When taking a step back is the quickest way forward

Revisiting an existing report that identified the barriers faced by not for profits could hold the solutions the sector needs now, writes David Crosbie. 

In January 2010, the Productivity Commission released one of the best researched and well-informed reviews of the charities and not-for-profit sector ever published in Australia. The foreword to that report was written by Gary Banks AO, chairman, The Productivity Commission (PC):

“A wide range of regulatory, institutional and funding reforms are needed to enhance (sector) effectiveness and achieve even better outcomes for the community ….. While there have been a number of reviews and inquiries over the years, implementing identified reforms has been slow… .”

The new Assistant Minister for Charities Andrew Leigh has indicated he is committed to implementing the policies outlined in the ALP National Platform. One of the ten key actions set out in these policies relating to the charities and NFP sector is to: “3b.  review the Recommendations of the 2010 Productivity Commission Report on the Not for Profit Sector”.

More than a decade since this seminal report was published, it is now on the government’s agenda to revisit its findings and recommendations.

I would like to commend some of the key people involved in the 2010 PC report; then commissioner Robert Fitzgerald, associate commissioner Dennis Trewin and a research team that included Professor Myles McGregor-Lowndes and Dr Jenny Gordon.  They did good work.

What is remarkable about this report is how current many of the findings and recommendations still are.  Here are some examples from the opening summary:

• “The level of understanding among the wider community of the sector’s role and contribution is poor and deserves attention.”
• “The current regulatory environment for the sector is complex, lacks coherence, sufficient transparency, and is costly to NFPs.”
• “Current information requirements imposed on NFPs for funding and evaluation purposes are poorly designed and unduly burdensome.”
• “Harmonisation of fundraising regulation through the adoption of a model act should be an early priority for governments.”

It is important to acknowledge that a lot has been achieved since the PC report was published in 2010, although most of the reform happened in the first three years under the ALP government.  The successful establishment of the Australian Charities and Not-for-profit Commission is probably the lighthouse success in Australian charity reform of the past few decades. It is complemented by the passing of the 2013 Charities Act which established a statutory definition of charity. Both were recommendations of the PC report.  There have been many other initiatives that have proved positive for our sector over the last decade or so, but progress has stalled on many key report recommendations.

As a sector, we have progressed since 2010, but re-reading the PC report, we still have a long way to go.

It is not possible to list all the yet to be actioned recommendations from the 2010 PC report, but there are some recommendations that offer good reference points for the forthcoming review.

The first recommendation of the PC report was to develop an Information Development Plan for the NFP sector to build a better evidence base for social policy in Australia.

The level of information available about the NFP sector has improved through the publishing of data collected by the ACNC, but in recent times the availability and quality of this data has diminished significantly from a research perspective.  The ACNC research advisory group, which informed the ACNC about potential research and data projects, was disbanded by the current ACNC commissioner.

We lack quality timely information about the NFP sector in Australia and this is one of the priorities the new government could and should address.

The PC report recommended, “Australian governments should agree to implement a reform agenda for reporting and evaluation requirements for organisations involved in the delivery of government funded services. It also recommended the establishment of a Centre for Community Service Effectiveness to promote best practice approaches to evaluation … .”

All too often different government entities and departments insist on different forms of reporting and evaluation.  These required reports are usually inadequately resourced or funded, and don’t relate to the program or policy goals.  This is another area still requiring significant reform if we are to improve productivity and effectiveness across the charities and NFP sector.

“The Australian Government should progressively widen the scope for gift deductibility to include all endorsed charitable institutions and charitable funds … .” This recommendation remains as relevant today as it was in 2010. Our current systems for granting tax deductibility of donations to charities fails the common-sense test.

There are also PC recommendations relating to expanding debt financing and impact investing, and exploring the use of the corpus funds held by philanthropic foundations and trusts to invest in and make loans to charities.

Workforce reforms recommended by the PC have largely been ignored which has contributed to the current shortfall of skilled staff across so many areas of charity operations.

Better use of IT, using standardised accounting measures, improving transparency, and of course, harmonisation of fundraising regulations across jurisdictions were all covered in the PC report.

Most PC recommendations relating to reform of government contracting and tendering remain current, with little real progress in streamlining and making fairer the processes, length of contracts and levels of funding provided to charities involved in government funded programs and services.

There is a recommendation to establish an Office for Not-for-profit Sector Engagement backed up by formal agreements between the government and the sector involving reform and active monitoring to improve the relationship between governments and the sector.

It is no accident that the ALP policy platform taken to the election and committed to by our new Assistant Minister for Charities includes the need to review the 2010 PC report into NFPs.

We don’t need to repeatedly reinvent the wheel; we need the barriers to improved productivity to change. As Gary Banks pointed out twelve years ago, despite all the reports into the sector, reform has been slow.

Let’s hope that by revisiting an old report, we will speed up new reform for the charities and NFP sector.