Govt Must Slash Charity Regulator - Report

The Abbott Government must remain firm in its pledge to abolish the charities commission and reduce red tape in the Not for Profit sector, according to a highly critical report by The Centre for Independent Studies.

The public policy research institute report said the Australian Charities and Not-for-profits Commission (ACNC), set up by the Gillard Government in 2012, was not achieving its main objectives, which were to improve public trust in the Not for Profit sector, reduce red tape, and police fraud and wrongdoing.

“Abolishing the ACNC should not be allowed to fall by the wayside,” the report said.

“Even with an annual budget close to $15 million, it is unlikely that the ACNC will make significant progress on any of the three objectives it was created to address: improving public trust in the NFP sector; reducing the burden of red tape that charities now face; and policing fraud and wrongdoing in the sector.

“Other countries that have established their own charities commissions have realised that these commissions are not an effective way to regulate the NFP sector. The New Zealand Charities Commission (NZCC) was abolished only six months before the ACNC was launched because the Key government did not think the commission was providing value for money.”

“The charities commission has failed as a model of regulation, and Australia would be better off following New Zealand's lead and scrapping the charities commission altogether,” report author Helen Rittelmeyer said.

Helen Rittelmeyer is a Policy Analyst with the CIS Social Foundations Program.

She said the only way to “slash red tape for charities was by slashing the regulator”.

“The ACNC was established to enhance public trust in the Not for Profit sector, but public trust in charities was already high, and is unlikely to increase any further if the international record of charities commissions is any guide,” she said.

“Charities now have to fill out an Annual Information Statement, ostensibly to reduce the burden of providing duplicate paperwork to different government agencies; instead, it has proven to be just an additional layer of reporting.

“Fraud is a minor and declining problem for Not for Profits in Australia, and the types of fraud predominant in the sector are ill suited to the oversight a charities commission provides. Law enforcement fulfils its role of pursuing charity fraud, and will continue to do so after the ACNC is abolished.”

The new CIS report said Australia should embrace new forms of oversight that would allow the Not for Profit sector to maintain its independence.

“Independent charity watchdogs – sometimes called the Charity Navigator Model – are growing worldwide, which means donors now have the means to research charities before they open their wallets,” Rittelmeyer said.

“Australia is a generous country, with nearly 70 per cent of us giving, yet by adding to the regulatory burden and taking time away from charities' primary purposes, the ACNC risks discouraging charitable giving, particularly among high-wealth donors.

“The Abbott government must counter the excessive burden of the ACNC now by committing to a timeframe of abolishing the commission.”

In August 2013, a major Not for Profit sector survey by peak body the Community Council for Australia and Tomorrow’s Agenda Research Institute, and initiated by Pro Bono Australia, reported a strong preference for the newly established ACNC, when compared to the Australian Tax Office.

The survey found that the establishment of the ACNC was important (81 per cent), along with the Office of the Not for Profit Sector (73 per cent).

The Federal Labor Opposition, the Greens and Not for Profit leaders have also come out in support of the ACNC since the Coalition announced its decision to abolish the regulator.

In a response to the CIS report, CEO of the Community Council for Australia,  David Crosbie said: “The CIS report on charities regulators is at best very poor policy analysis and at worse little more than self-serving political propaganda.  

“Even the model the CIS report authors argue for – the US Charities Navigator – has itself said there is a need for a national regulator of charities and far from claiming to replace the role of a regulator, Charities Navigator actually calls for a regulator like the ACNC to be established.

“Perhaps more importantly, the Charities Navigator is not much more than a league table of charities based on gaining access to seven years of comprehensive financial data collected by the US government revenue collector – the equivalent of our Australian Taxation Office.  

“I cannot imagine any serious policy analyst arguing the ATO should be collecting comprehensive financial data on all charities and that this information should be available to a third party who then publish a league table about the financial performance of the charities.  

“Real independent analysis of the Charities Navigator has found their model – based on an analysis of overheads – to be flawed.  Even Charities Navigator themselves are now reviewing their process and their models.  This kind of shallow report from CIS undermines both their credibility and the political position they are seeking to advance,” Crosbie said.

The Federal Labor Opposition says it rejects the assertions in a Centre for Independent Studies report that the Australian Charities and Not-For-Profits Commission (ACNC) should be scrapped.

“If this is the advice that Minister Andrews is receiving, is it any wonder that he is hell-bent on scrapping the ACNC despite its almost universal support in the sector and the advice of experts in the field,” Shadow Assistant Treasurer, Andrew Leigh said.

Philanthropy Australia, Australia’s peak body for philanthropy, has reaffirmed its continued support for the independent charities regulator in response to the CIS report.

“Since the ACNC’s establishment as an independent charities regulator, Philanthropy Australia has consistently supported the ACNC’s important role in our community,” Philanthropy Australia CEO, Louise Walsh said.

“The ACNC has only existed for just over a year – so far the progress is promising and we want it to be given the opportunity to realise its full potential.”

Philanthropy Australia says it is particularly concerned about current reform proposals, which involve returning responsibility for the registration and regulation of charities to the Australian Taxation Office (ATO).

“This creates a conflict of interest within the ATO given that it would both register charities and administer charitable tax concessions,” Walsh said.