Federal Budget - New NFP Regulatory Framework
12 May 2010 at 9:56 am
The Rudd Government will introduce a new regulatory framework to improve the integrity of public ancillary funds which it says will boost confidence in the philanthropic sector.
Assistant Treasurer, Senator Nick Sherry says the Government is committed to the continuing growth of the philanthropic sector and to supporting community-based charitable initiatives.
But he says alongside a strong philanthropic sector must come proper accountability, particularly when it comes to organisations benefitting from taxpayer funded incentives.
In 2008 the Government introduced a new regime for private ancillary funds and a new regulatory framework is aimed at ensuring public ancillary funds meet similar minimum standards.
Many community and fundraising foundations are set up as public ancillary funds and hold deductible gift recipient (DGR) status, meaning all donations made to the funds are tax deductible.
These funds then distribute the money gathered from public donations to other charitable organisations that also have DGR status. In the case of private ancillary funds, businesses, families and individuals establish a charitable trust of their own with DGR status.
Senator Sherry says the new framework for public ancillary funds will provide trustees with greater certainty as to their obligations and provide donors and the charitable sector with greater confidence that donations are being used effectively.
The proposed regulatory framework would take effect from 1 July 2011 and will include legislative guidelines similar to those introduced for private ancillary funds from 1 October 2009.
Senator Sherry says the legislative guidelines will allow for regular valuation of assets, will clarify investment and distribution rules and will contain a system of administrative penalties.
He says he consulted comprehensively on the private ancillary funds reforms and he's confident that compliance and governance outcomes were improved for philanthropy in Australia.
The Government will consult on the public ancillary fund changes through the release of a policy discussion paper. Details of the new regulatory framework will be finalised following consultation.