Christmas Release of ACNC Options Report

A Government report has admitted that there is still confusion about Federal plans to replace the national charity regulator.

According to a long-awaited consultative report, there’s still confusion in the Not for Profit sector about the replacement of the charity regulator and plans for a new Centre for Excellence with the sector still believing the regulator is still the best option ahead of the Australian Tax Office.

The Federal Government has finally released the findings of its consultations, just days before Christmas, into a controversial Options Paper for the replacement of the charity regulator, the Australian Charities and Not-for-profits Commission (ACNC).

The Government instigated the consultations in July 2014 received just 88 written submissions and engaged in face-to-face consultations with 230 people across Australia.

The Department of Social Services, under former Social Services Minister Kevin Andrews released the Options Paper in July outlining the proposed replacement arrangements for the reporting obligations of charities that would follow the abolition of the charities regulator.

However, despite the consultation not specifically asking the sector if it wanted to retain the ACNC, the report said  many stakeholders spoke of the benefits of having a dedicated charities regulator which understood their sector and had the resources to educate and support charities.

The report said a clear distinction needs to be made between the principles of charity and Not for Profit regulation currently in place, and the regulatory mechanism of the legislation itself.

“Any alternative arrangements should be underpinned by these principles, that is: reduction in red tape; minimising reporting requirements; and enhancing transparency in relation to the operation of charities,” the report said.

“Criticism was also raised of the consultation process with a concern that the Government had already made up its mind on the form of the replacement arrangements.

The report said there was strong support for retaining the Charities Register or a form of public register. Suggestions of alternatives included: the Australian Business Register (ABR), the ASIC website, or a database using cloud technology.

Retention of the data collected by the ACNC was a key issue, the Report said.

“A focus was the retention of register data and that the data remain accessible to the public.  Consistent formatting for the self-reporting requirements is considered important for aggregation and comparison of data.

“Some stakeholders expressed confusion about the link between the consultation on the ACNC replacement arrangements and the Civil Society National Centre for Excellence (NCE) consultation process.

The report considered the option of returning charity regulation back to the ATO which received mixed reactions.

Regarding the establishment of a dedicated unit within the ATO to address the needs of the charities sector, the report said that:

•  A dedicated unit would help alleviate previous concerns and address the needs of the charitable sector.

•  The dedicated unit within the ATO would have key advantages in developing and extending the body of knowledge in this specialist area and provide consistency of decisions.

•  The unit’s functions could be extended to include: the provision of advice; information and training; the maintenance of a register of charitable organisations; and the issuing of authoritative up-to-date certificates regarding charitable status.

“Both options would necessitate more time and resources on the part of all involved, rather than achieving the goal of building independence into the determination decision.  In response to this, it was suggested that a panel of experts who would make initial decisions relating to charitable status should be established.

“The two options present a good framework for the oversight of the administration of charities and Not for Profit organisations. However it should not be an either/or choice between the two, but rather a combination of the two options.”

The Report said another issue raised in the consultations was the regulation of charitable trusts.

“There is concern from some in the sector that there is not enough transparency in this area.  While others support the development of clear boundaries around the charities and not for profit sector, to ensure that service providers to the sector – trustee companies and public trustees – are not encapsulated in the new regulatory arrangements.”

The Report said the analysis of the feedback obtained through the consultation process will inform the development of the replacement arrangements and drafting of the Australian Charities and Not-for-profits Commission (Repeal) (No.2) Bill 2014, to be introduced later this year.

The first ACNC Repeal Bill will go before the Senate early next year.

DSS said it will also consult on the exposure draft of the legislation and will seek feedback from subject matter experts, such as charity law experts and sector advocates.

The new Minister for Social Service, Scott Morrison has not yet indicated his stand on the ACNC.

Find the report HERE