ACNC’s Review Submission Met With Concern From Charity Sector

The Australian Charities and Not-for-profits Commission’s submission to the five-year review of ACNC legislation has raised concerns in the sector, with fears the national regulator’s recommendations “will impose an ill-conceived restrictive agenda on all charities”.

The Australian Charities and Not‑for‑profits Commission Act 2012 and the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Act 2012, which sets the framework for the charity regulator, are required to be reviewed after five years of operation.

Assistant treasurer Michael Sukkar announced the terms of reference for the review in December, and last Friday the ACNC publically released its submission.

It made 40 recommendations to be considered by the review panel, including to consider adding two objects to the ACNC Act: “to promote the effective use of the resources of not-for-profit entities” and “to enhance the accountability of not-for-profit entities to donors, beneficiaries and the public”.

This would add to the current three objects of the ACNC Act which are: to maintain, protect and enhance public trust and confidence in the Australian not-for-profit sector; to support and sustain a robust, vibrant, independent and innovative Australian not-for-profit sector; and to promote the reduction of unnecessary regulatory obligations on the Australian not-for-profit sector.

News: The ACNC has today published its submission to the five-year review of the ACNC Act, currently being conducted by @Treasury_AU. Read more: https://t.co/Y96MjmnMpj pic.twitter.com/kPtJGsg9UP

— ACNC (@ACNC_gov_au) January 19, 2018

The submission said while the ACNC considered that the current objects remained relevant, they believed “there may be benefit” in including the additional objects regarding the effective use of resources and accountability.     

“In our view these are appropriate objectives for a charity regulator,” the submission said.

“In this connection we note that the commissioner is required in performing his functions and exercising his powers to have regard to a number of matters including ‘the need for transparency and accountability of the not-for-profit sector to the public (including donors, members and volunteers of registered entities) by ensuring the public has access to information about not-for-profit entities’ and ‘the maintenance and promotion of the effectiveness and sustainability of the not-for-profit sector’.”

The ACNC noted in the submission that it did not have specific powers or functions under the ACNC Act that directly related to the current second or third objects.

“If additional objects were added to the ACNC Act, then consideration would need to be given to whether additional powers and functions would be needed (within constitutional constraints) – and additional resourcing – to enable them to be met,” the submission said.

These potential changes were met with concern from those within the sector, with the CEO of the Community Council for Australia, David Crosbie, labelling the proposed new objects as “regulatory overreach” at its worst.

“Any doubt about the intention of the new ACNC commissioner to impose an ill-conceived restrictive agenda on all charities can now be dispelled with the ACNC submission into their review. The proposed new objects alone should be a wake-up call to every charity in Australia,” Crosbie told Pro Bono News.

“Who are the ACNC to determine if CCA or any other charity is using their resources effectively? On what basis will effective use be judged – the views of the commissioner?  What does increased accountability mean? Who sets what standards?

“In all my time working with the initial ACNC Task Force and for over three years on the ACNC Advisory Board, not one person at the ACNC ever suggested there needed to be new accountability measures or a capacity to judge the effectiveness of charities. A few days into the role and the new commissioner is trying to scuttle the years of painstaking work to establish agreed objectives and build a credible and respected ACNC that the sector works with.”      

Crosbie warned that the ACNC risked losing its credibility in the sector if it repurposed itself in this way.  

“This is regulatory overreach at its worse, driven by an ill informed ideological campaign to limit rather than enhance the role of charities in our communities,” he said.

“The ACNC needs to be very careful if it wants to maintain the high level of compliance and co-operation from the charities sector. If the ACNC loses standing and credibility with the sector through this kind of overreach, it will cease to be effective.”

Justice Connect acting CEO Sue Woodward, told Pro Bono News that she was also concerned with the ACNC’s recommendation to consider these two new objects.

Woodward said while she supported many of the recommendations from the submission, she would not support these changes to the objects of the act.

Don’t get us wrong- (a) and (b) are good things. Just don’t need to be new objects for a regulator. What is effective use of resources by an NFP is for board, funders, members, donors to decide. https://t.co/bsqA5PfymH

— Not-for-profit Law (@nfp_law) January 21, 2018

“It’s not that the effective use of resources of not-for-profit entities isn’t something that everyone would want, it’s simply that it’s not the role of the regulator to oversee that. It’s the role of the governing body of the not for profit,” Woodward said.

“It’s for the donors, members, the stakeholders and other funders to determine if the organisation is using its resources effectively or not, and whether people want to support it or not.”

She added that it would be “really hard” to define what constitutes an effective use of resources.

“For example you might be a not for profit that wants to consult with the community, with your members and with other key stakeholders before you implement up a new service,” she said.

“Taking time to do that in a comprehensive way may mean you may not do the work as quickly as you would do without a consultation. Some people may describe that as not being effective or efficient. There are just so many nuances in that expression that it is not an appropriate object for a regulator.

Agreed! Good article and right for you to plug it. Whole lot of issues. How to measure ‘efficiency’ – some orgs think involving and consulting with community/members/beneficiaries is crucial but maybe quicker (more ‘efficient’) if don’t. Nuances abound. https://t.co/HKmy1ZWmV8

— Not-for-profit Law (@nfp_law) January 21, 2018

Woodward said there was also “nothing to suggest that there’s a need for an object about enhancing accountability of not for profits”.

“There’s no case built into the ACNC submission to explain why they think the lack of having this as their object is holding them back in any way,” she said.

“And it looks to me that it is already covered under section 15-10, paragraph (b) of the existing legislation.    

“I don’t see where there’s a gap and why these needs to be elevated to an object.”

ACNC commissioner Dr Gary Johns declined to comment on these concerns when contacted by Pro Bono News, but a spokesperson said he would offer his perspective of the review in his next column on the ACNC website.        

The full list of the ACNC’s recommendations can be viewed here.