Calls to Abolish Basic Religious Charity Category from ACNC Legislation

Justice Connect has called to abolish the concept of Basic Religious Charity from the Australian Charities and Not-for-profit Commission’s legislation, in their submission to the ACNC review.

Justice Connect’s (JC) Not-for-profit Law Service made a submission to the mandatory five-year review of ACNC legislation on Wednesday.

It made six recommendations, including to remove the concept of BRC under ACNC legislation and subject it “to further review in five years”.

A charity is given BRC status if it is registered with the sole purpose of “advancing religion” and if it meets five other requirements.

Charities with BRC status do not need to answer financial information questions in its Annual Information Statement, submit annual financial reports to the ACNC (regardless of its size), or comply with the ACNC governance standards.

JC said in their submission that it was “not clear what special attributes such organisations have which justifies a lower level of regulatory oversight”.

The legal charity also expressed concerns that there was no size requirement in the definition of a BRC.

“Under the ACNC legislation the fact that larger charities have more robust reporting requirements recognises that greater regulatory oversight, and greater financial accountability and responsibility, is justified where more money is involved,” the submission said.

“This principle is undermined by the [BRC] category since a large charity that qualifies as a basic religious charity is excused from financial reporting obligations and has less regulatory oversight than a small charity with a different charitable purpose.”

Our submission to the ACNC legislation review: "there is no valid reason why charitable organisations established for one charitable purpose (i.e.
advancing religion) should be exempt from certain reporting obligations" https://t.co/0sXX41ooUi

— Not-for-profit Law (@nfp_law) February 28, 2018

Justice Connect’s acting CEO Sue Woodward, told Pro Bono News that she supported the abolition of the BRC category even if it was amended to cover only smaller religious charities.

“I believe even if it were to be amended so that it was based on say, annual revenue size, the exemption should still be removed,” Woodward said.

“They should just be treated like any other registered charity.”

Woodward said this recommendation was based on JC’s experiences with smaller charities, which had shown an ability to deal with the ACNC’s governance and reporting requirements.

“We regularly deal with very small, grassroots charities. They might have no paid staff and be entirely volunteer run,” she said.

“But we have found over the five year period that the support the ACNC has given through its advice service and education resources, has meant there’s been very little concern about being able to comply with the governance standards.

“So a very small parish, in my mind from a policy sense, is no different to a very small local group providing meals for people sleeping rough. If one small charity can do it, then I don’t see the policy basis for distinguishing, and giving an exemption from minimum standards, to one category of charity.”

This push comes despite the recommendations of the ACNC’s independent advisory board, which called for the reach of the BRC concept to be extended.

“[The ACNC Act] establishes the concept of [BRC], and allows exemptions from certain ACNC obligations where a BRC is not engaged in significant economic activity,” the board’s submission said.

“The concept arose to avoid unreasonable regulatory burden on small and unincorporated religious communities.

“The operation of [the BRC provision] has not been controversial, and the review panel should affirm the continued operation of the provision.”

But JC’s submission indicated they strongly opposed the board’s recommendation.

“We also see no valid reason why charities should not be treated in the same way when it comes to minimum standards of transparency and good governance,” the submission said.

“That is, all charities should be subject to all of the provisions in the ACNC legislation no matter what their charitable purpose is, especially as there are size tiers for reporting.

“We recommend that the category of Basic Religious Charity be removed from the ACNC legislation, and once that has been achieved it may be useful to consider if there is a better approach to the regulation of all small and micro organisations.”

The Anglican Church Diocese of Sydney also made a submission to the review, which strongly supported the BRC category for religious organisations.

“The BRC category strikes the correct balance by providing a high degree of transparency about the activities, personnel, size, governance and responsible persons of Basic Religious Charities, while recognising the unique nature of these charities by not imposing an unnecessary compliance burden,” their submission said.

The Diocese’s submission went further by recommending that BRC criteria be extended to allow for incorporated religious purpose charities to be eligible.

“We have not been able to ascertain the original rationale for this disqualifying criterion, other than perhaps that since these incorporated religious institutions were already subject to a statutory regime for financial reporting and governance standards, it was seen fit that they should continue under an analogous regime under the ACNC Act,” the submission said.

“It is apparent that there are BRCs and non-BRCs which are very similar in purpose, governance, activities and size, and which materially differ only in that one is incorporated and the other is not.

“We consider that religious purpose charities should not be disqualified from being a BRC by reason only that they are incorporated.”

Elsewhere in JC’s submission, the legal charity recommended that the ACNC progress its agenda to remove red tape, by forming an advisory committee of all states and territories to urgently #fixfundraising.

“With the public register, annual reporting and the Charity Passport, I think that the ACNC has already contributed to creating an environment that means the states and territories could repeal their inconsistent and out-of-date fundraising legislation,” Woodward said.

“The ACNC can’t and shouldn’t march in and take over the jurisdiction, but I certainly think they should be at the table for the discussion with states and territories.

“That’s the focal point of our fix fundraising campaign. We need a mechanism for solving this entrenched problem, one that’s been an issue for decades.”

The ACNC review panel will provide a report to the federal government by 31 May 2018.