Predictions for 2021: Charities
14 January 2021 at 7:30 am
To kick off this year’s series of predictions about what the social economy can expect from 2021, Dr Gary Johns writes there will be an ongoing climate of uncertainty in which innovation will be key to charities surviving and thriving.
Although 2020 is behind us, the COVID-19 pandemic and its impacts persist and will continue to create a climate of uncertainty for the charity sector this year. Charities have had to overcome momentous challenges presented by the pandemic including changing the way they deliver services, uncertainty in funding, and for some, periods of a shutdown of their operations. This year charities will need to continue to be creative and innovative if they are to flourish.
The pandemic placed increased pressure on the sector with higher community demand for some services, particularly from individuals whose livelihoods were adversely impacted. Charities that provide homelessness, domestic violence, mental health, and relief services such as food banks have experienced increased demand. Simultaneously, the capacity to meet demand has been constrained. Many experienced a fall in donations, have had to cancel or modify their usual fundraising events, and have been restricted in their use of the volunteers critical to their operations. Small charities that don’t receive government funding could be hardest hit. Analysis of data from the 2020 annual information statements that charities are required to submit will provide a clearer picture in time.
In 2021, innovation will be key to charities surviving and thriving. The Australian Charities and Not-for-profits Commission (ACNC) will continue to do all that we can to support a robust charity sector, with a particular focus on facilitating knowledge-sharing to stimulate discussion about innovation.
Improved functionality of the ACNC Charity Register, due for release in the second half of the year, will enable charities to display information about the programs they deliver on the register. I encourage all charities across Australia − large, medium and small − to include details about programs they want the community to support when they submit their 2020 annual information statement.
Last financial year there were 3.2 million searches of the Charity Register. Enhanced search features will enable supporters to search geographically, as well as by using key words charities use to describe their programs. This will promote transparency and public confidence, and allow charities to showcase their work.
A number of government announcements late last year foreshadowed legislative changes on the horizon.
A significant number of charities will save thousands of dollars in accounting expenses and see a reduction in red tape through planned changes to financial reporting thresholds. The changes announced follow a 2018 review of the ACNC’s legislation. Federal, state and territory governments have committed to developing a framework to implement the changes by the middle of the year.
More than 5,000 small and medium charities are set to benefit; more than 3,000 will no longer need to lodge reviewed financial statements and around 2,000 will no longer need to provide audited financial statements.
Precise revenue thresholds for minimum reporting requirements have yet to be decided, however the 2018 review recommended reporting levels of less than $1 million for a small charity and between $1 million and $5 million for a medium charity, based on rolling three-year revenue.
Another legislative change announced will impact just a tiny number of Australia’s 58,000 charities, yet it has generated considerable media coverage. In November, the federal government announced plans to introduce sanctions for charities that fail to join to the National Redress Scheme for people who have experienced institutional child sexual abuse. The changes include a new governance standard requiring registered charities to take reasonable steps to become a participating non-government institution in the National Redress Scheme if a claim has been, or is likely to be, made against them.
The proposed amendments would also change the definition of a basic religious charity (BRC) in the ACNC Act, removing a charity’s eligibility to be considered a BRC if it has a claim against it under the Redress Scheme and does not join the scheme within the time set out in the proposed law.
The changes mean that when the ACNC considers a charity is not taking reasonable steps towards joining the Redress Scheme, the charity would then be subject to the ACNC’s enforcement powers including the governance standards, and loss of charity registration and access to generous Commonwealth charity tax concessions.
Following the 2020 bushfires, community concern about accountability and transparency increased significantly. During the year, the ACNC undertook reviews of three charities involved in the bushfire response following media reports criticising how charities raised funds, and how and when those funds were spent. The ACNC will introduce additional charity risk reviews in the coming years following the government’s budget announcement of additional funding for this purpose.
When I meet charities across Australia, I am impressed by their determination to overcome sometimes extreme challenges to deliver their vital work in the community and struck by their commitment to transparency. I commend them for their ongoing commitment to their work.