Plan C for the ACNC

It is bad change-strategy to drop something like the ACNC while it appears to be working and is so strongly supported, writes Research Director Curtin University Not-for-profit Initiative, Penny Knight  who offers a “Plan C” alternative for the Federal Government.

If the Government feels it must abide by its election promise to close the ACNC, it could instead choose to extend the deadline for closure until July 2019 – in other words give the ACNC what is known as a ‘sunset clause’.

A Bill is currently before Parliament to repeal the Australian Charities and Not-for-profits Commission Act. If passed, it will see the closure of the ACNC in July 2015 and the return of charity regulation to various state and Commonwealth departments including the Australian Tax Office. The Commonwealth also plans to support the establishment of a body that seems to be intended to promote sector self-regulation.

The ACNC was set up at the end of 2012 with the aim of increasing NFP accountability and transparency, supporting a robust, independent sector and leading a reduction in NFP reporting burdens.

Among other things, it registers new charities and maintains a public database of information on charity activity, governance and finances. Prior to its establishment, there had been extensive consultation and strong endorsement for this concept of a ‘one-stop-shop’ by the Productivity Commission in its 2010 report.

But when the ACNC opened its doors support from NFP leaders was patchy. Curtin University has been working with and researching the NFP sector for a number of years, and two years ago our research found that many sector leaders were sceptical about the ACNC, believing it could not achieve its objectives and would result in an increase, not a decrease in bureaucracy.

However, in the last 12 months there has been a rather dramatic shift in attitude towards the ACNC. Longitudinal research we carry out with the Australian Instituted of Company Directors and others, and studies by organisations such as Pro Bono Australia have found that the majority of the sector – at least 80% – now want the Commission to stay.

In March this year, some of Australia’s most respected NFP CEOs including Tim Costello from World Vision wrote to the Prime Minister asking him to retain the ACNC. This sudden and widespread support for the ACNC has put the Commonwealth Government in an awkward position. Prior to the election, the promise to abolish the ACNC seemed like a sensible and well supported idea. But now, the Commonwealth Government now finds itself in that proverbial spot between a rock and a hard place.

In fact, currently there is so much support for the ACNC that any alternative model of sector regulation proposed by Government is very likely to be met with opposition. The chance of success of a self-regulation model in this environment is particularly low which means we are likely to find the sector in a policy void for years.

It is bad change strategy to drop something while it appears to be working and is so strongly supported. If the Government feels it must abide by its election promise to close the ACNC, it could instead choose to extend the deadline for closure until July 2019 – in other words give the ACNC what is known as a ‘sunset clause’.

This would allow the ACNC to fully implement its legislated functions and be thoroughly tested by all stakeholders. If it is found to be ineffective or too expensive, then this will be proven and the ground will open for new and better approaches. If not, then the sector will have the support it wants from government.

This strategy will require the Government to keep an open mind, continue to fund the ACNC as needed, and to fully support a genuine independent evaluation at the end of the term. Arguably something we should expect from Governments in regard to all policy decisions.

Offering a sunset clause instead of imminent closure is not only more tactical for the Commonwealth (and probably more cost efficient in the long run) it also demonstrates that the Government genuinely respects the sector.

The NFP sector in Australia is a core part of our economy employing over 900,000 people (8% of Australia’s workforce) and generating more than $100bn in annual income. It is important we have clear, stable and effective policy for its future.

Penny Knight

Curtin University Not-for-profit Initiative

Penny Knight is a Director of BaxterLawley and Research Director of Curtin University Not-for-profit Initiative.

Contact details: Penny.knight@curtin.edu.au

Twitter  @PennyAKnight