BUS101: The Legal Environment of Business - Case Study

Internal Code: MAS3774

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Case Study 1: Organisational Structure According to ASIC (Australian Securities and Investments Commission) a public company must have at least three directors, one Secretary as well as one member (ASIC, 2011). According to Compassion Australia’s 2014 Financial Report (2014), they have seven directors of the company. Mr J Horn is the member of the directors who is their secretary. The report also states that there are six members of the company (Compassion Australia, 2014). In the organisational structure of Compassion the Board of Directors leads by developing strategy for the Executive Team to implement. There are four members of the Executive Team. The CEO Tim Hanna reports to the board of Directors and outworks the strategies through the other three members of the Executive Team. While the Executive Team are paid staff, all of the Board of Directors are serving in a voluntary position.   Case Study 2: Not For Profit Status Compassion is a registered not-for-profit organisation in Australia registered with Australian Charities and Not-for-profit Commission (2015). To be registered as a NFP (Not-for- profit) in Australia there are a number of requirements outlined in the Australian Charities and Not-for-profits Act 2012 (Cth, Div 25). The primary requirements are that the entity must be a not-for-profit; it must comply with the governance standards; it must have an ABN; it must not support any terrorists or criminal activity according to any Australian Government Agency (ACNC, 2012). Compassion States in its mission statement that its primary goal is to demolish poverty (Compassion Australia, 2014). They clearly state in their organisation that they are not-for-profit. Their goal is Charity and they are classified under ACNC as ‘public benevolence institution’ and ‘purposes beneficial to the general public and analogous to the other charitable purposes’ (ACNC, 2015). To be listed as these subtypes they would have to comply with the Charities Act 2013 (Div 2) to fit under ‘the purposes for public benefit’ umbrella. Through the activities listed in their annual report this is clearly visible. In the directors report (Compassion Australia, 2013) the governance of the board of directors and the membership is outlined, demonstrating that there is compliance with the governance standards. Compassion has been registered with an ABN since it’s founding in 1979 (ANCN, 2015). As for the condition to not support any terrorists or criminal acts this would be something that would completely contradict Compassions value of integrity. One possible circumstance that could raise this point to question, was if a Church that Compassion sponsors came under persecution and began to retaliate with violence. This however is unlikely to be deemed by the Australian Government as a terrorist organisation, and even if the scale of violence escalated Compassion would be likely to sever all ties. Case Study 3: Deductible Gift Recipient (DGR) Compassion is registered as a DGR which means that donations to most programs over $2 can have a tax deduction made for them. Two of the programs that do not receive DGR status are the Bible Fund and the Leadership Development program (Compassion Australia, 2014). The reason for this is the Department of Foreign Affairs and Trade outline in their guidelines that DGR status is not given to the purposes of evangelism or proselytising. This means that the programs solely promoting religion cannot be given DGR Status (Department of Foreign Affairs, 2014). There are a number of things that must have happened for Compassion Australia to have been given DGR status. Many of these points have been covered previously but others include: an approval from the Minister of Foreign Affairs; an application for endorsement must be made to the ATO; an approval application to the Department of Foreign Affairs and Trade and apply for endorsement as a developing country relief fund (Justice Connect, 2014). It is evident through their current status that they have been approved by all of the above parties. With the continuing reporting requirements for an organisation to maintain a DGR, Compassion Australia must remain aware of the legal environment both in our country and in the countries that it works in.