Charity Sector Welcomes Release of ACNC Review

The charity sector has welcomed the release of the Australian Charities and Not-for-profits Commission legislation review, which says the sector needs a single national scheme and fundraising reform to combat an “unacceptable level of unnecessary red tape”.   

The final report, tabled in Parliament on Wednesday, made 30 recommendations aimed at finding “a balance between supporting the sector, reducing red tape, enhancing accountability and addressing misconduct”.

A common theme of the report was the need for a national scheme for the sector, which requires a referral of powers from the states to the Commonwealth.

“Australia currently has eight separate jurisdictions whose regulatory regimes impact upon charities and not for profits, with the Commonwealth government’s regulatory requirements, through the ACNC Acts and the tax system, overlaying each of these,” the report said.

“This results in inconsistency, complexity and inefficiency for charities. The panel is strongly of the view that a national scheme is the best option for the sector going forward, especially in areas such as governance, fundraising and registration.

“In the absence of a national scheme, the sector will continue to be subject to an unacceptable level of unnecessary red tape.”

ACNC legislation setting the framework for the national charity regulator must be reviewed after five years of operation.

The five-year review was announced last December, with a panel featuring Patrick McClure AO as chair, as well as Greg Hammond OAM, Su McCluskey, and Dr Matthew Turnour.

The panel sought to alter current revenue thresholds and minimum reporting requirement for registered entities.

They recommended revenue thresholds be increased to less than $1 million for small charities, from $1 million to less than $5 million for medium charities and $5 million or more for large charities.

Community Council for Australia CEO David Crosbie, told Pro Bono News the report contained many positive recommendations.

“We believe the review panel has produced a good report that reflects careful consideration of the various issues. CCA welcomes most of the recommendations,” Corsbie said.

“We are particularly pleased that the report acknowledges the unnecessary imposition of reporting requirements in a number of areas – as reflected in recommendations arguing for referral of state powers and increasing thresholds for definition of small, medium and large charities.”

Regarding ACNC governance, the panel said it was unnecessary for the objects of the ACNC Act to be either expanded or prioritised.

This is despite ACNC’s own submission to the review calling for the panel 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”.

The panel called for the ACNC to establish an executive committee, comprising the commissioner and assistant commissioners, and for the advisory board to be extended to “interface with both the minister and the sector”.

Crosbie said this was another good call from the review panel.

“The decision to support the current objects of the ACNC, which were arrived at after considerable consultation with sector, is also welcomed as are measures to improve governance within the ACNC by formally recognising both the role of the advisory board and the assistant commissioners,” he said.

Examining fundraising, the panel said the federal government had an opportunity to reduce red tape for the sector by taking a leadership role in working with state and territory governments to harmonise fundraising laws.

It recommended the government develop a mandatory code of conduct and amend the Australian Consumer Law (ACL) to ensure its application to fundraising activities.

Big tick for our #fixfundraising campaign. Panel for @ACNC Legislative Review report recommends ACL be amended to clarify its application to charitable and not-for-profit fundraising and a mandatory Code of Conduct be developed https://t.co/kssFIeiGDQ

— Justice Connect – Not-for-profit Law (@nfp_law) August 22, 2018

Sue Woodward, the lead contact for the #fixfundraising coalition, which has pushed for fundraising reform in the sector for the past two years, told Pro Bono News she was pleased with the panel’s recommendations.

“This is what we have been calling for. Now we need a swift response from the government that they will adopt this recommendation and show leadership on progressing a national scheme, as the panel urges,” Woodward said.

“There is a meeting of all consumer affairs ministers at the end of August, so this work can start now. This is yet another independent report saying what others have said for over 20 years – it surely is time to work on the implementation details.”

The Australian Institute of Company Directors also welcomed the fundraising recommendations.

AICD managing director and CEO Angus Armour encouraged the federal government to consider the report carefully.

“The AICD has advocated for comprehensive reform of Australia’s disjointed and inefficient web of fundraising laws through our work with the #fixfundraising coalition,” Armour said.

“We believe reform in this area could deliver more than $15 million in savings for charities every year and allow them to focus their energies on their mission, rather than red tape.”

The panel said secrecy provisions in the ACNC Act were “overly restrictive” and should be adjusted so the commissioner could disclose information in a wider range of circumstances, in order to protect public trust and confidence in the sector.

“The ACNC’s inability to make any comment in respect of whether it is (or is not) undertaking an investigation in respect of a complaint against a registered entity is harmful to the perception of the ACNC as an effective regulator,” the report said.

Another key area the report examined was the concept of Basic Religious Charity (BRC) – a status which offers charities a lower level of regulatory oversight.

In wake of calls to abolish the concept, the panel said if other recommended changes to the financial reporting requirements were adopted, then all BRC exemptions should be reviewed.

While Crosbie said CCA would consult with members before taking a public position on the issue, Krystian Seibert, an industry fellow at the Centre for Social Impact at Swinburne University of Technology, said he was encouraged by this “possible pathway” to end the exemption.

He also expressed support for the amendment of secrecy provisions.

“I’m pleased that the panel highlighted the need to loosen the secrecy restrictions which stop the ACNC commenting on its enforcement actions, and that it identified a possible pathway for removing the Basic Religious Charity exemption,” Seibert told Pro Bono News.

I've had a chance to examine the ACNC Review report – very comprehensive and addresses the key issues. Well done to the Panel for all their work on it! https://t.co/MG4kxQrfzX

— Krystian Seibert (@KSeibertAu) August 22, 2018

Woodward, speaking on behalf of Justice Connect as head of not-for-profit law, stood by her view that BRC exemptions should end.

“The panel have proposed a package of four reforms to underpin a ‘review’ of the BRC exemption. If ‘review’ means removal of the exemption, then this package might be a palatable compromise as it would ensure all small charities are treated in a similar way no matter what their charitable purpose,” she said.

“However, if the alternative proposed by the panel is not an alternative, it is the status quo and is not to be supported.

“We stand by our view: there is no valid reason why charitable organisations established for one charitable purpose (i.e. advancing religion) should be exempt from certain obligations.”

ACNC commissioner, Dr Gary Johns, commended the report for providing “a balanced analysis” of potential changes to support the commission’s regulatory framework.

“I note that there are many similarities between the ACNC’s submission to the review, and the final recommendations of the review panel – particularly in relation to the current secrecy provisions and changes to the ACNC regulations,” Johns said.

“I also welcome recommendations that will encourage further reductions in regulatory burden – including the suggestions to mandate the use of the ACNC Charity Passport, and calls for Commonwealth-led reform of fundraising regulation.”

News: The ACNC has welcomed the publication of the ACNC Legislative Review report, which makes 30 recommendations to strengthen the ACNC's legislation. Read more: https://t.co/7FKZFFsyi2 pic.twitter.com/uMyzHZxx5j

— ACNC (@ACNC_gov_au) August 22, 2018

ACNC advisory board deputy chair Martin Laverty, thanked the review panel for undertaking the review and for endorsing the board’s recommendations.

“The advisory board’s submission to the review of the act said the ACNC’s enabling legislation [served the sector] well. As such, our submission to the review did not seek major change to the objects of the act. The review report has endorsed this position,” Laverty told Pro Bono News.

“The advisory board will examine the report over coming months to consider how the review’s recommendations might play a role in our ongoing work.”

Labor MP Andrew Leigh, the shadow minister for charities and not for profits, spoke to Pro Bono News on Wednesday following the report’s release.

He said a Shorten Labor government would be an ally of the charity sector and support the significant fundraising reforms recommended in the report.  

“I’m sure the sector would welcome having a government that was actually interested in working in partnership with them to reduce the regulatory burden rather than increasing it,” Leigh said.

“That’s why we’ve strongly supported the #fixfundraising campaign. It’s well beyond time for change. The idea that in 2018 charities should have to go through and do paperwork in every state and territory in Australia is just utterly last century.”

Labor welcomes ACNC review https://t.co/01uywj8sTg, though it isn’t encouraging that it was tabled by a minister who’d just offered his resignation. Labor supports #FixFundraising campaign & we’re pleased the review backs it. Will study other recommendations in detail. #auspol pic.twitter.com/aaGTK8E7FM

— Andrew Leigh (@ALeighMP) August 22, 2018

Leigh also weighed into the leadership drama engulfing Parliament, in wake of reports that Assistant Minister Michael Sukkar – who commissioned the review and is responsible for the ACNC – had an offer of resignation rejected following a leadership spill.  

“Since 2013 the ACNC has had five different ministers. On the Labor side, there’s been one person – me – responsible for the charities commission,” he said.

“And that shows in terms of your ability to engage deeply with the sector, to understand it, and reflect its aspirations.

“If Michael Sukkar goes, then the charity sector will end up with its sixth minister in five years and that says it all about the ability of the Turnbull government to engage in long-term policy reform.”    

On Thursday morning, it was reported the prime minister had accepted Sukkar’s resignation.   

Sukkar did not respond to Pro Bono News’ request for comment.