‘There's no need for these regulations’ – Charities fear changes to governance standards will have a negative effect

Nearly one in six charities believe they could have faced deregistration in the past year if the controversial new regime had been in place 

Almost two thirds of Australian charities believe the proposed changes to governance standards will have a negative impact on their organisation, with three quarters agreeing it could have a “chilling effect” on Australia’s democracy, a new survey shows.

Last month, the government laid out its amended plan to strengthen laws to ensure charities that engage in or use their resources to actively promote unlawful behaviour face enforcement action.  

The planned amendment to Australian Charities and Not-for-profits Commission (ACNC) governance standard 3, would expand the reasons for which a charity can be deregistered beyond indictable offences to include summary offences, such as trespassing, theft, vandalism or assault.

But Pro Bono News’ recent reader poll found that just 3 per cent of charities think the changes would have a positive impact on their organisation, compared to 64 per cent who believe the changes would have a negative impact.

As many as 15 per cent believe their organisation has done something or omitted to do something in the past year in the course of their normal work that would have left them open to deregistration under the new regime. A further 39 per cent said they didn’t know.

Despite the issue making headlines in recent weeks, the survey found that there is still a lot of confusion around the implication of the changes. While 86 per cent of respondents were aware of the changes, 60 per cent of the respondents were unclear on how the changes would actually affect their charity. 

A potential chilling effect

Charities have previously come out strongly against the plan – which is part of a government crackdown on “activist organisations masquerading as charities” – arguing that it could see charities shut down for speaking out and would impose a significant administrative burden.

A number of leading organisations have even taken the issue to the United Nations, urging the international body to “take urgent action” and speak out against the plan, arguing the proposal would infringe on the rights to freedom of assembly and expression.      

On the issue of advocacy, 75 per cent of respondents to Pro Bono News’ poll agreed that due to fear of falling foul of regulations, some charities will cease to make their views known publicly, thereby creating a “chilling effect” in Australia’s democracy. 

Read more: Advocacy Under Threat as NFPs Engage in Self-Silencing

One respondent said the chilling effect was “potentially huge” and wouldn’t necessarily be seen.

“Not all organisations will have the risk appetite or financial security to be able to operate confidently within this system so will back out of activities they don’t understand etc,” they said.

“Having worked in the sector within the UK when the Lobbying Act came in in 2017 I know from experience how conservative we all became and how much time was spent behind the scenes trying to work out what it would mean in practice.

“Ultimately a lot of organisations simply couldn’t take the risk and so remained silent in the lead up to an election and did no issues-based advocacy, like we did in our day-to-day work, because we weren’t sure how the rules would be implemented in practice.”

Another respondent said the legislation felt impossible to comply with 100 per cent. 

“Rather it will silence public discourse, political critique. It won’t make it go away. It will affect the mission of many organisations,” they said.

A significant administrative burden

As many as 65 per cent of respondents agreed that the proposed regulations would impose a significant administrative burden on charities, forcing them to divert resources away from frontline service delivery and into unnecessary paperwork.  

A combined total of 40 per cent of charities estimated the new regulations would add more than 50 hours to their organisation’s workload over the coming year – 17 per cent said it would be between 51 and 100, 14 per cent put it between 100 and 300 hours, and 9 per cent estimated it would add more than 300 hours of work.

One respondent said: “From an internal control perspective, we do not have the resources or systems to do what would be required under these proposed changes – we struggle as it is to stay up to date with all the compliance, employment and other regulations under which we operate. 

“I also worry about the ability to attract skilled and qualified directors – it is already difficult enough, but with the sort of work we do, these changes pose another additional liability to our COM that may well stop people from taking on the role.”

Double standards

Many respondents also raised questions over whether the changes were necessary and pointed to a double standard when compared to the private sector.

“There’s no need for these regulations,” one respondent said. “If something is unlawful then prosecute it – don’t penalise others by association. It’s extremely cynical of the government to apply these standards to charities when they don’t apply to businesses or political parties. The double standard is stunning.”

Another said the regulations placed charities at “very significant, existential risk if they commit minor offences”. 

“I have no problem with charities complying with the law, but the proposed amendment makes the punishment for a minor violation utterly disproportionate to the offence,” they said.

“Large companies regularly commit major environmental offences but they are rarely punished with anything more than a fine that is barely noticeable in comparison to the enormous profit they make from destroying the environment.”

In total, 206 people from small, medium and large organisations responded to the poll.

See the full results here.