Not for Profit Sector Needs Reform – New Study
Monday, 1st March 2004 at 12:03 pm
The regulatory framework behind Australia’s Not for Profit sector is riddled with inconsistencies and is undermining an economically valuable sector, according to a new University of Melbourne study.
In a first of its kind, the study by University of Melbourne’s Centre for Corporate Law and Securities Regulation researcher Susan Woodward, surveyed over 1700 NFP companies.
The final research report (A Better Framework: reforming not-for-profit regulation) makes recommendations designed to achieve a balance between the needs of the sector and the broad public interest in NFP accountability.
Recent ABS figures confirm that NFPs play a vital role in our society, with the sector adding more to Australia’s GDP than the mining industry. In economic terms alone Australians give more than $2.8 billion annually to NFP organisations.
But Susan Woodward says the underlying health of the sector is at risk.
She says the regulatory framework that underpins the sector is complex and riddled with inconsistencies and it’s time for some preventative medicine.
Woodward says that to meet both the needs of the sector and the needs of its stakeholders, the relevant laws and regulatory bodies needed to be fair, consistent and clear in order to promote NFPs that are transparent, accountable and credible.
She says if the regulatory fundamentals are sound, then growth and innovation are more likely to occur.
Ms Woodward says the legal structures in the NFP sector are more varied and complex than in the business sector, and she has proposed several reform recommendations, the principal one being the need for a single, Commonwealth regulatory regime.
Other recommendations include:
– ASIC becoming the new regulator for all incorporated NFPs (associations and companies), at least until any sector specific regulator is introduced establishing a specialist NFP unit within ASIC
– developing a plain language guide and replaceable rules for NFPs
– establishing an independent NFP advisory body to provide assistance to NFPs with a range of legal, taxation, training and dispute resolution issues.
Ms Woodward says if important reforms are to take place, the sector itself will need to lobby for change, and government (State and Federal) will need to be committed to streamlining and reforming NFP regulation.
She concludes saying that getting the underlying regulatory framework right, accountability and confidence in the sector generally will be improved, leaving Not for Profit organisations more time to concentrate on the important services they provide to the community.
If you would like an electronic copy of the report’s executive summary and recommendations just send us an e-mail with NFP’s Companies Report in the subject line to firstname.lastname@example.org.