Be Careful What You Wish For!

The ACNC, Australia’s first charity regulator, cannot and should not try to be all things to all people instantaneously, warns the CEO of the Community Council of Australia, David Crosbie.

For over a decade many arguments have been made for a dedicated and responsive regulator for the Not for Profit (NFP) sector. There is no doubt that if the existing situation was put forward as a serious proposal, it would attract very limited support. Who would want the ATO acting as the gatekeeper determining charitable status – even the ATO itself would probably baulk at such a role – yet this is the situation NFPs are currently faced with.

Consultations over the past 18 months on the establishment of the Australian Charities and Not-for-profits Commission (ACNC) have demonstrated a very high level of support, but they have also highlighted a real disparity about what kind of regulator the NFP sector and others want or expect.

CCA has consistently pushed for the establishment of the most flexible, efficient, effective, and responsive regulator possible. The ACNC must be able to collect, validate and publish accurate, timely and meaningful information about the NFP sector. Achieving this objective will eventually enable charities to use one set of validated information (the charities passport) whenever they interact with regulators or governments at all levels. This could include to local councils providing rate concessions; to state governments providing fundraising registration; and to federal government providing taxation concessions.

The ACNC must also have a transparent and efficient process for determining charitable status. This will not only make becoming   charity easier for thousands of small NFPs, but provide the broader community with accurate and validated information about all charities.

If the ACNC can provide validated registration of charities, and publish accurate information about charities, it will create a beachhead for reform – a fundamental starting point for reducing the current situation of duplication, over-regulation, and unnecessary compliance costs.

Anyone who has tried to maintain an accurate and timely database of organisations knows that achieving the core objectives of the ACNC will be a challenging exercise. It will require active engagement with charities (an educative role) and the community to ensure that there is a clear understanding about the information to be collected and what it means.

Despite this very demanding NFP regulator role there are those who believe it is just not quite challenging enough.

Senior members of the NFP sector have argued that the ACNC should have to sign up all States and Territories to refer their powers to the ACNC before it even exists. This is a farcical position based on a utopian version of Federation that long ago crashed on the rocks of political and economic realities. Even if there were no politics involved, who is going to sign up to something that doesn’t yet exist?

Similarly, some have suggested that unless the ACNC can deliver an instantaneous reduction in red tape it will be a failure. This approach also flies in the face of the way governments actually operate. In the first instance there may be some duplication of information as charities transfer from ASIC and the ATO across to the ACNC. But over time, the establishment of a strong database of information about charities and the broader acceptance of the associated charities passport will significantly reduce red tape. That this might not happen immediately does not mean the ACNC has failed.

To become the best possible regulator with accurate and timely information, the ACNC will need to be focused. Most of us have learned you only become effective by choosing what you will not do. Yet over the past couple of weeks I have heard from some people that they want the ACNC to be:

• a sector development agency
• an accreditation agency providing some kind of quality assurance
• a driver of NFP mergers or acquisitions
• an NFP sector rating agency or a builder of league table comparisons (the mycharity website??)

The ACNC cannot and should not try to be all things to all people instantaneously and it is unrealistic to have such enormous expectations.

The sector needs to be careful what we wish for. There are real dangers in any suggestion that the NFP sector needs an interventionist regulator looking into the running of charities across Australia to determine if they are doing good work.

Ultimately, it is those of us in the NFP sector that will drive the performance of the ACNC and help determine the degree to which the ACNC achieves a real reduction in red tape and compliance costs. We are a very powerful sector. Should the ACNC over-reach its role or fail to provide the core regulatory functions in a timely and effective way, CCA will be one of many groups who will hold the ACNC accountable.

And that is exactly as it should be. The ACNC will be publicly accountable not only to the Parliament, but also to the sector it serves.

David Crosbie is the CEO of the Community Council for Australia and member of the Not for Profit Reform Council.