Charities Unclear and Concerned Over Foreign Donations Bill

The majority of Australian charities are unclear on how they stand to be affected by the government’s proposed Electoral Funding and Disclosure Reform Bill 2017, according to a new survey.

A poll of the not-for-profit sector, conducted by Pro Bono Australia, has found more than two thirds (63 per cent) of respondents said they were unclear on how the draft bill would affect their charity.

A total of 355 people (58 per cent at C-suite or board level) responded to the survey, which was open for a week, with 118 respondents making additional comments, the majority of which expressed concern over the bill with several calls for it to be redrafted.

A total of 96 per cent said their charity or NFP had not been consulted by the government on the draft bill.

Pro Bono Australia founder and CEO Karen Mahlab AM said the findings were concerning.

“The survey shows that charities are unsure about what this bill means for them and are concerned about how they could be caught up in this legislation,” Mahlab said.

“It also tells us that far more charities are likely to be caught up in this legislation than has been assumed, which is very worrying.

“Optimally, the government should have conducted a full regulatory impact assessment of the impact of the draft bill on charities.”

The Election Funding and Disclosure Reform Bill, which aims to ban foreign donations and require registration and disclosure requirements for a broader group of non-party political actors than is the case currently, was referred to the Joint Standing Committee on Electoral Matters by Minister for Finance Mathias Cormann on 6 December.

According to the federal government the bill is necessary to block donations by foreign entities attempting to influence Australian electoral outcomes.

However, the bill has come under fire from many in the charity sector with fears it could have a “chilling effect” on advocacy and impose an onerous level of red-tape on charities.

When asked how concerned they were about the disclosure and regulatory obligations of the draft bill, 79 per cent said they were concerned, with the majority of those (53 per cent) either “very concerned” or “extremely concerned”.

One survey respondent said: “While this may has been positioned as a political issue – this bill will directly impact the ability for charities to deliver necessary services that help people, often with life saving programs. It would be misguided to believe the impact of this bill was targeted, when in fact it is far reaching and the full impact is not really understood on both people and our economy. A full impact assessment should be a minimum prior to any further progress of this bill.”

Another respondent said: “We are currently negotiating future international funding which may now be in doubt.”

As many as 40 per cent of respondents said their charity received international philanthropy of more than $250, which under the new bill could not be used for political purposes, and must be kept in a separate account to the one used for political expenditure.

Of those that received international philanthropy, nearly a quarter said they would have to stop some of their advocacy work because of the ban.

The latest findings from the survey also suggested the new definition of “political expenditure” means many more charities would be captured by the legislation.

Under the current Commonwealth Electoral Act 1918 non-party political actors are required to lodge an annual return where their expenditure on political activities exceed the threshold of $10,000.

In amendments to the act passed in September 2017, the types of activities which would be covered by political expenditure were broadened significantly. While the act previously only caught public expression of views on issues in an election, the amendments expanded it to also catch public expression of view on issues which are likely to be before electors in an election, even if an election has not been called.  

Seak-King Huang, principal at Prolegis Lawyers, told Pro Bono News that the sector was not consulted widely about the 2017 amendments.

“Anecdotally, it seems that many did not know about the ramifications of these amendments. Many would have assumed that they were a response to what has been dubbed the ‘Medi-scare’ campaign in the 2016 federal election and would not apply to them,” Huang said.

The proposed bill retains this broadened definition as it applies to reporting of political expenditure and significantly the definition is also relevant to the expansion of those who will need to be registered as political actors.  

Many in the charity sector are concerned this could be problematic for charities and not for profits, as it broadens what is reportable beyond expenditure on campaigning via advertising and the media during an election to expenditure on activities like producing a submission and giving evidence to a parliamentary inquiry, engaging with a United Nations body, looking into Australia’s domestic activities, or producing a research paper published on an organisation’s website that contains some conclusions.

One respondent said “virtually any matter of public interest” could be classed as an issue before electors in an election.

“We receive substantial international philanthropy on various issues such as to conduct research into mitigating the effects of climate change, the human and environmental effects of statelessness, etc – if a paper is published or [a] media release [is] made on those topics, it is in danger of being classed as political, particularly if seen as contrary to current government policy. This is ludicrous,” they said.

Another respondent said they feared the new reforms left them open to “malicious persecution”.

“Despite our organisation being focused into achieving on-ground outcomes I consider the current draft legislation so sweeping and broad it will stifle a lot of legitimate non-party political comment on specific issues, and will leave us open to malicious persecution by government if we ever did cross their path on any specific issue,” they said.

Overall, 51 per cent of respondents thought their charity would spend more than $13,500 p.a on activities under the expanded regime including the public expression of views on issues that are or could become a federal election issue.

Nearly a quarter of charities (24 per cent) thought they would fall into the newly created class of “political campaigner” (organisations that incur more than $100,000 of “political expenditure” in any of the previous four years, or $50,000 or more in political expenditure, where that represents 50 per cent or more of their annual budget).

However, it was evident from some comments that it remains unclear to charities what expenditure would be counted. Questions have been raised regarding the inclusion of staff costs, which if included could place more charities into the new categories.

More than half (55 per cent) said they thought being classified as either a “political campaigner” or “third party campaigner” would have an effect on their reputation in the eyes of their supporters, donors and the public.

The survey also questioned charities over the obligations and liabilities that will be placed on the financial controller.

Under the new bill, if you are a charity the financial controller will be the person who is responsible for maintaining financial records.

As many as 60 per cent of respondents said they would need to review whether their staff were capable or possibly recruit new personnel in order to comply. Some questioned how they would be able to comply where the charity received international donations via third-party platforms (such as Good2Give).

One respondent said: “As the ‘financial controller’ I am considering resigning as I am outraged that I might be imprisoned for not correctly reporting such vague ‘political expenditure’ or for accidentally accepting a donation from the wrong person. Please, please help us.”

Gareth Beyers, government relations advisor to the Australian Council for International Development (ACFID), who gave evidence to the committee on Wednesday, said the findings confirmed charities’ fears.  

“The ambiguity of the bill and the lack of consultation and regulatory impact assessment has left charities unclear and uncertain about how they will be affected. It is very concerning to see that charities are already thinking of stopping some of their advocacy – this is the chilling effect we feared,” Beyers said.

“Worryingly, charities are telling Pro Bono that international philanthropy for their organisation is already in doubt.

“Reform opportunities should seek to identify and remove inefficiencies. But, as the ACNC has illustrated in their submission to the committee’s inquiry, the bill places unnecessary regulatory burden on charities already registered with the ACNC. It will make it considerably harder for charities to achieve their charitable purpose and charities may cease their advocacy due to the heavy burden.”