Diocesan schools, organisations and parishes are constituted in various ways. However they are all not-for-profit (NFP) entities registered as charities with the Australian Charities and Not-for-profits Commission (ACNC).
The characteristics of NFP, charitable, religious entities are briefly outlined below.
Not-for-profit status
NFP entities are organisations established to provide services to the community. They do not operate to make a profit for their members (or shareholders or other stakeholders, if applicable). This means that NFPs do not declare dividends or distribute assets to members (including on a winding-up).
NFPs are exempt from income and certain other kinds of tax. Care must therefore be taken by those governing NFPs to continue to operate on a NFP basis in order to retain these tax exemptions.
The Australian Institute of Company Directors (AICD) has recognised that NFP governance is different to that of for-profit organisations. The AICD has published its Not-for-Profit Governance Principles which provide a framework for NFPs to consider good governance practices.
Charitable status
In addition to being NFPs, Diocesan schools, organisations and parishes are also charities registered with and regulated by the ACNC.
Charities are not separate to NFPs – they are a particular type of NFP whose purposes are within one of the twelve categories listed in the federal Charities Act, 2013 (advancing education, health, religion etc), or are institutions which meet the requirements for two types of institution (public benevolent institutions or health promotion charities).
Some charities are entitled to one or more additional tax benefits – GST concession, FBT exemptions and deductible gift recipient (or DGR) status.
Most charities must comply with the ACNC Governance Standards. There are six standards:
Standard 1: Purposes and not-for-profit nature
Standard 2: Accountability to members
Standard 3: Compliance with Australian laws
Standard 4: Suitability of Responsible People
Standard 5: Duties of Responsible People
Standard 6: Participation in the National Redress Scheme
Most charities must comply with the ACNC reporting requirements - Annual Information Statement and financial reporting.
There are currently exemptions for basic religious charities (BRCs). A BRC is a registered charity that –
- has the charitable purpose of advancing religion (and no other charitable purpose),
- meets specific criteria relating to the nature of its incorporation,
- does not report to the ACNC as part of a group,
- is not a DGR,
- is not a recipient of more than $100,000 in government grants, and
- participates in the National Redress Scheme.
A BRC does not have to answer financial information questions in its Annual Information Statement, submit annual financial reports (regardless of its size) or comply with the ACNC Governance Standards. Also, the ACNC does not have the power to suspend or remove a member of a BRC's governing body – a Responsible Person.
Charities undertaking activities or providing funding overseas (broadly understood and including BRCs) must comply with the ACNC External Conduct Standards. There are four standards:
Standard 1: Activities and control of resources (including funds)
Standard 2: Annual review of overseas activities and record-keeping
Standard 3: Anti-fraud and anti-corruption
Standard 4: Protection of vulnerable individuals
There are some additional tax compliance obligations for charities which are DGRs which must be observed in order to maintain that status (in particular, obligations about the use of donations).
Religious status
The relationship of Diocesan schools, organisations and parishes to the Synod of the Diocese mean they have a religious purpose, even if that purpose is ancillary to other purposes, for example education. Usually, therefore, they should register “advancing religion” with the ACNC as one of their purposes.
There are range of benefits given to entities with a religious purpose – including fundraising exemptions, anti-discrimination exemptions, religious freedom laws (but not in NSW or under federal law), tax benefits or exemptions. Increasingly, to access these benefits, an entity with a religious purpose must be registered with the ACNC as a charity having advancing religion as its purpose, or one of its purposes.
