Advisory Board Warns There is No Need to Change ACNC Legislation

The Australian Charities and Not-for-profits Commission’s independent advisory board has warned a review panel there is no need to change ACNC legislation, three weeks after the charities regulator asked the panel to consider adding two new objects to the ACNC Act.   

The Australian Charities and Not‑for‑profits Commission Act 2012 and the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Act 2012, which sets the framework for the charities regulator, are required to be reviewed after five years of operation.

On Thursday, the ACNC’s advisory board (which is separate from the commissioner and the ACNC), put forward their submission to a review panel led by Patrick McClure AO.

The submission, provided to Pro Bono News, cautioned against any sudden legislative amendments, to ensure the commission is given time to properly support the development of the charities and not-for-profit sector.

“The commission’s enabling legislation was and remains widely supported by the charity sector. There have been few if any complaints about the act,” the submission said.

“With the act having been embraced by those reliant on the ACNC’s regulatory role, and with it enabling scope for the Commonwealth and states and territories to refer further powers to the ACNC, there may be no need for amendment to the act.

“In fact, caution in recommending amendments to the act may be prudent. Legislative change creates uncertainty, and a subsequent burden of practice change by those impacted by new law. Opening up a well-functioning act to parliamentary debate may also result in unforeseen legislative outcomes.”

This recommendation contradicts with the ACNC’s own submission to the review, which called for the panel to consider adding two objects to the ACNC Act: “to promote the effective use of the resources of not-for-profit entities” and “to enhance the accountability of not-for-profit entities to donors, beneficiaries and the public”.

These proposed new objects were met with concern from the charity sector, with fears it would “impose an ill-conceived restrictive agenda on all charities”.

But ACNC commissioner Gary Johns defended the potential new objects in his commissioner’s column on the ACNC website.

“These recommended objects are not designed to create restrictions or impose limitations on charities. They are not additional enforcement powers, but rather a mandate for the ACNC to support and promote effective and efficient use of resources,” Johns said.

While the advisory board’s submission did not call to amend the existing ACNC objects, it did recommend that the regulator’s “first and principle object” should be to “support and sustain a robust, vibrant, independent and innovative” sector.

This is due to what the board sees as a “transition of governments’ policy”.

“A significant role performed by the Australian charities and not-for-profit sector is that of the implementation of government policy relating to many areas of public interest (for instance, in the provision of human services),” the submission said.

“Additionally, Australia’s governments are changing policy relating to funding provided for these services in a number of ways, including in the application of quasi-market funding arrangements that change the financial and operating risks faced by charities and not-for-profits. These risks relate to sustainability, competition, systems capacity, and change management capacity.

“While the policy changes are seen as a significant advance, such risks are important to acknowledge and consider as, while they are felt by the charitable and not-for-profit sector directly, governments and those reliant upon services also face them, the materialisation of which will increase costs to the former and reduce outcomes for the latter.”

The submission suggested that the ACNC could adopt a number of roles to support key drivers of what makes a “robust, vibrant, independent and innovative” sector.

These included the “fostering of efficient resource use”, the “promotion of volunteering”, and “governance capacity development”.

“[Current] appropriation does not support fulfilment of its second object to support and sustain charities. Nor is the ACNC sufficiently supported through either its appropriation, or with whole of government support, to make any meaningful reduction of sector red tape; greater uptake·of the Charities Passport by Commonwealth departments and agencies would instantly contribute materially to the reduction of sector red tape,” the submission said.

“The review panel should consider prioritising the ACNC’s object to support a robust sector, whilst maintaining public trust and confidence and having greater capacity to reduce red tape.

“[It] should assess current constraints in advancing the second and third objects, and recommend to government action to empower the ACNC to achieve each of its objects.”

The advisory board also called to extend the reach of the “basic” charity concept.

“[The ACNC Act] establishes the concept of a Basic Religious Charity (BRC), and allows exemptions from certain ACNC obligations where a BRC is not engaged in significant economic activity,” the submission said.

“The concept arose to avoid unreasonable regulatory burden on small and unincorporated religious communities.

“The operation of [the BRC provision] has not been controversial, and the review panel should affirm the continued operation of the provision.”

Elsewhere, the board’s submission called for the ACNC Act to better cater to not-for-profit organisations and not simply charities.

“The act’s full potential is yet to be utilised, particularly it’s potential to regulate further not-for-profit entities other than charities,” the submission said.

“Recognising not-for-profit registration and oversight and fundraising regulation remain roles of state and territory law, the review of the act offers, perhaps, the only opportunity in the foreseeable future for effort to be directed to seeking Federation agreement about the ACNC being the one stop shop for both charities and not-for-profit organisations.”

Advisory board chair and UNICEF CEO Tony Stuart said he hoped the review could “restart discussion” about the ACNC’s role regulating not for profits.

“The original idea for the ACNC was to have it register, support sustainability, and reduce red tape for all not for profits, not just charities. The ACNC has proven it can regulate the 54,000 charities well. We hope the review can restart discussion about it also playing a role not for profits as well,” Stuart said.

The advisory board’s submission contained a number of other recommendations to the review panel, including to consider a broader role for the advisory board to provide advice to the responsible ACNC minister on matters relating to the charity and not-for-profit sector.

It also recommended that the ACNC be able to issue public statements about its investigations into charities and the reasons for cancelling a charity’s registration.

“These restrictions materially inhibit the capacity of the ACNC to meet its objectives and reduces the opportunity for the sector to learn from real cases and outcomes,” the submission said.

“While appropriate protections should be retained, the ability to share information will enhance the public trust and confidence in the sector, and assist the sector to become more sustainable.”

Submissions to the review panel close on 28 February.