Charities Deserve Better Than the Regulation They’re Used To

The Not for Profit sector deserves better than just a reversion back to the unacceptable regulatory environment the Productivity Commission identified in 2010, writes Liz Morgan, NFP Law expert from Justice Connect.

When the value of Australia’s new charities regulator is questioned we should not assume that it will only ever maintain the regulatory status quo.

What we should really be asking is which regulation and reporting would work best for our sector, and what potential does it hold for streamlining and simplifying our work?

Justice Connect’s Not-for-profit Law service regularly travels to regional Victoria to provide legal training to Not for Profit community organisations.  One of the sessions includes an explanation of the obligations of registered charities when reporting to the Australian Charities and Not-for-profits Commission (ACNC).  About three minutes into this training the same questions inevitably arise:

"What is the value of the new regulator? Do we really have to report to the ACNC in addition to our reporting to Consumer Affairs Victoria?" and then "Why? Why another regulator? Surely the last thing we need is more reporting?".

These questions come from groups central to community life in country towns and regional centres across Victoria.

They include organisations working in the areas of disability support, Not for Profit child care, health, sport, emergency services, aged care, community development, religion, arts and culture, and the environment, among many others. Most are incorporated associations, which already report annually to Consumer Affairs Victoria (CAV), and many are also charities.

We confirm to them "yes, currently the ACNC reporting is in addition to CAV’s reporting requirements". There are sighs across the room. These are not unexpected – in a sector overwhelmed by regulation and reporting, we know it is easy to feel that the last piece of regulation "on top of the pile" is the one that is "too much".

So we briefly divert from the training to discuss the idea of effective regulation of the sector – something that Not-for-profit Law has been advocating for since 2008.

A 2007 study undertaken by the National Roundtable of Not-for-profit Organisations found there were more than 170 different laws across Australia, administered by 95 different government bodies making separate decisions about whether a particular organisation meets their criteria for a charity.

We explain that Victorian organisations in the room may end up regulated by up to 30 different laws requiring them to prove they are Not for Profit or charitable, or provide ongoing financial and operational reporting to a range of government agencies.

These include laws about incorporation, charitable tax concessions, deductible gift recipient status, fundraising, minor gaming, raffles and liquor licensing, just to name a few.

It is precisely this frustrating and confusing experience of "red tape" that the ACNC was designed to overcome.

Many of our participants have spent years of their volunteered time reporting to numerous government agencies with similar information about their organisation, sometimes annually, sometimes paying fees to do so, all on different forms and due on different dates.

Probably the most significant and helpful change for registered charities in regional communities is that their details can be accessed online via the ACNC’s public register. It is free for charities to submit their information, and, in contrast to many other regulators, the data is then available for everyone to use.

The long-term idea is that, with the cooperation of the states and territories, an organisation could simply and routinely send potential funders, philanthropic organisations or federal, state or local government agencies a link to their entry on the ACNC public register as proof of their charitable status, and for details about their basic operational and financial information.

This would save organisations having to constantly resubmit similar paperwork to multiple government agencies. The public can also use the register to find out more about these organisations.

In our training sessions, we notice a shift in the mood of the room following this discussion. There is new interest; questions are asked about whether people can search the register to find charities in their regional area.  

Participants start to recognise the practical benefits of having all organisations’ governing documents on a public register. A number wonder out loud why for years they have been paying annual fees and providing information to regulators that do little with it. There is agreement about the usefulness of a dedicated regulator that has our sector as its only priority.  Those in the training sessions who have had contact with the ACNC generally comment that they found the staff knowledgeable, helpful and responsive to their questions.  

The establishment of a single, national regulator for the sector was recommended by the Productivity Commission in January 2010 after a comprehensive inquiry into the contribution of the sector and its regulation. Their report followed 15 years of similar reports which all found the regulatory framework to be complex, lacking coherence and without sufficient transparency, as well as costly for NFPs.  

The recommendation for a single regulator and streamlined reporting was a long-term vision for the sector, and it was always going to take time.

Any plan to do away with the ACNC is a short-sighted policy which deserves our attention and scrutiny. What alternative is being proposed?  The sector deserves better than just a reversion back to the unacceptable regulatory environment the Productivity Commission identified in 2010.   

We urge community organisations to replace the question ‘Is this more regulation?’, with new questions:  "Which regulation or kind of reporting would work best for our organisation or sector?" and "What changes would reduce the need for us to report multiple times?" and "What kind of information should the public have about the important work our organisation is doing?".

The sector deserves effective regulation and we need to ask new questions, loudly, to make sure we get it.

About the Author: Liz Morgan has worked for six years as a lawyer and trainer for NFP Law (Justice Connect) and during this period also worked for a year at the ACNC while it was being established.