From Haphazard to Harmony – Australian Charities and Not for Profits Commission
23 August 2012 at 12:50 pm
OPINION: As legislation to set up Australia’s first charity regulator is introduced into Federal Parliament, the Chair of the Not for Profit Reform Council, Linda Lavarch says the importance of the ACNC as an independent, statutory regulator for the sector cannot be understated.
Charities are in Crisis is the opening statement of a new book Driven by Purpose – Charities that make the difference. The authors Stephen Judd, Anne Robinson and Felicity Errington stress that it is not a crisis of money, professionalism or leadership but a crisis of identity. Judd et al look at the ways in which each charity should revisit its purpose to overcome any identity crisis.
But there is an even bigger issue to grapple with. There is only a limited understanding or recognition of where charities sit within the landscape of Australian society. As a society we cherish the work that they do and we want our charities to succeed but we need to figure out how they should be supported and regulated.
Having 178 pieces of Federal, State and Territory legislation and 19 separate agencies determining charitable purpose does not begin to demonstrate the regulatory nightmare that some charities endure. It has become beyond ridiculous. Thankfully a better deal for Charities is about to begin and this reform is broadly supported by the Not for Profit sector in Australia.
Today, the Government introduced the Australian Charities and Not-for-profits Commission (ACNC) Bill, the Consequential and Transitional Bill, and the Tax Laws Amendment (Special Conditions for Not-for-profit Concessions) Bill to Parliament.
The importance of the ACNC as an independent, statutory regulator for the Not for Profit sector cannot be understated.
Without the ACNC we leave this important sector which is estimated to represent over four per cent of GDP and eight per cent of the Australian workforce to an incoherent, costly, uncoordinated, complex regulatory regime in which the ATO has assumed the position of default regulator. It is therefore not surprising that Not for Profits have been calling for an independent regulator like the ACNC for so long. These calls have been supported by no less than six major inquiries since 1995. All of these inquiries including the significant inquiry undertaken in 2010 by the Productivity Commission, Contribution of the Not-for-profit Sector, have unequivocally called for a ‘one-stop shop’ national regulator for the sector.
It’s not just the Not for Profit sector that will benefit from the ACNC. While many of us roll our eyes as soon as we hear the words ‘regulatory reform’, we all have an interest in a stronger, more sustainable NFP sector.
There would be very few of us not touched by the work of some 600,000 Not for Profits that exist in Australia. Whether it is helping to organise meals on wheels, supporting grass roots sport or caring for our natural resources, Not for Profits are often the glue that holds our communities together. Australians donate around $7 billion in money and $14.6 billion in time each year. The last thing we want is the good works of our charities and the army of volunteers who help them being held back by the current haphazard regulatory environment.
The ACNC Bill follows many months of consultation with Not for Profits. This consultation resulted in a number of significant changes since the first draft was released in December 2011. This has also led to the Government delaying for 12 months to 1 July 2013, the introduction of the financial reporting and governance standards. A decision welcomed by the sector.
The 2010 National Compact between the Government and NFPs committed both parties to working together on a shared vision to improve Australia’s social, cultural, civic, economic and environmental outcomes. This shared vision was based on an appreciation of the unique contribution that a strong and vibrant Not for Profit sector makes to Australian society.
The Not for Profit sector looks forward to continuing our engagement with Government on standards that strike the right balance between accountability and ensuring that we do not stifle the vibrancy and responsiveness of the sector.
Australia needs a creative and productive Not for Profit sector that can serve the Australian community into the future. I am confident the ACNC’s role of ‘light touch’ regulatory oversight combined with education and support will become profoundly important to underpinning civil society in Australia and then we will be in no doubt about the difference charities make.
About the author: Linda Lavarch is the Chair of the Not for Profit Sector Reform Council which was established by the Commonwealth Government in 2010 for three years to support the Office for the Not-for-Profit Sector to implement the Government's commitment to NFP sector reform around regulation, reduced red tape and improved transparency and accountability.
Whilst I am sure most people would agree withe sentiments and views it is the first time in Australia certain religious charities are defined as not being a “religious charity” because of their structure , A first that we should not be proud of .The relevant section is 205-35.It would appear to be the beginning of attack on religion by the Government and Treasury .It is significant that in the Explanatory Memorandum this is not even mentioned . One can only wonder why ?
Totally agree.
The role of the ACNC and the book referenced int he opening statement have no relevance to one another. That book is not representative of the sector, and does not deserve the credence it is given. There is a huge crisis in Australia in the gap between rich and poor, evidenced by the government’s own social inclusion report recenlty released. The increased demand for support and the inadequate funding levels to respond is the crisis.
There is no spiritual or religious crisis, just people working harder than ever to deliver the mission of their NFP.
Poor reference LInda. Find another one.
I agree with Linda Lavarch’s conclusions the the NFP sector needs reforming. The ACNC and other initiatives like the Standard Chart of Accounts are good steps.
However, the big hurdles are still the disparate compliance regimes with which NFP’s must deal. Most NFP’s are still incorporated under state legislation such Associations Acts. Of course they have their own compliance requirements, and there still appears little attempt to coordinate across state & federal jurisdictions. Another compliance requirement is grant funding conditions, especially reporting. We still have to negotiate wildly variable and sometimes simply ludicrous reporting requirements from different funding agencies.
There are two relatively simple fixes to both. The first is a federal corporations act for NFP’s. The CATSI Act is a good precedent, take the Corporations Act as a base and modify where necessary for NFP’s (eg on Directors duties). The second is a set of reporting standards for grant funding bodies, conceptually not that different to accounting standards. Like the SCOA they could then be adopted through COAG.
The ACNC and other nfp reforms would then get some real traction.