Procurement decisions are made by charities and not-for-profits regularly and can be the source of problems and expense if you don’t get the decisions right.

It’s important that you don’t think that suppliers won’t look to enforce their agreement just because you are a charity or a Not-for–Profit association.

Procurement has its pitfalls and you

New NSW Associations Laws to Commence on 1 September 2016

Important amendments to the Associations Incorporation Act 2009 (NSW) and the Associations Incorporation Regulation 2016 (NSW) will commence on 1 September 2016.

These amendments will affect both existing Associations and the registration process for new Associations in NSW.

The following summary highlights the key changes:

York CathedralLast week, a NSW Supreme Court decision was handed down regarding the fate of a parcel of land on which a church building stands.  The findings of Lindsay J in this case serve as a timely reminder of the obligations and duties of trustees who hold property in their names, in this context, on behalf of a church body.

Facts of the Case

While some of facts of the case were contentious, the findings from Lindsay J paint a straightforward picture of the events that had occurred:

  • In 1978, five men, being members of a small congregation of Christians who worshipped under the name “The Apostolic Christian Church Nazarene-Sydney” (Church), purchased a property in Arncliffe, NSW (Land) for the purposes of enabling the congregation to worship and pray there.
  • While the Land was purchased in their five individual names, there was no doubt that the Land was purchased and used only for the advancement of religion.  The Judge was satisfied that the five individuals intended to hold the Land as trustees for the Church.
    Continue Reading Trustee Duties v Self-Interest – A Battle over Church Property

York CathedralIn late 2013, the Supreme Court of Queensland refused an application instigated by a parishioner of a Methodist Church in Queensland, who sought orders to allow him to freely pass into the Church to distribute flyers he had made.  The facts of the case are straight forward:

What happened?

  • Mr Gallagher, who had been a member of the congregation of a Methodist Church in Queensland, became increasingly upset at the theology proffered by his church.
  • Mr Gallagher created “warning pamphlets” and during Sunday service, placed them in the pigeon holes (located inside the Church) of some of the members.
  • One of the respondents (who included the pastor and members of the Board of that Church) asked Mr Gallagher to leave, but he refused and only left after the police were called.
  • The following day, the respondents sent a letter to Mr Gallagher stating that the Board was unable to allow him to enter onto the Church property without express permission.
  • Mr Gallagher complied with their letter but felt that the respondents’ actions were unjust and contrary to his entitlement to freedom of speech. He commenced action against the Church in the Supreme Court of Queensland.

Continue Reading Freedom of Speech on the Doorstep of the Church?

ACNCUnder the Australian Charities and Not-for-Profits Commission Act 2012, certain information must be published by the Commissioner on the ACNC Register for the public to view. This information includes the entity’s name, ABN, sub-type, governing rules, details of responsible entities, information statements, financial reports or any other information the Commissioner is authorised to collect. This is very broad and in some circumstances charities may wish to apply for the information to be withheld from the ACNC Register. The Commissioner may withhold information if it is commercially sensitive or has the potential to cause detriment to the registered charity or an individual. We recommend all charities registered with the ACNC consider whether certain information should be withheld from the ACNC Register.

The scope for withholding information from the ACNC Register was widened by the Australian Charities and Not-for-profits Commission Regulation 2013. Amongst other things, the Regulation offered additional privacy protections for Private Ancillary Funds (PAFs) registered as charities with the ACNC. Typically, these protections were introduced in order to protect the identity of individual philanthropists or donors and to prevent an unreasonable burden being placed on PAFs whereby they might be inundated with donation requests from other entities.

Continue Reading ACNC Private Ancillary Fund Privacy Opt-in Extended to 30 June 2014

Senior woman with caregiverSummary – Aged Care operators can place accommodation bonds in Development Funds.

When the Federal Government amended the prudential requirements for the investment of accommodation bonds in residential aged care facilities subject to the Aged Care Act in 2011, there was some doubt as to whether Catholic aged care operators could legitimately place accommodation bonds

Lehman BrothersSummary – Update:  Local Councils, Church, Charities and Not-For-Profit Groups who purchased complex financial products from Lehman Brothers are set to vote on a settlement proposal to get up to half their money back from liquidators of the failed investment bank.

You may recall we posted a blog article in October 2012 titled “Lehman Brothers class action – a win for NFPs” regarding the representative proceedings or ‘class action’ filed on behalf of 75 Councils, Charities, Church and other Not-For-Profit groups who collectively lost over $200million when they purchased toxic securities sold by a subsidiary of Lehman Brothers called Grange Securities (Grange) prior to 2008.

After a long running legal battle the Federal Court held last October that Grange had breached its fiduciary duty to 3 Councils who filed proceedings as representative plaintiffs on behalf of 72 other Councils, charities, Church and other Not-For-Profit groups. By filing representative proceedings the Court may resolve issues of fact and law involving the applicants and the respondent that are common to claims that other group members have against the same respondent.

Continue Reading Update: Local Councils, Church, Charities and Not-For-Profit Groups to vote on settlement proposal relating to failed investment bank, Lehman Brothers

ACNCSummary – The Australian Charities and Not-For-Profits Commission (ACNC) legislation has received royal assent and the ACNC has commenced operation.

Today the Governor General assented to the Australian Charities and Not-For-Profits Commission Act 2012 and the Australian Charities and Not-For-Profits Commission (Consequential and Transitional) Act 2012 (ACNC Acts).

Who is regulated by the legislation?

Although the title of the legislation extends to charities and Not-For-Profits, at this stage the ACNC Acts only cover “charities”, with the possibility for Not-For-Profits (who are not charities) being regulated under the ACNC Acts at a later stage.

Continue Reading ACNC Commences Operation

Lehman Brothers sign being taken awaySummary – Federal Court rules Lehman Brothers Australia is financially liable for misleading clients including Church and Not-For-Profit Groups to purchase complex financial products.

In Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in Liq) [2012] FCA 1028, the Federal Court of Australia has held that Lehman Bros Australia Ltd (In Liq), which was formerly called Grange Securities Ltd (Grange), is liable to compensate the 3 plaintiff Councils for losses incurred as a result of investing in highly complex investment products called collateralised debt obligations (products).

In this matter the 3 Councils led representative proceedings or a ‘class action’ on behalf of 72 other Councils, charities, Church and Not-For-Profit groups who collectively lost over $200million when the products purchased from Grange prior to 2008 either plummeted in value or were completely wiped out during the global financial crisis (GFC).  While only the claims of the 3 Councils were tested by the Court in these proceedings, as these are representative proceedings the Court can resolve issues of fact and law involving the representative applicants and the respondent that are common to claims that other group members have against the same respondent. 

Continue Reading Lehman Brothers class action – a win for NFPs

multitasking manSummary – The High Court has recently ruled on the obligations of company officers wearing two hats.

The High Court has recently shed further light on the obligations of care and diligence in respect of company officers who occupy multiple roles.

In the case of Peter James Shafron v Australian Securities & Investments Commission the High Court held that Mr Shafron, contravened s.180(1) of the Corporations Act 2001 (Cth) (Act) by failing to discharge his duties as an officer of James Hardies Industries Limited (James Hardie) with the degree of care and diligence that a reasonable person in his position would have exercised.

Continue Reading Company officers – Duty of Care obligations for those who have more than one job description