Company Directors Warn on DGR Reform Restricting Advocacy

The Australian Institute of Company Directors (AICD) has warned against any proposals that would create additional regulatory burden on the charity sector or diminish its ability to advocate, as part of the government’s plans to reform the tax deductible gift recipient (DGR) system.

In its submission to Treasury’s consultation paper on DGR reform, the AICD welcomed plans to streamline administration of the DGR system by requiring all non-government DGRs to register with the Australian Charities and Not-for-profits Commission (ACNC) and consolidate the administration of the registers under the Australian Taxation Office.

The AICD said the reforms were “sensible measures that bring greater consistency to the regulation of NFPs, reduce red tape for organisations that currently report to multiple regulators, and provide a higher level of public accountability and transparency”.

However, the submission did not support requiring additional reporting from charities about their advocacy activities saying “it would create a significant regulatory burden without achieving sufficient public benefit”.

The comments supported submissions from Philanthropy Australia, the Community Council for Australia and the Fundraising Institute Australia.

The Treasury paper includes a proposal for new reporting obligations for advocacy activities and a proposal to limit the level of advocacy undertaken by environmental organisations by requiring them to allocate 25 to 50 per cent of their donation revenue on environmental remediation.

Under the Charities Act 2013 Australian charities can undertake advocacy to further their charitable purposes, for example through supporting or opposing relevant government policies and decisions.

It’s estimated that two thirds of the AICD’s 40,000 membership were involved in the work of the NFP sector in some way.

AICD general manager advocacy Louise Petschler said the institute was committed to achieving a fit-for-purpose regulatory regime for the NFP sector.

“We recognise that advocacy work is a vital part of the role charities play in our society. The last thing we would want to see is the capacity of the sector to perform its role in public life diminished,” Petschler told Pro Bono News.

“We don’t support the proposal to require additional information from charities about their advocacy activities.

“In our submission we make the point that, at a principles level, it would be a significant regulatory burden without a benefit that we can see and we point to the existing powers that the ACNC has to collect information about compliance with the law and their main activities.

“We think that within a framework where charities with DGR status are going to be regulated under the ACNC framework which we strongly support but there is no place for having additional requirements imposed on DGR charities around advocacy.”

The AICD submission also supported a regulatory approach to NFPs that was “streamlined, nationally-consistent and importantly, would reduce red tape for this vital sector”.

“The AICD believes these proposals will reduce red tape for charities, provide a greater level of transparency and public accountability about the activities of DGRs and, in doing so, support charitable giving,” Petschler said.

“These reforms will also help further consolidate and cement the ACNC’s role as the national, specialist regulator of charities.”