic accounting capacity. We work closely with the Australian Taxation Office and state and territory regulators, as well as security, intelligence, and enforcement partners, such as the Australian Federal Police and the Australian Transaction Reports and Analysis Centre (AUSTRAC).

We take all complaints and intelligence provided by the public seriously, and take enforcement action when necessary.

In addition to these internally developed measures, the Australian Government is a signatory to the Financial Action Taskforce (FATF), an international consortium dedicated to countering terrorism financing and money laundering. Many of the measures that help prevent these practices are already written into government accreditation and contracting for overseas aid charities.

And from the perspective of the individual donor, the ACNC encourages members of the public to always do their own due diligence before donating time or money to a charity by checking the ACNC Charity Register. That way you can be confident you are giving to a bona fide charity.

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