Date posted: 1/06/2020

Financial challenges of COVID-19 for Charities

Charities are not immune from COVID-19

In brief

  • The Australian Charities and Not-for-profits Commission (ACNC) understands may charities are concerned during this time
  • In the past few months, some charities have pivoted and adapted well
  • Charities are reminded of Governance Standard 5 which requires that a charity does not operate while insolvent

Charities are not immune from the economic and health consequences of COVID-19.  The ACNC understands that many charities will be concerned about their financial position. 

Some charities have managed to pivot and adapt well to the crisis. The ACNC applauds this innovation but it is critical that charities considering a pivot get advice to ensure they still meet their obligations.  Significant changes mean charity leaders need to make a number of decisions, including reviewing processes and finances, consulting stakeholders and reviewing the charity’s constitution to determine if changes are required.

Other charities, despite the best efforts of their boards, may face insolvency. For charities in this situation, there are some important considerations.

Governance Standard 5 requires a charity’s Responsible People to ensure the charity does not operate while insolvent. ACNCs approach to interpreting this Governance Standard during the COVID crisis is set out on our website.

Charity boards, advisors or administrators should be aware that charities must conform to their wind-up clause which requires any surplus assets be given to another charity with similar purposes. Winding up also includes revoking the charity's ACNC registration.   This is a vital step to ensure that listings on the ACNC charity register are current and accurate, and to support public trust and confidence in the broader charity sector. 

ACNC Compliance during COVID-19

The ACNC commissioner has decided not to investigate certain breaches of the Governance Standards and the External Conduct Standards from 20 March until 25 September 2020. Refer to the ACNC website for further details.

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ACNC Wind up your charity

The ACNC has further information to assist you to wind up your charity.

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ACNC Insolvency and Charities

The ACNC has further resources and guides to assist you to identify if your charity needs to appoint a liquidator or administrator to manage the charity.

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