Charity Regulator the ‘Missing Link’

The work of Australia’s beleaguered charity regulator, the ACNC, has been described as the ‘missing link’ in Australia’s long term charity regulation by a leading Not for Profit academic.

Prof Myles McGregor-Lowndes, the Director of the Australian Centre for Philanthropy and Nonprofit Studies at QUT, as well as a member of the ACNC Advisory Board, has defended the organisation in a guest editorial on the regulator’s website.

Prof McGregor-Lowndes said his defence follows a recent paper published by the Centre for Independent Studies Ltd (CIS) (an ACNC-registered charity) which makes the case that ‘the problem facing the NFP sector in Australia is one of too much regulation, not too little’.

However, Prof McGregor-Lowndes said that during its short history the ACNC has played a positive role in the overall regulatory environment of charities, and it is well-placed to continue that role.

“In the short term, it provides the infrastructure for a ‘one stop shop’ for Commonwealth regulatory requirements, and a dedicated force to work with other Commonwealth agencies to streamline their present arrangements,” he said.

“Its stellar improvement in terms of timeliness, consistency of decision making and responsiveness to emerging issues of previous ATO functions, surpasses the sector’s original high expectations.

“At a meta-level, it is the missing link set to drive the long-term reconfiguration of Australian regulation for the better,” he said.

He said that while spurring on debate over regulation of the NFP sector is always commendable, the starting point must be ‘what is the best mix of regulatory tools or strategies?’ underpinned by a strong understanding of the Australian regulatory environment.

“The CIS paper adopts a simplistic approach to the issue and its conclusions will not deliver the desired outcome. In my view, the paper’s research question ‘too much or too little regulation’ is not the most productive approach to take.

“For example, in Australia we have one state jurisdiction with over 123 pages, nearly 30,000 words, of legislation to regulate fundraising activities, and another with none. One form of regulation rarely hits the bullseye in any area of endeavour, so I am sceptical of those who advocate the ideal silver bullet solution, whether it is a central government regulator, the markets, or self-regulation.

“Rather we need to ask what mix of regulatory tools can be used to achieve acceptable behaviours, at an appropriate cost to whoever is bearing the costs, be they the taxpayer, charity, donors or beneficiaries,” he said.

Prof McGregor-Lowndes said it’s ironic that cash-strapped US State Attorneys General collectively decided early this year to ask philanthropic backers and academic institutions to build them a single electronic portal, to allow once only entry of fundraising returns for multiple state regulators, in order to reduce red tape for charities, and to improve their ability to detect fundraising fraud.

“This demonstrates to me that the ratings agency model is not a silver bullet, but a niche player,” he said.

Prof McGregor-Lowndes said that if there is one point of consensus in the debate over the last couple of decades it has been that inconsistent and duplicative state and territory regulation is hindering charitable enterprise, particularly with barriers to new entries and restructuring.

“Governments of all hues recognised the business sector’s arguments along exactly those lines, and we are now reaping the productivity benefits of reform initiatives, much of it white tape.

“The ACNC with its specialised charity gateway assessment and central database offers significant benefits to state and territory regulators, other Commonwealth agencies, charities themselves, and their donors and supporters.

“As reform of business regulation has done, this is a medium to long term strategy which must proceed through the consultation and political compromises necessary in a federation.

“It is not about too much or too little regulation. It is not about silver bullet solutions. It is about the best regulatory mix that delivers benefits for Australians. The ACNC can and should play a critical role in that mix.”

The full editorial can be seen here.