The “External Conduct Standards” are contained in the Australian Charities and Not-for-profits Commission Amendment (2018 Measures No. 2) Regulations 2018 that were tabled in Parliament late November 2018. On 22 July 2019, the External Conduct Standards officially came into effect and became the new Division 50 of the Australian Charities and Not-for-profits Commission Regulation 2013 (ACNC Regulation).

What are the External Conducts Standards?

The External Conduct Standards are a set of standards that govern how a registered charity must manage its activities and resources outside Australia. The Standards explain adherence to the proper behaviour, governance and oversight when carrying out activities and providing funding overseas.

Who do the External Conducts Standards apply to?

If a charity is operating outside Australia, even in a limited capacity – then it is required to comply with the External Conduct Standards. This includes if charities are sending small amounts of money overseas or overseas activities are being conducted through a third party. The External Conduct Standards would apply to such charities in addition to the existing ACNC Governance Standards.

If the charity does not operate outside of Australia, it does not need to comply with the External Conduct Standards; however, the charity would still need to comply with the Governance Standards. Both the external conduct standards and the governance standards impose reasonable levels of oversight and standards of governance rather than specific steps for charities to take.

What Do the External Conducts Standards cover?

The External Conducts Standards cover 4 aspects of a charity’s overseas operations, which include:

  1. Activities and control of resources and funds;
  2. Overseas activities and record-keeping;
  3. Anti-fraud and anti-corruption procedures; and
  4. Protection of vulnerable individuals when conducting overseas operations.

All four External Conduct Standards share the same aim in ensuring that the activities of a charity outside Australia are consistent with its purpose and character as a not-for-profit. The Standards will be explored in further depth below.

Defining “Operating Outside Australia”

Regulation 50.4 of the Australian Charities and Not-for-profits Commission (ACNC) Regulation 2013 clarifies the application of “operating outside Australia” and states that:

  1. For the purposes of this Division, a registered entity, or a third party, operates outside Australia if it operates outside Australia in whole or in part.

For an entity to operate outside Australia, they must carry out activities outside Australia and send resources to be used outside Australia, to satisfy its objectives. However, if a charity’s activities outside Australia are intended to provide a benefit to people in Australia, and those activities are merely incidental to its operations in Australia, then the External Standards may not apply.

Defining “Working with A third-party operating outside Australia”

Under regulation 4 of the Australian Charities and Not-for-profits Commission (ACNC) Regulation 2013, a “third party” is defined as:

“Third party”, in relation to a registered entity, means an entity (other than a registered entity) that formally or informally collaborates with the registered entity for the purpose of advancing the registered entity’s purpose or purposes, and includes:

  1. an entity with which the registered entity has some form of membership, association or alliance; and
  2. an entity that has an arrangement with the registered entity.

If a charity is working with a third party that meets the above requirements, the charity must comply with the External Conduct Standards.

External Conduct Standard 1

External Conduct Standard 1 requires a charity to maintain reasonable internal control procedures to ensure that funds, equipment, supplies and other resources are used outside Australia in a way that is consistent with the charity’s not-for-profit purpose and character.

The charity must also do this in respect to funds, equipment, supplies and other resources provided to third parties outside Australia.

This standard also requires charities to comply with Australian laws while operating overseas, with regard to money laundering, financing of terrorism, sexual offences against children, slavery and slavery-like conditions, trafficking in individuals and debt bondage, people smuggling, international sanctions, taxation and bribery.

External Conduct Standard 2

External Conduct Standard 2 requires a charity to obtain and keep records for each financial year for its operations outside Australia including its activities and related expenditure on a country-by-country basis and/or in collaboration with a third party. This ensures the charity’s transparency and accountability to the public.

The ACNC has provided the following useful example of record keeping requirements relating to third parties:


An Australian charity works with a charity overseas that is not registered with the ACNC and the Australian charity provides funds to help the overseas charity purchase and supply food to villages experiencing drought and other disasters. The overseas charity then works with other organisations overseas that aren’t registered in Australia to help it distribute the supplies.

Reporting requirements

The Australian charity must comply with the External Conduct Standards for:

  1. its own activities overseas
  2. those of its overseas partner charity; and
  3. the other organisations the partner charity works with on this project.

External Conduct Standard 3

External Conduct Standard 3 requires a charity to take reasonable steps to minimise any risk of corruption, fraud, bribery or other financial impropriety, and to identify and document any perceived or actual material conflicts of interest, by its Responsible Persons, employees, volunteers and third parties outside Australia.

The purpose of Standard is to give the public confidence that a registered charity with operations outside Australia is managed in a way that ensures:

  1. it is solvent
  2. risks to its assets are minimized
  3. the charity and its resources are furthering its purposes
  4. it is operating in a way consistent with its purpose and nature as a not-for-profit.

In particular, the Standard is intended to minimise the risk of resources being stolen or misused for illicit or illegal purposes.

External Conduct Standard 4

This ensures a minimisation of the risk of harm, exploitation or abuse of a vulnerable person. External Conduct Standard 4 requires a charity to take reasonable steps to ensure the safety of vulnerable individuals overseas. ‘Vulnerable individuals’ are defined as people under the age of 18, or those who may be either unable to take care of themselves – due to their age, an illness, trauma, disability, or some other disadvantage – or unable to protect themselves against harm or exploitation. This standard applies where individuals are being provided with services or accessing benefits under programs provided by the charity (whether directly or through collaboration with a third party). It also applies where individuals are engaged by the charity, or a third party in collaboration with the charity, to provide services or benefits on behalf of the charity or third party. 

Birchgrove Legal & Charities

Feel free to contact us if you have any questions about the External Conduct Standards, particularly if you are unsure about whether the External Conduct Standards apply to your charity or how to manage your compliance.

Birchgrove Legal is a boutique Sydney law firm that specialises in the not-for-practice sector. Its market-leading practice is at the cutting edge of innovative approaches to serving NFP sector organisations across the spectrum of entity types. Get in touch with one of our authors to discuss your needs further.

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