NFP Directors Sceptical About Impact of ACNC

Australia’s first charity regulator, the Australian Charities and Not-for-profits Commission (ACNC), will have no impact on Not for Profit governance, according to the findings of an Australian Institute of Company Directors’ study.

About 80 per cent of NFP directors surveyed for the 2012 Directors Social Impact Study, conducted by Curtin University on behalf of Company Directors, said they are worried that the proposed ACNC will not reduce red tape or improve financial reporting, recruitment of directors, compliance and the ability of their organisation to achieve its mission.

“Although there is widespread support in the sector, and across the director community, for the ACNC, the study findings confirm that there is doubt among the NFP community that the legislation establishing the new regulatory regime, in its current form, will achieve the Government’s commitment to strengthen the NFP sector,” Chief Executive and Managing Director of the Australian Institute of Company Directors, John Colvin said.

“Although positive changes have been made to the Bill since this study was completed, there are still a number of areas directors remain concerned about.

“These are the types of issues the proposed ACNC has an opportunity to address. The ACNC’s role as a leader and educator will be enhanced if they can actively work with the sector to fix the challenges that organisations and boards have faced over many years.”

Professor David Gilchrist from Curtin University said that greater communication was needed from the Government in order for company directors to “better understand the ACNC going forward”.

The study took place in late June this year. The charity regulator Legislation has since undergone changes following community consultations through several the Senate Committees.

“Although positive changes have been made to the Bill since this study was completed, there are still a number of areas directors remain concerned about,” Colvin said.

The peak national and state and territory bodies for Australia's community welfare sector, have again put their full support behind the establishment of the ACNC following the release of the Company Directors report.

ACOSS chief executive Cassandra Goldie said: “It’s true to say there were concerns that the Legislation before Parliament did not go far enough to ensure red tape is reduced and financial reporting improved.

“Many of the sector’s concerns have since been taken on board and substantial improvements made.

Dr Goldie said these previous concerns are captured by the Australian Institute of Company Directors report which ACOSS believes reflects the situation prior to those improvements.

The study of some 2000 directors also found that Not for Profit directors are working on average 35 days a year, or the equivalent of seven working weeks, in their role, with 86 per cent doing so voluntarily.

“These directors have exactly the same duties and responsibilities as directors of our largest companies, and are also subject to the same liabilities. Their decision to serve comes from a deep commitment to benefiting the lives of communities and individuals across Australia,” Colvin said.

The study also found that there are no discernable differences between the governance effectiveness of Not for Profit and for-profit boards.

“We need to dispel this myth that NFP boards are ‘second rate’ and lack governance skills compared to boards in other sectors,” he said.

The report was launched in Sydney today. View the report online here.