I recently looked up synonyms for the word “whistle-blower” and some of the results surprised me: “betrayer”, “blabbermouth”, “double-crosser”, “informant”, “sneak”, “snitch” and “backstabber” to name a few. There is no doubt that the word has many negative connotations, and that the narrative around whistleblowing needs to change.
In a post- Banking Royal Commission world, it is clear that whistleblowing is a crucial part of uncovering corruption and misconduct in institutional settings. In the not-for-profit sector, where organisations provide services to vulnerable members of our community and handle donations, grants and government funding, there is no argument that illegal, fraudulent, unsafe and unethical practices should be detected at the earliest stage possible.
Whistleblowing is effective at doing just this. Studies show that tip offs from whistleblowers are the most common and effective way of discovering fraud in the not-for-profit sector.[1]
The law is finally catching up and new federal whistleblower laws came into effect on 1 July 2019. These laws improve the protections available to people who report misconduct and provide the necessary structural framework to encourage whistleblowing. The laws apply to a wide range of not-for-profit and charitable organisations, including those structured as companies and incorporated associations.
Of course, it is up to each of these organisations to not just comply with these laws but to establish a culture that encourages people to speak up and that changes negative preconceptions about whistleblowing.
ASIC is currently in the process of finalising its guidance for companies who are required to implement a whistleblower policy by 1 January 2020. As part of that process ASIC is considering whether small not-for-profits or charities should be exempt from the requirement to have a whistleblower policy.
We anticipate that ASIC will finalise its view on this issue in the next month. However, even if some not-for-profit organisations are not legally required to have a policy, we recommend they consider adopting one anyway. Aside from the fact that implementing a policy along with proper training will encourage disclosures of improper conduct, a policy will also make it easier to comply with the whistleblower laws (which will still apply even if an organisation is not required to have a policy).
If you need help preparing or reviewing a whistleblower policy please contact us.
[1] BDO Not-For-Profit Fraud Survey 2014
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