My ACNC Review Wishlist

Krystian Seibert sets out what he would like to see from the Australian Charities and Not-for-profits Commission Review, which is expected to be released this week.

While the media focus on the National Energy Guarantee and leadership ructions, I’m more interested in something else happening in Canberra this week – the expected release of the ACNC Review on Wednesday.

The review panel, comprising of Patrick McClure, Matthew Turnour, Greg Hammond and Su McCluskey, did an excellent job engaging with stakeholders when conducting the review. Based on their thoughtful approach to the task, I’m expecting a comprehensive and high-quality report to be released tomorrow.

In terms of what I would like to see in the report, here’s my wishlist.

Strongly affirming the ACNC regulatory framework

A few months ago, I was reading Regulating Charities: The Inside Story, co-edited by Myles McGregor-Lowndes. When placed alongside regulatory frameworks in similar common law countries around the world, the ACNC framework really is world class.

It’s not perfect, and it needs some changes, hence the review. But despite being a political football for a few years, by and large it has functioned well and delivered what could be regarded as “best practice regulation”. I’m hoping that there’s a strong affirmation of this by the review.

Keeping the ACNC Act’s objects as they are

Although the ACNC submission did propose the addition of two objects to the ACNC Act, I don’t think they are necessary. The current objects work well and reinforce each other effectively. To “support and sustain a robust, vibrant, independent and innovative Australian not-for-profit sector” is very important, and you can only achieve it if you “maintain, protect and enhance public trust and confidence in the Australian not-for-profit sector”.

“Promoting the reduction of unnecessary regulatory obligations on the sector” sets out an expectation that the ACNC will work across government to try to minimise the red tape imposed on charities, but it also makes it clear that the ACNC itself needs to be mindful of what it asks of charities. Over time there can be a tendency for regulators to ask more and more of those they regulate, without properly considering the burden it can impose.

Reforming the ACNC Act’s secrecy provisions

It’s rather odd that when the ACNC undertakes enforcement action, such as deregistering a charity, the act prevents it from publicly setting out the reasons it has done so. A regulator needs to be able to set out why it has decided to take action against a charity where it has done something wrong – donors, volunteers, beneficiaries and other stakeholders have a right to know. I’m hoping that the review recommends that these restrictions be loosened, so that the ACNC can issue a statement of reasons to accompany enforcement actions.

Protecting accumulated charitable assets

At the moment, when a charity is deregistered, the ACNC no longer has jurisdiction over it and therefore can’t act to ensure that the charity’s assets are used for charitable purposes. It can recommend that the state attorneys-general do something, but they’re not known to be particularly active when it comes to this sort of thing.

One way to address this is to impose a “deregistration tax” on any deregistered charities which have not transferred their assets to another registered charity within a specified time period. Something similar is in place in Canada, and I’m hoping the review considers how it could be implemented in Australia.

Ending the Basic Religious Charity exemption

Basic Religious Charities are currently exempt from complying with the ACNC’s governance standards and financial reporting requirements. This exemption should end. It was a political compromise intended to smooth the passage of the ACNC legislation through a Parliament where the government of the day lacked a majority in both houses. As an adviser working on getting the ACNC legislation passed, I was closely involved with that decision, and if confronted with the same situation again, I would recommend the same course of action. But I don’t believe that the exemption has a credible policy rationale. All charities should be subject to a consistent set of minimum standards, whether they have religious or non-religious purposes.

Mapping out a path for addressing gaps in the ACNC’s powers

Many of the ACNC’s enforcement powers can only be used against so-called Federally Regulated Entities. For many types of charities, such as unincorporated associations or trusts, the only enforcement power available to the ACNC is deregistration, which is a rather blunt instrument that should only be used in very serious cases.

The gap exists because of the limits on the Australian government’s legislative powers set out in the Australian Constitution. It’s not easy to fix, because it would require states to “refer” legislative powers to the Australian government, something they’re generally rather reluctant to do. That said, I’m hoping that the review maps out a process for this to happen, because although it’s rare, it does happen – Australia’s corporations law is based on such a referral of powers, and the referral of powers needed in the case of the ACNC is rather narrow. It will be up to the Australian government to take the proposal to the states, but I’m hoping the review will give the impetus for them to do this.

Recommending that governments #FixFundraising

We all know that the regulation of charitable fundraising in Australia is a mess, and there’s currently a Senate Inquiry examining this. Although the most viable reform option involves using the Australian Consumer Law, rather than making the ACNC the nation’s fundraising regulator, I hope that the review makes a strong and clear recommendation that when it comes to fundraising regulation, it’s time for all our governments to act now to #FixFundraising.

There are other things I hope to see in the review when it’s released, eg allowing the ACNC to put additional information about a charity’s tax concessions on the ACNC Register. But I’ve set out my priorities above, and I’m looking forward to reading the review when it’s released tomorrow.

About the author: Krystian Seibert is an industry fellow at the Centre for Social Impact at Swinburne University of Technology.