Introducing the sector watercooler: The end of jobkeeper and power to the ACNC

In a new monthly column, Wendy Williams sits down with Krystian Seibert to discuss the latest trends and issues across the charity sector. This month they discuss the pending JobKeeper payment cliff, what happened to donations during COVID, and changes to ACNC powers. 

It is a year on from when the coronavirus first reached our shores and plunged us into lockdown. 

As has been much discussed, the pandemic did not affect everyone equally, and it is fair to say it did not affect every charity equally. 

But one thing that a lot of people in the sector agree on is how important JobKeeper has been in supporting the sector and providing a form of certainty as regards income. 

That payment is now about to end. So let’s start there. 

Krystian, when the crisis hit, a lot of people assumed the worst. There was a lot of discussion around what would happen when JobKeeper ends. We’re now at that point. What impact do you think it will have on the sector? Is it going to be as severe as we all feared?

It is hard to tell. There was an analysis done back in August by Social Ventures Australia and the Centre for Social Impact, looking at the impact of the extension and the ending of JobKeeper. Their analysis showed that 14 per cent of charities would still be at risk or high risk of becoming unviable by September 2021, even under the extended arrangements.

I think that charities have been planning for it to end. But for some it will be really challenging because they will lose that support, and it will present a cliff. If things really do start to normalise now, and the economy starts to recover, that will obviously help. But in this climate would I be ending such an essential form of support now? I don’t think so. 

It would be good to extend it by at least a couple of months. I know it comes at a cost to government, but a lot is at stake and I think that would be the best decision.

It’s been said a lot, but the impacts of the crisis have been unevenly felt. In terms of the charity sector are there some areas that you would be more worried about than others?

The whole crisis has had such an uneven impact and it has been difficult to predict what the impacts are, more broadly in society but also within the charity sector. 

In terms of donations, if you look at platforms such as GiveNow, which Our Community runs, or mycause or GoFundMe, the public data available from them actually indicates that there was quite a big increase in donations last year, taking out the impact of the bushfires. Now, it could be people switching from going directly to charities, to the platforms, but it could also be an indication of donations holding up quite well.

In terms of the charities themselves, it’s a mixed bag. A lot of charities took hits last year in terms of events and that sort of fundraising. But then others have held up and done quite well. Some of the high net worth fundraisers that I’ve spoken to have said that high net worth fundraising has held up really well. So it will be interesting to see what happens once we have all the data. Even that high level data won’t necessarily show the changes in particular segments, or the impact on particular charities, but I expect some will hold up well, some will struggle. It will take time to see the full washup.

As you say we don’t yet have all the data. But what do we know about how donations have behaved so far?

They have not behaved how I would have expected. The forecasts done when the crisis hit suggested that there would be quite a big reduction last year and this year. Maybe overall that will still be the case, but from the data I’ve seen and what I’ve been told anecdotally it’s not as bad as what I would have thought. That said, there are charities that will be hit hard and that will have struggled. I think it is the uneven nature of it that is the particular problem. 

Another aspect is that, when the crisis hit there was a feeling that if you were primarily government funded that was a good place to be because there was stability in that, whereas if you were a social enterprise, if you were trading, or dependent on donations there was a lot of uncertainty. But then in the end, once when we got through lockdown, trading picked up again – albeit it still had a big impact on many organisations depending on the type of trading that they do, and donations are a mixed picture. But now moving forward it will be interesting to see government’s approach to funding. Are there going to be lots of cuts across the board? Maybe government funding will be at risk.

And to change the conversation. Another concern for the sector at the moment is around the proposed new governance standards on unlawful activities by charities. What do you make of the new proposals?

I think people in the community have an expectation that charities abide by the law. And there is already a governance standard in relation to compliance with the law and not committing serious offences which personally I think is sufficient. What’s proposed is going to really tighten things up. It will basically mean that there is a situation where if a charity does something, or organises an event where something ends up happening, that is or could be treated as a certain type of summary offence set out in the proposal, then the ACNC has the power to deregister them. That is a very low threshold and a broad power for a regulator. A summary offence is a pretty basic level of offence and relates to trespass and similar types of things and is pretty broad. This is a rather extreme proposal, and no evidence has been provided for why it’s necessary. It’s not that charities are allowed to break the law, they can’t – if they break the law then they can be penalised under the relevant law like any other organisation. This is about what can happen to their registration as a charity because they’ve committed a relatively minor offence. 

I also think there is a broader type of problem because while yes there is an expectation that charities abide by the law, if we go back to the civil rights movement in the US in the 1950s and 1960s for example – when Rosa Parks sat down on a bus in Montgomery, Alabama in the part for white people only, she was breaking the law. But would people today say she should not have done that – that she should’ve just complied with a fundamentally unjust law and moved to the other part of the bus? Would people think that if she broke the law as part of her work with a charity, that the charity should’ve lost its registration? Social change often involves protest, and protest is a part of the civic action that happens in a democracy. And sometimes, as part of that, laws can be broken.

Even putting that kind of example to one side, looking at the way the proposed standard is drafted at the moment, if there is a protest, say out the front of a government department, in their publicly accessible forecourt, and a charity organises it and they are asked to leave and the police come, and they say that if you don’t leave you’ll be charged with trespass or something like that – basically on my reading of the proposal, that charity could lose its registration. I think protesting in the forecourt of a government department is something that anybody should be able to do in a democracy. I think the thresholds in this proposal are just so low, there is so much potential for arbitrary application of the provisions, and it just doesn’t recognise the nature and process of social change in a democracy. For that reason I think it’s fundamentally flawed.

Do you see this as the government picking a fight with charities? 

I think it’s probably an immediate response to some of the things that happened last year in terms of certain charities, which lost their registration anyway. The former assistant minister for charities made it pretty clear early on that he wanted to do something in this space and made some strong statements about it, even a couple of years ago now. So I don’t know that it is deliberately trying to pick a fight or if it is just that charities should not be doing this and we will stop them from doing it. Whether they have deliberately set the threshold so low and made it so easy to deregister a charity, I don’t know, I always like to give people the benefit of the doubt. I just think it is a disproportionate response and the case hasn’t been made why the rules as they stand are not appropriate.

In 2018, the government went too far when it came to making changes to the electoral act which impacted on advocacy, there was a very strong response from a broad range of organisations across the sector, and the government to its credit listened and pulled back the proposals. It will be interesting to see what the response is here. Most charities won’t be affected by it, but the principle of it and the very low threshold sets a precedent for what may happen if there are changes proposed in other areas of the regulatory framework. 

What is coming up that charities need to have on their radar in the next month?

Apart from the things we’ve talked about such as JobSeeker, we’re now into the budget cycle. It’s the first budget we’ve had as we have come out of the crisis, so charities will be really trying to shape that budget and influence that budget as it is going to set the framework for how the government responds coming out of the crisis in the medium term at least.

I think more broadly, there will be more consultation this year in the ACNC regulatory framework space. That sort of stuff is going to be happening, and given what is in the proposal regarding unlawful activities we’re going to have to be pretty vigilant about it.