Transparency and accountability are vital in ensuring public trust and confidence in the charity sector, writes ACNC commission, Dr Gary Johns.
Given the significant contribution from taxpayers, it is natural, even expected, for people to want to know where charities spend funds, as well as how much they spend. And the reporting required of charities helps achieve this.
Thousands of charities, mostly large, will soon be required to report remuneration they provide their Responsible People and other selected organisational leaders – their ‘key management personnel’.
These changes, which also come into force from the 2022 Annual Information Statement reporting period, are in line with guidelines set down by the Australian Accounting Standards Board (AASB).
The changes will see mostly large charities required to disclose remuneration provided to their ‘key management personnel’ in their reporting to the ACNC. This will be through the Annual Information Statement and annual financial report.
Remuneration can encompass financial items – wages, salaries and bonuses – as well as non-financial items like the provision of free or subsidised goods and services. For example, some charities provide benefits like a car as part of a remuneration package they offer.
Even items like paid long-service leave or a post-employment pension come under the heading of remuneration.
The ACNC has long held the position that charities can offer remuneration to board members. But, in doing so, each charity has to be careful in deciding:
whether it is reasonable to offer remuneration, and
what reasonable remuneration might be.
A charity should think about the measures it will take to ensure it is accountable and transparent in offering remuneration to board members, and in informing its supporters, volunteers and the wider public about the decision to do so.