The Not for Profit sector contributes around $43 billion to Australia’s gross domestic
product, derived from approximately 600,000 organisations.
. This is an attractive sum of money for people intent on unlawful gain, which typically occurs through theft, fraud, bribery and corruption, money laundering and the financing of terrorism.
Charities and other Not for Profit organisations (Not for Profits) are too often an easy target for financial crime due to the trusting nature of many sector employees and those charged with governance, whose priority is the passionate and well-meaning delivery of
services to those in need. Further, in maximising the benefit of such services, sometimes resources applied to risk management can be less than what is ideally required to protect the assets, integrity and beneficiaries of Not for Profits.
This article discusses key findings of various reports issued in 2014 and 2015 by the
Australian Government and overseas bodies that all identified the rising risk of financial
crime impacting Australian charities and other Not for Profit organisations.
It is critical for those charged with the governance of Not for Profits to understand
their obligations. They may be personally liable, along with their organisations, for
failing to comply with the various pieces of legislation introduced to protect their
organisations from financial crime.
The Corporations Act 2001 ss 180−184, s. 286 and ss 588G and J provide penalties in respect of care and diligence, good faith, use of position and information, acting recklessly, intentional dishonesty, books and records as well as insolvent trading.
The Australian Charities and Not for Profits Amendment Regulation 2013 (No. 1) under Governance standard 5: Duties of responsible entities (Div. 45.25), provides very similar obligations as the Corporations Act 2001, plus disclosure of conflicts of interest.
The Criminal Code Act 1995 (Cth) under Div. 70 prohibits bribery of foreign and Commonwealth public officials, including soliciting bribes.