Sector Welcomes ‘Sensible’ DGR Reforms

The social sector has welcomed the government’s proposed Deductible Gift Recipient (DGR) reforms including a move away from plans to limit environmental advocacy.

The Minister for Revenue and Financial Service Kelly O’Dwyer announced plans to reform the administration and oversight of organisations with DGR status on Tuesday.

The reforms included a move to integrate the DGR registers and Overseas Aid Gift Deduction Scheme with the Australian Charities and Not-for-profits Commission charity register, as well as abolishing duplicative reporting requirements.

Significantly for environmental charities the government also said it would “not mandate a level of remediation by environmental organisations”.

“These sensible reforms will enhance the role of the Australian Charities and Not-for-profits Commission (ACNC), strengthen governance arrangements, reduce administrative complexity and ensure continued trust and confidence in the sector,” O’Dwyer said.

Community Council of Australia CEO David Crosbie told Pro Bono News the proposed DGR reforms appeared to be “relatively well targeted” and would be an improvement on the current situation.  

“Issues may emerge when we see the proposed legislation. We are, however, reassured that the government is not pursuing the requirement for environmental charities to spend 25 per cent of their resources on remediation activities, and is also talking about consulting with the sector prior to finalising the legislation,” Crosbie said.

Under the proposed reforms all non-government DGRs will be automatically registered as a charity with the ACNC from 1 July 2019, with a 12 month transitional period to assist current non-charity DGRs with compliance.

To strengthen oversight of overseas activities, the government will issue External Conduct Standards to be enforced by the ACNC, as recommended by the ACNC and AUSTRAC’s Australia’s Non-Profit Organisation Sector: Money Laundering and Terrorism Financing Risk Assessment Report which was released in August.

In addition, to “improve transparency for both the ACNC and Australian donors”, the ACNC will publish charities’ declarations of political expenditure to the Australian Electoral Commission and relevant criminal activities of charities’ staff or responsible persons in the Annual Information Statement.

Fundraising Institute Australia (FIA) welcomed the move to bring all not for profits with DGR status under the umbrella of the ACNC.

“It makes good sense to have a single regulator overseeing all reporting requirement, as opposed to the current system that sees some DGRs having to report to the commissioner of taxation,” FIA CEO Rob Edwards said.

“FIA has been working tirelessly for red tape reduction across all levels of government.

“It has been a long road, but we are starting to see results. Several of the states have now committed to streamlining their reporting requirements, and now the Commonwealth is coming to the party.”

The latest reforms come after the not-for-profit sector was called on by the treasury to have its say over a discussion paper exploring potential reforms to the DGR tax arrangements for charities.

Concerns were raised at the time over a number of inclusions that focused on charities engagement in advocacy activities.

Peak body Philanthropy Australia said in its submission it also had major concerns about the reintroduction of the ‘In Australia’ requirement.

However the latest announcement revealed the government will not proceed with the “In Australia” legislation which it said “could prevent many DGRs from conducting legitimate activities outside Australia such as visits to foreign medical institutions or participating in international cultural or sporting events and would not provide appropriate oversight of the overseas activities of exempted organisations such as overseas disaster relief funds”.

Philanthropy Australia CEO Sarah Davies said the reform package contained a range of “positive and sensible changes”.

“Whilst some of the proposals canvassed in the discussion paper earlier this year, particularly in relation to advocacy by charities, were concerning, it’s good to see that the Australian government has listened to stakeholder feedback and will not being proceeding with those proposals,” Davies told Pro Bono News.

“We’re particularly pleased that the government won’t be proceeding with the ‘In Australia’ legislation, which would have restricted the international activities of Australian charities.

“This is an issue we’ve been advocating about for some time, so we welcome and commend Minister O’Dwyer’s decision on this issue, which provides certainty and helps support Australians giving overseas.”

Australian Conservation Foundation CEO Kelly O’Shanassy told Pro Bono News they were happy the Turnbull government had “backed down on its anti-democratic proposal to place limits on the advocacy of environment groups”.

“Advocacy makes Australia a better place. It has kept oil rigs off the Great Barrier Reef, and given us Landcare, clean energy, air and water, and a Franklin River that flows,” O’Shanassy said.

“Limiting environmental advocacy is the agenda of coal lobby groups, especially the Minerals Council of Australia. By putting these changes on the agenda in the first place the Turnbull government was doing the bidding of big polluters.

“It is interesting this back down follows a statement by BHP opposing the changes, and even a retreat by the Minerals Council in recent weeks.”

But O’Shanassy said while ACF was “on the record” supporting increased coverage of NGOs by the ACNC, without full details of all the proposed changes they could not “form a view on other reforms put forward by the Turnbull government for the charity sector at this stage”.

“Charities are already highly regulated and scrutinised, much more so than other groups in public life such as industry lobbies. Any reforms should not put undue burdens on charities that would force them to use their limited resources on unnecessary red tape,” she said.

“The Turnbull government must also drop its proposed limits to international philanthropic donations to charities and allow charities to get on with our crucial work of building a better Australia.”