Poor Government Response to the Senate Inquiry into NFP Disclosure Regimes

Given the plethora of inquiries and investigations into the Third Sector, you may have wondered whatever happened to the recommendations of the Senate Inquiry into Disclosure Regimes for Charities and Not for Profit organisations.
 
The Senate Economic Committee delivered its extensive report to Parliament in December 2009 after receiving some 183 submissions from Not for Profit organisations and individuals. 

The Federal Government’s response slipped into Parliament and was entered into Hansard without discussion on June 22nd, 2009.

The response has been described as poor by Independent SA Senator Nick Xenaphon, who was part of the Senate Committee inquiry.

Xenaphon says the Government needs to deliver certainty to the Not for Profit sector on this issue, and so far it has failed to do this.
 
He says any changes to disclosure regimes will have a significant impact on the sector and the sorts of delays that are occurring are simply adding to an already difficult situation.
 
Some of the 15 detailed recommendations in the report included the appointment of an Australian Minister for the Third Sector and a single independent regulator for Not for Profit organisations.
 
The Inquiry was initiated by former sitting members of the Australian Democrats following research published by the Australian Consumer Group Choice on charities and the cost of fundraising, early in 2008. 

A survey conducted by Choice Magazine found that 81% of respondents did not know what proportion of their charitable donation reached their favoured charity’s beneficiaries, yet 94% considered it important to have access to that information. The survey found wide variability and inconsistency in the way that charities communicate key information to donors. In some cases, such information was not publicly available at all, as some charities did not publish their annual reports or financial accounts.
 
In its recommendations, the Senate Report said that a special unit should be set up within the department of Prime Minister and Cabinet specifically designed to deal with issues around the Not for profits and the Unit should report to a Minister of the Third Sector.

The report also recommended the establishment of an Australian National Regulator for Not for Profit Organisations saying it should have similar functions to regulators overseas and in particular in the UK, including a register for NFP organisations with a compulsory sign-up requirement.

The aim of the Regulator would be to develop a searchable data base of Not for Profits for public access, ensure compliance with relevant legislation, develop best practice standards as well as educate Not for Profits on best practice.

In the area of reporting and transparency, the report recommended the implementation of a standard chart of accounts for all NFPs and a new disclosure regime that contains elements of narrative and numeric reporting as well as financial reporting.

The Senate committee recommended that the national regulator investigate the cost- versus-benefit of a GuideStar-type system (a website portal that publishes information on the aims and activities of Not-For-Profit Organisations) in Australia to encompass all NFP Organisations.

As well it recommended that a Taskforce be established to help implement the recommendations of this report.

It says the Taskforce should actively seek to ensure that the measures of reform that it implements do not impose an unreasonable reporting burden on small and micro Not for Profit organisations.
 
The Federal Government’s response is to agree in principle to a common terminology for referring to organisations within the Sector however it says the results of the Productivity Commission inquiry may assist is developing a framework which could underpin standard definitions and terminology.
 
And the Government has left the more vexing questions around tax arrangements to the Henry Review into the future Australian Tax System.
 
The government says on the issue of a single, independent national regulator requires agreement by State and Territory Governments to refer their responsibilities to the Commonwealth. Again, it says it will be considered by the government drawing on findings and reviews throughout 2009 such as the Productivity Commission. The other issues have been ‘noted’.
 
PILCH describes the Government’s response as cautious, deferring the vast majority of the Senate Committee’s recommendations until the completion of the ongoing Henry Review and Productivity Commission study – each with relevance to the NFP sector. 

The full report can be downloaded at: www.aph.gov.au
 
The Government’s response can be found at www.openaustralia.org