It’s Time We Had a Not-for-Profit Sector Ombudsman

The not-for-profit sector lacks a champion within the Australian government, writes Krystian Seibert.

According to the most recent Australian Charities Report, in 2016 the Australian charities sector had income of $142.8 billion – that’s larger than Australia’s agriculture sector!

It employs 1.3 million people – that’s more than each of the retail trade, manufacturing, mining and construction sectors.

It’s supported by the generosity of Australians – 2.9 million people volunteer for charities and donations amount to $10.5 billion.

When we add in the broader not-for-profit (NFP) sector, these figures will be even bigger.

The NFP sector doesn’t just generate revenue and provide jobs – that’s not actually what it’s there for – it makes a vital contribution to building more inclusive, resilient and sustainable communities right across Australia, in so many diverse cause areas.

But despite its significance and the role it plays in our community, it lacks a champion within the Australian government.

The Australian Charities and Not-for-profits Commission (ACNC) plays an important role supporting the charities sector in particular, the second object of the Australian Charities and Not-for-profits Commission Act 2012 (Cth) is to “support and sustain a robust, vibrant, independent and innovative not-for-profit sector”. But the ACNC is a regulator, and this object is about ensuring that it fulfils this role in a way that is responsive to the needs and expectations of the sector it regulates.

The ACNC contributes an important perspective to policy debates, for example if has pointed out the red tape impost of the proposed Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017. But the ACNC’s role beyond that is rather limited, and that’s understandable because it needs to keep its focus on being a regulator.

The small business sector has a champion within the Australian government – it’s called the Australian Small Business and Family Enterprise Ombudsman. The ombudsman is an independent advocate for small business within the government, and focuses on effectively influencing decision makers to ensure we have the laws, regulations and policies to help small business grow. It also provides dispute resolution assistance for small businesses.

It’s time that the not-for-profit sector also had such a champion – that’s why I’m proposing the establishment of an NFP Sector Ombudsman.

The NFP Sector Ombudsman would be a person with extensive experience in the NFP sector. This would be combined with a solid understanding of government and the policy development process.

It would be a position that is guaranteed independence through a dedicated Act of Parliament, which would also set out its role and powers – this is modelled on how the Australian Small Business and Family Enterprise Ombudsman is established. The ombudsman would be supported by small office, staffed with public servants committed to the ombudsman’s mission.

I am proposing that the ombudsman would have the following key roles:

Contributing to the policy development process

The ombudsman would advocate within the Australian government for legislation, policies and practices which support the NFP sector to fulfil its purposes and benefit the community.

There would be a requirement that the ombudsman be consulted as part of the development of any policy proposal which has more than a material impact on the NFP sector – that way decision makers, be they senior public servants, ministers or cabinet would have an opportunity to consider the ombudsman’s views and advice when making decisions.

In addition to this, the ombudsman would make submissions to Parliamentary and other inquiries or consultations where relevant.

Undertaking reviews and studies

The ombudsman would be able to undertake reviews and studies into legislation, policies and practices affecting the NFP sector. This could include strategic issues of significance to the NFP sector, its sustainability and effectiveness.

These could be undertaken at the request of a relevant minister, but the ombudsman could also independently decide to undertake a particular review or study where the need arose. It would be expected that these decisions would be made in consultation with the NFP sector.

There would be a specific role undertaking reviews in two key areas of interface between NFP organisations and the Australian government:

• The administration of the ACNC regulatory framework – to examine the policies and practices of the ACNC to ensure that they are responsive to the needs of charities, including the identification of any systemic issues which may arise within the ACNC from time to time. This is not dissimilar to the role of the Inspector-General of Taxation with regards to the Australian Taxation Office.
• The administration of contractual relationships between Australian government agencies and NFP organisations – to ensure that these relationships are managed effectively and fairly. In the past, some questions have been raised about the fairness of such contractual relationships, and also about the effectiveness of tendering processes.

In both instances, the ombudsman could make recommendations to the agencies it reviews, the Australian government or both. Its recommendations would not be binding, but they would be influential – the reviewed agency and the Australian government would be required to publicly respond to them.

Facilitating dispute resolution

The ombudsman would have a role mediating disputes between Australian government agencies and NFP organisations – for example around service delivery contracts. However, its role would not be to review individual regulatory or administrative decisions of the ACNC or any other agency – as other processes already exist for that.

It could also provide referrals to low cost alternative dispute resolution services for NFP organisations more generally.

The establishment of an NFP Sector Ombudsman need not be an expensive reform – the Australian Small Business and Family Enterprise Ombudsman has a staff of around 20 in addition to the ombudsman, and a budget of $2 million per year.

It would be a tangible reform that would give the sector a voice within the Australian government and help ensure that the Australian government delivers better outcomes for the NFP sector, and in turn the community which it serves.

About the author: Krystian Seibert is the advocacy and insight manager at Philanthropy Australia and an adjunct industry fellow at the Centre for Social Impact at Swinburne University.

Krystian Seibert writes for Pro Bono News on a monthly basis.