Who are a Charity’s “Responsible Persons”?

Who are a charity’s “Responsible Persons”?

If your organisation is a registered charity with the Australian Charities and Not-for-profits Commission (ACNC), you are required to notify the ACNC of the appointment of people responsible for governing the charity. These are known as “Responsible Persons”. Essentially, they are entrusted with making decisions on behalf of the charity and determining how the organisation should be run.

However, because charities can be established under a range of different legal structures (each using different terminology to describe the individuals who govern them), we often find it can be confusing for organisations to determine who their Responsible Persons actually are.  

The following table provides a list of who are typically the Responsible Persons within common charity structures:

Charity Structure	Details	Responsible Persons
Incorporated Association	Incorporated Associations are organisations incorporated under state or territory law, that are usually not-for-profit and have only charitable purposes. It is a legal entity that is separate from its members.	Each of the association’s committee member
Company Limited by Guarantee (CLGs)	CLGs are registered companies with ASIC.	Each of the company’s directors
Trusts (Ancillary Funds)	ACNC registered ancillary funds can be either private or public funds. They act as intermediaries between donors and deductible gift recipient (DGR) organisations. They allow people to give money as a deductible donation which is then distributed to the DGR endorsed organisation through the ancillary fund.	Each of the trustees. If the trustee is a corporate trustee, the directors of that corporate trustee
Unincorporated Association	An Unincorporated Association is not a separate legal entity from its members. It is simply a group of people who have collectively come together for a common purpose. Examples include church groups, parishes or Parent and Citizen Associations.	The individuals making decisions on behalf of the association and managing its day-to-day operations.

Charities have a responsibility to notify the ACNC if a Responsible Person is appointed to or leaves the charity. For medium or large charities, notification must occur within 28 days of the change occurring; smaller charities have up to 60 days. This means charities which are CLGs are not required to notify ASIC of director changes, but may choose to do so.   

Governance Standards

All charities must adhere to the ACNC’s Governance Standards. These Governance Standards provide the core principles for running a charity. There are six Governance standards that aim to maintain the public’s trust in charities, remain charitable, and operate in a lawful, accountable and responsible way.  

Governance Standard 5 outlines the duties of Responsible Persons. It requires charities to take reasonable steps to ensure that their Responsible Persons fully understand, appreciate and discharge their duties appropriately. These duties include:

• to act with reasonable care and diligence;

• to act honestly and fairly in the best interests of the charity and its charitable purpose;

• not to misuse their position or the information they are privileged to as a Responsible Person;

• to disclose conflicts of interest;

• to ensure that the financial affairs of the charity are managed responsibly; and

• not to allow the charity to operate while insolvent.

Interestingly, if a company is a registered charity with the ACNC, these duties supersede some of the director’s duties under the Corporations Act 2001 (Cth).

Public Funds and “responsible persons”

Public funds are funds to which members of the public are invited to contribute and may be established in two ways:

1. as a separate entity, e.g. under an instrument of trust; or

2. as part of a sponsoring organisation (which must have the power to establish a public fund).

The money or property donated to the fund must be distributed to the sponsoring organisation or other entities to support their charitable activities. Public funds must have their own set of rules and be governed by its own committee of “responsible persons”. Confusingly, the term “responsible persons” in the context of public funds is different from that used by the ACNC.  For public funds, certain people must hold a certain level of responsibility in the community either through public office or their standing in the community. The ATO’s taxation ruling on public funds can be found here.

This is distinct from the ACNC’s definition of Responsible Persons, which is focussed on the role a person holds within a charity, rather than their public status.

Some examples of people who are eligible to be responsible persons for a public fund include:

• church authorities and clergy;

• school principals;

• judges, solicitors, doctors, and other professional people;

• mayors, councillors, town clerks, and members of parliament;

• recipients of awards from government for services to the community such as an Order of Australia; and

• members of a professional body which has a professional code of ethics and rules of conduct.

Although the daily operations of the public fund can be delegated to another person, the committee governing a public fund must consist of a majority of these people. The responsible person requirement for a public fund is stricter than other charity structures because there is a greater level of community accountability when public money is involved.

Conclusion

All charities have Responsible Persons who control and hold ultimate decision-making authority. Depending on the charity’s legal structure, these people may be committee members, company directors, trustees or directors of a corporate trustee. Regardless of a charity’s structure or who occupies these positions, all Responsible Persons must comply with ACNC Governance Standard 5, which requires them to act lawfully, responsibly and in a way that maintains public trust and confidence in the charity. 

If would like advice on Responsible Persons or your charity’s governance obligations, please reach out to our charity and not-for-profit team.

Paul Gray
Principal
T 03 5225 5231 | M 0414 195 886
E pgray@ha.legal

Hugo Le Clerc
Senior Associate
T: 03 5225 5213 | M: 0438 089 334
E: hleclerc@ha.legal

Prepared with the assistance of Nicholas Gardner.