ASIC to reform charitable funds
The financial services regulator has proposed to remove the existing exemptions available to charitable investment funds, which it said would ensure fair markets and informed investors.
The Australian Securities and Investments Commission (ASIC) has been increasing its focus on organisations which behave like banks, but are not regulated in such a way.
This is why ASIC released a consultation paper proposing two options, one of which would see the removal of existing exemptions available to charitable investment funds.
Charitable organisations which raise investment funds currently have exemptions from the licensing, fundraising, debentures and managed investment provisions of the Corporations Act 2001.
The second option would allow funds to retain existing exemptions, but only if they invest 75 per cent of their funds in assets directly related to their charitable purpose, hold an Australian financial services licence and meet minimum capital and liquidity requirements.
"One of the challenges for financial regulators is narrowing the gap between community expectations regarding the level of regulation afforded to certain organisations and the actual degree of oversight," said ASIC Commissioner, Greg Tanzer.
"These proposals address some key risks associated with investments in charitable organisations, many of which are largely unregulated," Tanzer added.
There are approximately 180 charitable organisations that rely on ASIC's exemptions to raise investment funds.
ASIC said the proposals would not affect fundraising by charities in the form of donations.
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