Charities Caught in Web of Red Tape

The old maxim of ‘if it ain’t broke, don’t fix it’ must surely apply to keeping the national charity regulator, writes Alex Malley chief executive of CPA Australia – one of the world's largest accounting bodies.

Uncertainty is the new normal in the charities and Not for Profit sector.  It applies to individual providers battling to secure ongoing funding as much as it does to the national regulator, the Australian Charities and Not-for-profits Commission (ACNC).

It’s important we fix these uncertainties because charities are such an important part of our community and broader economy, employing nearly one million Australians, turning over close to $100 billion each year and delivering services that affect all of us in one way or another.    

When the ACNC opened its doors in December 2012, it was touted as the turning point for charity regulation. Its job was to improve the effectiveness of the sector, build transparency and trust, and reduce the regulatory burden many charities face.  

Uncertainty for the regulator came in the form of a pre-election promise by the then coalition opposition to abolish the ACNC.  It’s a commitment they’re sticking with in Government, contending that the regulator only adds to the red tape burden.

The problem is it’s been 18-months since the election and nothing concrete has happened. The laws that established the ACNC remain in place, and it continues discharging its duties of oversight.  We’re also yet to see any detailed plans for the ACNC’s replacement.

The resulting regulatory quagmire means charities across around the country have no choice but to muster the scant resources at their disposal to ensure compliance with new reporting rules which they expect to be dumped, along with the ACNC.

I have been a leading voice in applauding the Government’s focus on red tape reduction.  Yet here we have a classic moment in bureaucracy: in a move to reduce red tape, the abolition of a regulator charged with eliminating red tape is in limbo, resulting in more layers of red tape being loaded onto charity operators who have no capacity to absorb additional costs.

There’s another key point. The majority of charities – more than 80 per cent in a recent survey – want the ACNC retained.

It’s rare for those being hit with new rules and compliance requirements to so strongly support a regulator, and it’s because the ACNC is doing a good job. From any vantage point, the Commission is providing effective leadership at a difficult time.  Their work to consolidate into one regulatory framework, the current spider-web of differing rules across multiple states and territories makes a lot of sense.

The ACNC is working.

The Government may just be coming around to its merits, with indications from Social Services Minister Scott Morrison that he has “no immediate plans” to move on its axing.

In reality however, uncertainty remains.  

So in the interests of stability and certainty, it’s time to make the call.  And with all the challenges our country is facing, from security issues to stalled budget initiatives, the old maxim of ‘if it ain’t broke, don’t fix it’ must surely apply.  

About the author: Alex Malley is the Chief Executive of CPA Australia which has a global membership of more than 150,000 members working in 120 countries around the world, with more than 25,000 members working in senior leadership positions.