Australia's charities watchdog has been criticised for its "light touch" approach to regulation, with staff failing to even Google organisations to check they were legitimate.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The Australian National Audit Office reviewed the performance of the Australian Charities and Not-for-profits Commission in regulating the nation's 57,600 registered charities and 600,000 not-for-profit organisations, seven years after its creation.
It found the commission had taken a "light touch" approach to assessing whether charities met required governance standards, relying heavily on information provided by applicants unless evidence emerges to the contrary.
"There was limited evidence of wider checks being undertaken, including - as required in the [commission's] internal work instruction - of internet searches being undertaken on the charities purposes and activities," the audit said.
It also found data integrity issues with the Charity Register, including charities that were incorrectly characterised as religious organisations, which meant they did not have to comply with governance standards and provide an annual financial report to the regulator.
The audit also uncovered charities with incorrect legal structures, and ones that were not entitled to registration as a government entity on the register.
There were also some charities still listed which had shut down and did not respond to attempts to contact them. Others no longer had a valid ABN and therefore were no longer entitled to be registered as a charity, but were still listed anyway.
The regulator was also hamstrung in using its enforcement powers due to confusion over whether charities are "federally regulated entities". Each state and territory has different charity laws.
The regulator also relied heavily on external parties to bring compliance issues to its attention.
The commission was also unclear on what information it could publish about its investigations and compliance actions, due to the secrecy provisions in the Australian Charities and Not-for-profits Commission Act.
All up, the audit found the commission had been "largely effective" in regulating charities.
Assistant Minister for Charities Zed Seselja said the commission "has demonstrated to be an effective regulator."
However Labor's charities spokesman Andrew Leigh said the audit reflected "a common theme I hear from charities - that the [commission] is focused on compliance, and hasn't done enough to support the charity sector".
