Calls for Urgent Charity Reform

Significant reform and streamlining of Australia’s Not for Profit laws and regulations is urgently needed according to Robert Fitzgerald, the Chair of the National Roundtable of Nonprofit Organisations.

Fitzgerald who chaired the Charities Definition Inquiry says developing a regulatory framework to replace a shaky scaffold will make a major contribution to achieving Australia’s economic and social goals.

The National Roundtable of Nonprofit Organisations (Nonprofit Roundtable) has been formed by national peak organisations and has identified reform of the legal and regulatory environment of Not for Profit organisations as an urgent national priority.

Towards this end, the Nonprofit Roundtable is proposing fundamental reforms to Australia’s NFP organisation regulation.

Robert Fitzgerald says Australia must have a regulatory environment that promotes enterprise, integrity and funder confidence.

The announcement of the Roundtable’s Nonprofit Regulation Reform Program coincides with the Federal Government decision not to go ahead with the Draft Charities Bill and maintain the status quo on the common law meaning of a charity.

The Government has decided instead to extend the current meaning of a charity to include certain child care and self-help groups, and closed or contemplative religious orders.

The Government has also announced that it will delay the introduction of changes requiring charities to be endorsed in order to access relevant tax concessions until July 2005.

The Government’s position is the final response to the Report of the Inquiry into the Definition of Charities and Related Organisations released in August 2002.

In July 2003 the Government released draft legislation that provided a statutory definition of a ‘charity’. The Government then referred the draft to the Board of Taxation to consult with the charitable sector on the workability of the legislation.

The Government says that the advice from the Board of Taxation was that the draft legislation did not achieve the level of clarity and certainty that was intended to be brought to the charitable sector.

The Director of Philanthropy and Nonprofit Studies at Queensland University of Technology, Myles McGregor-Lowndes endorses the comments of the Nonprofit Roundtable and says he’s disappointed the Government did not follow through on a wide range of reforms particularly in the area of tax reform.

He says his personal view is that the Draft Bill was technically flawed in its concept of trying to codify the definition of charity.

He says the Government should be looking to reforms before the Parliaments in England, Scotland and New Zealand.

He says in Britain in particular, it maintains the common law statutes and the legislation ‘grafts on’ additions such as amateur sport, and reconciliation and resolution of conflict organisations which would taken in groups such as Amnesty International.

The Nonprofit Roundtable says Australia’s third sector is large by international standards and bigger than many domestic industries. While there is some evidence of renewal and growth in some parts of the sector, it says it is also clear that many parts are in difficulty.

Robert Fitzgerald says that one thing that is certain is that the existing legal framework and regulatory environment of the Not for Profit sector is in need of fundamental overhaul to provide a clear, consistent and coherent framework based on sound public policy considerations.

For example he says that at present there are more than twenty different ways to incorporate a Not for Profit organisation. Fundraising is equally bedevilled by a proliferation of regimes across states and territories.

But he says it is in tax law that the greatest confusion is to be found. It is impossible to find any set of principles underpinning tax legislation that designates tax concessions and there are no clear links between the concessions provided and public disclosure requirements.

He says the proposals that have been developed as part of the Reform Program by the Nonprofit Roundtable will apply principles to promote social and economic development.

The Program will be progressed through a consultative process involving the Not for Profit sector, its members, funders, donors and the wider community. It will cover reforms in areas including: National Law and Regulation; Fundraising and Capital Raising; Corporate Structures; Accounting Standards; and Taxation

The objective of the Program is to promote organisations and their activities leading to increased employment, volunteerism, capacity building, enhancing efficiency in the delivery of services, integrity and donor confidence.

To view the Board of Taxation’s review of the Draft Legislation in HTML go to www.taxboard.gov.au/content/Charity_consultation/Chapter_1.asp.