D.2 Integrity and Ethics

The Preamble to ACFID’s Code of Conduct states that a key purpose of ACFID is to ‘equip and encourage members to observe the highest ethical standards in all their activities.’

This includes strict observance of the Code.

This section of the Code falls under the organisational category, and covers integrity and ethics. It includes five sets of Principles and Obligations that deal with both the basic functioning of signatory organisations in terms of meeting the legal obligations of both state and federal legislation and higher-level concerns such as respect for other NGOs and attention to the environmental impact of operations.

All of these issues affect the reputation not only of your own organisation, but of the entire aid and development sector. Thus, signatory organisations to the Code are encouraged to be scrupulous in observing these obligations to avoid undermining the credibility of the sector.

Section D.2 of the ACFID Code of Conduct includes five sets of Standards each with respective Principles and Obligations. Standard D.2.1 addresses the legal requirements for organisations to exist and operate. Standard D.2.2 describes the need to respect other NGOs working in aid and development. Standard D.2.3 and D.2.4 address how to avoid fraud, corruption and conflict of interest. Finally, Standard D.2.5 considers the environmental impact of your organisation’s operations.

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D.2.1 Legal Requirements

Principle

It is the responsibility of each signatory organisation to ensure that they are meeting the range of legal obligations that are applicable to them in each jurisdiction in which they work.

Obligation

  1. The governing bodies of signatory organisations will ensure that their organisations have in place compliance systems and processes to ensure that their legal obligations are being met in each jurisdiction where work is carried out.

Why

Legal and regulatory structures provide the framework for your organisation’s activities in Australia and elsewhere. All stakeholders in your organisation should be able to trust that it will function within these structures, according to law and any relevant regulations. The wrongdoings of one organisation in the sector could impact on the credibility of the sector as a whole.

In some countries where signatory organisations work, legal and regulatory structures and the justice system may be weak or difficult to navigate. Partners and in-country staff will be best placed to ensure all local legal and regulatory obligations are met and to assess the risks in countries where these systems are weak or less effective.

Values

This standard reflects the Code of Conduct’s commitment to:

  • Accountability to all stakeholders
  • Building trusting relationships with communities
  • Honesty and transparency in all dealings

Practical Guidance

All signatory organisations, regardless of size, are subject to a complex range of legal requirements and legislation – such as corporations laws, rules of incorporation of associations, fundraising and charitable institutions, privacy, equal employment opportunity principles, occupational health and safety standards, human rights and anti-discrimination, intellectual property, child protection and copyright, as well as other external obligations – such as code compliance or certifications.

Here are some practical suggestions to ensure your organisation is meeting its legal obligations: 

In Australia

  • All charities must be registered with the Australian Charities and Not-for-profits Commission – the ACNC
  • Your governing body and senior staff should be well informed of all the legal and regulatory obligations of your organisation in Australia and the countries you operate in. This information should be updated regularly to ensure it remains current.
  • Seek legal advice from a legal firm familiar with the legal and regulatory frameworks for not-for-profit organisations or, as a minimum, seek some guidance from your auditors
  • Seek guidance from the ACNC and other centres such as the Victorian Government’s Not-for-profit Compliance Support Centre or see Justice Connect.
  • Establish a documented register of all of your legal and regulatory obligations, deadlines for compliance, details of regulatory bodies, who within your organisation is responsible for ensuring obligations are met, and the process they will follow to ensure compliance
  • Prepare a written Annual Report for your governing body that reports your compliance with the requirements in your register of obligations
  • Undertake an annual review of all obligations to ensure that compliance is being maintained and to identify any changes in requirements  
  • Delegate responsibility (through the governing body and/or executive) to a senior staff member (or one of its own members) to do this, for example, to the Company Secretary, Finance Manager or Office Manager.
    • The delegated person should be accountable for providing this information to the governing body and ensuring the organisation remains compliant with its obligations.
    • Include this responsibility in their job description and employment contract and through staff performance appraisals.
    • Your executive must ensure the delegated person has the necessary support throughout your organisation and its different operations to meet compliance obligations.
  • Larger and more complex signatory organisations will require more rigorous and comprehensive systems and processes to ensure compliance across a multiple number of staff, volunteers, activities and locations.
  • Where multiple staff are involved in compliance management, the following is recommended:
    • A written or electronic manual outlining all compliance requirements, the respective responsibilities of all operational areas of the organisation, the systems to ensure ongoing compliance and how up to date is the compliance information
    • A process for a regular (i.e. annual) internal audit of compliance obligations
    • Regular staff training to ensure they are fully aware of their individual and organisational responsibilities.
  • Where your organisation is involved  in research, refer to the ACFID Guidelines and Principles for Ethical Research and Evaluation in Development.

In other countries

  • The governing body and senior staff should be well informed of all legal and regulatory obligations of your organisation in each of the countries you operate in. The information should be updated regularly to ensure it remains current.
  • Consult with your partners to understand all local legal and regulatory obligations which may impact operations and programming
  • Undertake due diligence on all partner organisations to ensure they operate in compliance with the legal requirements of that country
  • Seek legal advice from a legal firm familiar with the legal and regulatory frameworks for foreign NGOs or, as a minimum, seek some guidance from your auditors
  • Include in Partnership Agreements the obligation for partners to keep up to date with local legal and regulatory requirements, to share this information with your organisation and to maintain their compliance
  • Develop a documented register of all legal requirements in-country, updated annually and shared between the in-country partner and your Australian based organisation.
  • Support any training required for partners to strengthen their capacity to meet any required obligations (e.g. such as relating to employment or child protection)
  • These obligations may differ depending on whether your organisation has its own office and staff or is supporting the work of local partner organisations. In some countries, such as Ethiopia, there are complex and strictly applied regulations for foreign NGOs which have serious implications for partners if compliance is not met. Many countries, at the very least, require formal registration of foreign NGOs.
  • If you employ local staff in other countries, ensure all employee obligations are met, for example, taxation, health insurance and pension contributions and if there is a need to terminate the employment of a local staff member, local legal processes are followed.

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D.2.2 Respect for other NGOs

Principle

Signatory organisations will ensure that their public communication is respectful of other NGOs. They will not denigrate other agencies, or make inaccurate or misleading public statements regarding other agencies.

Obligations

  1. Signatory organisations will ensure that any communication regarding another NGO will be factually accurate and will not intentionally or otherwise mislead.
  2. Signatory organisations will not make statements about other NGOs with the intention of creating a reputational or other advantage for themselves.

Why

It is important to maintain the reputation, credibility and trust of NGOs amongst all stakeholders and foster the principles of fairness and cooperation amongst NGOs in the sector. Accurate communications about your own and other NGOs is important in building trust and credibility in the public domain and amongst other stakeholders including partners and communities. Misinformation or negative information about one NGO will impact on the perception of the sector as a whole. 

This standard does not discourage the use of a responsible complaints mechanism where a legitimate concern with another NGO arises. Standard E.3.1 of the Code of Conduct has a robust complaints mechanism which should be followed. It respects the principles of confidentiality, independence and response.

Values

This standard reflects the Code of Conduct’s commitment to:

  • Building creative and trusting relationships
  • Honesty and transparency in all dealings 
  • Strengthening civil society.

Practical guidance

Here are some practical suggestions for your organisation to demonstrate its respect for other NGOs in its communications:

Organisation and policy level

  • Create and document a policy or guidelines for dealing with all communications (including media, public statements and external events) with external stakeholders including the public, institutional donors, partners and other NGOs. The policy or guidelines should include:
    • Reference to the principles of honest and fair communications
    • Respect for the roles of other NGOs in the sector
    • Explicit reference to this standard, stating that all public communication will be respectful of other NGOs and will not denigrate other NGOs, or make inaccurate or misleading public statements regarding other NGOs
  • Manage your communications and media by delegating clear responsibilities to board members, staff or other representatives of your organisation involved in external communication
  • Ensure these delegated representatives are fully aware of your organisation’s obligations under this Code of Conduct and any relevant policies and guidelines

Staff and volunteers

  • Provide all new managers, board members, staff and volunteers with your organisation’s media and communications policy, guidelines or equivalent.
  • Use your induction processes to:
    • Orient new managers, board members, staff and volunteers to the ACFID Code of Conduct and your organisation’s obligations under this standard.
    • Explain that appropriate complaint mechanisms are available through the Code of Conduct Committee if there is a legitimate and well-founded concern about another NGO.
    • Ensure they understand the NGO sector’s commitment to principles of fairness and cooperation
    • Explain the risks to the sector as a whole if individual member NGOs develop a bad reputation

Public information

  • Ensure all public information that refers to other NGOs does so in a positive and accurate manner and seek their permission before its release
  • Designate a person within your organisation and a process to ensure all public or media statements are checked for accuracy of content and consistency with communication and media guidelines
  • Consider a formal approval mechanism for all public communications including website content, newsletters, media statements and speeches

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D.2.3 Anti-fraud and anti-corruption

Principle

Signatory organisations will minimise any risk of wrongdoing, corruption, fraud, bribery or other financial impropriety among its governing body, paid staff, contractors, volunteers and partner organisations.

Obligations

The governing bodies of signatory organisations will ensure that their organisations:

  1. Articulate their stance against any wrongdoing, ensure that their ways of working actively minimise the risk of operational wrongdoing and monitor for evidence of wrongdoing.
  2. Have internal and external processes for safe reporting of wrongdoing (‘whistle blowing’) that include:
    1. Publicised points of confidential contact (including at least one member of the governing body);
    2. A process for investigation and escalation; and
    3. Prescribed timeframes for investigation and response.
  3. Take prompt, firm corrective action where wrongdoing is identified.

Why

Your organisation should have a zero tolerance position on corruption, fraud, bribery and other financial impropriety. Corruption and fraud are contrary to the fundamental values of integrity, transparency and accountability and undermine the effectiveness of organisations and development efforts.

To foster public trust and ensure good conduct in aid and development work, signatory organisations have the responsibility to promote legal and ethical behaviour and to monitor the actions of staff and partners to ensure no wrongdoing or impropriety. In some contexts in which you operate, there is a heightened risk of corruption, fraud or bribery, and you should act, and be seen to act, in a way that is honest and transparent.

Values

This standard reflects the Code of Conduct’s commitment to:

  • Accountability to all stakeholders
  • Building trusting relationships with communities
  • Honesty and transparency in all dealings

Practical Guidance

What is corruption, fraud and bribery?

Corruption, fraud and bribery are related to each other but differ in definition.

Corruption is an abuse of a position of trust in order to gain an undue advantage. This includes financial corruption such as fraud, bribery and extortion; but also non-financial corruption. Examples of this include diverting aid and assistance to non-target groups, allocating resources in return for sexual favours, giving preferential treatment to family and friends, and coercing and intimidating staff or beneficiaries to ignore or participate in corruption.

Fraud can be defined as dishonestly obtaining a benefit, or causing a loss, by deception or other means.

Bribery is a form of corruption. It is a specific offence that concerns the practice of offering or accepting money, gifts or other advantage to gain an illicit advantage. Bribery, including provision of ‘facilitation payments’, is a crime in most countries and under the UN Convention Against Corruption, which has 174 party states.

There are laws in Australia against the bribery of foreign public officials to obtain or retain business, and some of your overseas activities will be covered by these laws.

Here are some practical suggestions for your organisation to minimise the risk of and address corruption, fraud and bribery:

Organisational and policy

  • The governing body and executive should establish a high-level commitment to a zero tolerance approach to fraud and corruption
  • Create and document an anti-fraud and anti-corruption policy or separate policies, approved by the governing body.
  • Create and document procedures for implementing the policy and ensure that governing body members, staff and partners are familiar with them. The procedures should include the following:
    • Recruitment practices which include due diligence on prospective employees
    • Due diligence assessment of partners and key third party suppliers
    • Regular training for staff and partners to raise awareness of the risks associated with fraud and corruption, mitigation strategies and the organisation’s relevant policy and procedures
    • Risk analyses in each country of operation including Australia
    • Reporting procedures, including the requirement to report without delay all cases of alleged, suspected or detected fraud or corruption
    • All cases of alleged fraud or corruption to be handled in a confidential, prompt and professional manner
    • The requirement for independent audits, delegations, financial management, internal controls, accounting and cash handling procedures to minimise the risk of fraud
    • Ongoing monitoring to ensure compliance with anti-fraud / anti-corruption policies and any related procedures
    • The prohibition of undocumented transactions or loans to governing body members or staff
    • The process to deal with allegations of wrongdoing
    • Procedures to pursue the recovery of proceeds of fraud and apply prosecutorial or administrative action
  • Create and document a policy that facilitates complaints and whistle blowing in cases of fraud and corruption, with a clear referral procedure that allows reporting to a member of the governing body, and a confidential and independent review process.
  • Undertake a thorough risk analysis in each country of operation (including Australia) so that your analysis is context-specific.
  • Document the assessment and identification of risk and risk mitigation strategies in a risk framework or equivalent.
  • Ensure risk assessments explicitly consider the risks associated with wrongdoing, corruption, fraud, bribery or other financial impropriety and consider the specific procedures that your organisation has in place regarding decision-making, financial management and reporting.
  • Communicate your organisation’s zero tolerance approach to fraud and corruption and all relevant policies and procedures to internal and external stakeholders, through orientation for staff and partners and promotion through publicly available materials such as websites.
  • Undertake training and awareness programs to ensure staff and partners are aware of potential risks, policies and procedures to prevent and mitigate risks, and reporting procedures.
  • Undertake periodic reviews of anti-fraud and anti-corruption policy and procedures and report outcomes to the governing body. Organisations that are exposed to higher risks should consider external verification and assurance of their anti-corruption procedures.
  • Identify and appoint a senior staff member with whom other staff can discuss issues and situations when they arise. Or you may choose an external contactor to address corruption, such as the ACFID Code Secretariat Management Team, or an organisation such as STOPline that specialises in whistle-blower protection services.

Partnerships and third party suppliers

  • Undertake comprehensive due diligence assessments of all current and potential partners and key third party suppliers to assess the robustness of their practices and operations, their policies and general approaches to anti-fraud and anti-corruption, internal financial management, procurement and reporting procedures
  • Include anti-fraud and anti-corruption clauses in all partnership and third party supplier contracts
  • Provide training for partners where necessary to ensure their awareness of the risks associated with fraud and corruption and local legal and regulatory obligations
  • Undertake periodic reviews of partners’ internal financial management, procurement and reporting procedures and, where possible, those of key third parties which your organisation engages with.

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D.2.4 Conflicts of interest

Principle

The governing body of signatory organisations will ensure that their organisations manage any real or perceived conflicts of interest for their governing body, paid staff, volunteers and partners.

Obligations

  1. Signatory organisations will have a clear conflict of interest process that:
    1. Requires members of the governing body, paid staff, and volunteers to disclose any real or perceived conflict of interest or any affiliation they have with an actual or potential supplier of goods and services, recipient of grant funds or organisation with competing or conflicting objectives.
    2. Requires members of the governing body and paid staff to absent themselves from discussion, as appropriate, and abstain from voting or otherwise participating in the decision making on any issue in which they have a conflict of interest.
    3. Requires members of the governing body, paid staff, and volunteers to disclose any material gifts or offers of gifts for their personal use and prohibits them from accepting valuable or otherwise inappropriate gifts.

Why

It is important to maintain the reputation, credibility and trust of signatory organisations within the public domain. As values-based, humanitarian and non-profit organisations, signatory organisations are expected to conduct themselves with integrity. Voluntary governing bodies of signatory organisations are expected to be ‘responsible persons’ of integrity and able to make independent and objective decisions focused on achieving aid and development objectives. Signatory organisations have a duty to carefully manage any real or perceived conflicts of interest because reputational damage can affect the whole sector.

Real or perceived conflicts of interest will exist in the normal course of business. This standard supports organisations to recognise and prevent situations of conflict of interest, and manage them in a consistent and responsible way.

Values

This standard reflects the Code of Conduct’s commitment to:

  • Accountability to all stakeholders
  • Building trusting relationships with communities
  • Honesty and transparency in all dealings

Practical guidance

What is a conflict of interest?

A conflict of interest arises when a person participating in decision-making, gains or is perceived as gaining an advantage (or avoiding a disadvantage) for themselves or for another organisation or person in which they have an interest, due to access to privileged information or from the outcome of the decision.

The nature of the aid and development sector means that individuals are often involved where situations of conflict of interest may arrive. They often volunteer their time. They are often chosen to help because of their expertise in certain areas. They may work in a field or occupation related to the organisation’s activities and interests. In all of these situations, conflict of interest can easily arise. In addition, the not-for-profit sector benefits from support in the form of gifts and donations from individuals and companies, which may result in perceived or real conflicts of interest. 

Conflicts of interest are common. They do not have to be a serious problem. Most conflict of interest situations are readily identified before any impropriety has occurred and therefore can be easily avoided. However, if a conflict of interest isn’t managed properly, it may damage your organisation’s reputation and, in serious cases, breach the law.

Your organisation should have policies and processes to recognise real or perceived conflicts of interest, if possible prevent them, and where they do arise, manage them. A perceived conflict of interest can be as damaging to your reputation as a real one. You have the duty to carefully manage perceived or real conflicts of interest as the reputational damage from poor management can affect the whole sector.

Here are some practical suggestions for your organisation to strengthen its management of real or perceived conflicts of interest:

Organisational and policy

  • Review your governing instrument and any legislation that applies to your organisation to understand your legal duty to prevent and manage conflicts of interest
  • If your organisation is a company limited by guarantee make sure you promote and develop your governing body's understanding of directors duties (including the duty to avoid conflicts and to act in the best interests of the company) under the Corporations Act 2001 and the common law
  • Include a clause in your governing instrument outlining the obligations of your governing body to prevent and manage conflicts of interest.
  • Document in more detail the procedural arrangements for managing conflicts of interest in a board charter or procedures document
  • Create and document a conflict of interest policy, approved by the governing body that is applicable to directors, staff and any volunteers with decision-making authority over your partners, activities or resources. The policy should outline the following:
    • Who is responsible for implementing the policy for staff, volunteers and governing body members
    • What is the process for reporting on, reviewing and updating the policy
    • What are the consequences (e.g. paying restitution, resigning) for those who fail to comply with the policy
  • Create and document procedures for implementing the policy and ensure that governing body members and staff are well familiar with them. The procedures should outline the following:
    • Your organisation’s definition of conflict of interest
    • The requirement by directors to disclose potential and actual conflicts of interest, such as directors sitting on the governing bodies of other NGOs or funding bodies, or being employed by specialist firms that provide goods or services to your organisation.
    • Inclusion of conflict of interest as a standing agenda item on all governing body meetings
    • Where an actual or potential conflict of interest exists, the director or staff person may remove themselves from the discussion and decision-making process. The governing body or other committee determines whether this is required.
    • The procedure for addressing perceived, potential, actual conflicts of interest, including those that have already occurred
    • Procedures to ensure open and fair procurement of goods and services (or reference made to a separate relevant policy)
  • Governing body members and staff to disclose actual or potential conflicts of interest, and following this, your organisation to create a documented register of them
  • Include conflict of interest as a standing agenda item on all governing body meetings to ensure it is addressed openly and systematically
  • Document responses to the conflict of interest agenda item in the meeting minutes to ensure rigour and provide evidence that it was systematically considered in cases of perceived or actual conflict of interest. Records should include attendance and voting on agenda items.
  • If your organisation makes loans to members of the governing body, a documented policy must clearly describe how the loans operate. All loans or transactions with members of the governing body are to be included in your full financial reports and be publicly disclosed.
  • Provide training for all your directors and staff to ensure their understanding of conflict of interest situations, for example, how to avoid being placed in a situation of perceived obligation or indebtedness, and dealing with gifts and hospitality
  • Establish procedures to ensure fair and open procurement practices

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D.2.5 Environmental Impact of Operations

Principle

Signatory organisations will aim to operate their domestic operations in an environmentally sustainable way.

Obligation

  1. Signatory organisations will aim to reduce the environmental impact of their domestic operations

Why

Promoting environmental sustainability and contributing to the preservation of the environment for future generations can be done through your organisation’s domestic operations, as well as development and aid activities.

Sustainability is important not only because it’s the right thing to do; it can also contribute to a more healthy and cost-effective organisation, compliant with accepted standards and regulations.

Values

This standard reflects the Code of Conduct’s commitment to environmental sustainability in the domestic operations of signatory organisations.

Practical guidance

Here are some practical suggestions for your organisation to strengthen its approach to environmental sustainability in domestic operations:

Organisation and policy level

  • Create and document a policy, procedure and guidelines on environmental sustainability that covers both domestic operations and international aid and development activities (also see Standard B.1.6)
  • The core sustainability policy should be ratified by your governing body and senior management.  Your organisation may also consider certifying this policy with ISO 14001.
  • Guidelines should support staff in implementing the organisation’s commitments to minimise environmental impact. Actions could include:
    • Paper recycling
    • Switching off idle equipment and lights
    • Avoiding paper products from native forests
    • Switching thermostats to more season-appropriate lower energy settings
    • Avoiding bottled water
    • Procurement policies that recognise sustainability objectives
    • Using energy management software for smart buildings
    • Using renewable power
    • Increasing awareness through posters, emails and internal staff newsletters
  • Set performance targets to minimise environmental impact in your domestic operations and publicise them throughout your organisation. Targets could relate to:
    • The usage of material, energy and water
    • The energy saved due to conservation and efficiency improvements
    • Achievements in reducing greenhouse gas emissions
    • Progress in mitigating the environmental impacts of products and services 
    • Transport
    • Biodiversity
    • Waste reduction
  • Include an overview of the organisation’s commitments to minimising and evaluating environmental impact during induction of new staff
  • Provide training and other awareness-raising initiatives for staff on environmental sustainability
  • Publicise your commitment and your actions in your office and to your stakeholders on your website and in newsletters or similar
  • Monitor, review and report internally and externally on your environmental impact; this includes regular external reporting of performance against key environmental performance indicators
  • Appoint a focal person within your organisation responsible for monitoring environmental impact
  • Reward and incentivise relevant staff to monitor and reduce the organisation’s impact on the environment; include related targets in job descriptions and appraise staff against these annually.

Partners and external stakeholders

  • Consider core environmental values and principles in developing any corporate partnerships
  • Assist your partners to develop their own policies and guidelines.

Programs

  • Plan transportation for field trips with consideration of CO2 emissions. Transport is an energy-intensive sector, accounting for approximately 23% of total global energy-related emissions. 
  • Consider whether travel is necessary, and whether communication technologies and local capacity can be used instead.

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