Rebooting the ACNC

When it comes to the Australian Charities and Not-for-profit Commission, what is needed now is not wholesale changes to what was a very successful organisation, but a reset of culture to one of engagement rather than enforcement, writes David Crosbie.

Note: Following the publication of this article, ACNC Commissioner Dr Gary Johns has issued a reply. Scroll down to see his response.

Over the past month many people have talked to me about the need to reset the way the Australian Charities and Not-for-profit Commission (ACNC) interacts with the charities sector. Some have made suggestions about who should lead the ACNC following the resignation of Dr Gary Johns, others have talked about expanding the role of the ACNC, and some have suggested the need to bring forward the 10-year review.

In any discussion about the ACNC now and into the future, it is important to be very clear about the role of the ACNC, how and why charities see the ACNC as valuable, and what we might need to focus on to improve the performance of the ACNC.

Establishing the ACNC took years including over 12 months of extensive consultation, discussion and debate. In the early days of 2011, there were a broad range of views about what role the ACNC could and should fulfil. Some wanted a very minimalist record keeping entity that didn’t require annual reporting or any accountability measures. Others argued the ACNC could be an “accreditor” for the sector, endorsing and promoting charities, even making public judgements about which charities were of greater benefit to our communities.

As I have previously noted, it is beyond dispute that the leadership of the first ACNC commissioner, Susan Pascoe, and assistant commissioners David Locke and Murray Baird, was outstanding. Their accomplishments are remarkable especially when you consider the negative pressure exerted by the Abbott government as they tried to close down the ACNC. I should also note the steadfast leadership of Robert Fitzgerald AM, the inaugural chair of the ACNC Advisory Board, and the ongoing support of the now Assistant Minister for Charities Andrew Leigh who championed the ACNC from day one.

See also: Australian charities over 20 years – A timeline

Thankfully the combination of astute leadership, careful stewardship, strategic advocacy and well-informed planning, enabled the ACNC to emerge as a world class regulator for the sector focused on three core objects:

• maintain, protect and enhance public trust and confidence in the Australian not-for-profit sector;
• support and sustain a robust, vibrant, independent and innovative not-for-profit sector; and
• promote the reduction of unnecessary regulatory obligations on the sector.

Like many long-term supporters of the ACNC, I believe the most valuable role the ACNC can fulfil is to be a very good regulator. A good regulator works collaboratively with the groups it is regulating to achieve the highest possible level of compliance. When regulators fail to proactively engage it inevitably leads to lower compliance and increased enforcement actions. 

This applies whether we are talking about a Liquor Licensing Commission or ASIC or any regulator. (A well-informed restaurant owner who understands their liquor licensing obligations is clearly more likely to do the right thing.)

The regulatory systems that support this engagement approach include responsive helplines and interactive web sites, multi-platform communication and sharing of information, giving back by producing timely and informative reports about important issues, supporting research, encouraging transparency and accountability across multiple platforms. 

Good regulators also work to reduce the time and cost of compliance activities by streamlining data systems and effectively linking accurate and timely data across different authorities, government departments and jurisdictions.

My three main concerns with the ACNC over recent years have primarily been about its failure to positively engage with the sector, falling performance in the key service aspects of the organisation like the helpline and online engagement, and wasted energy and time pursuing the futile vision of a public donor marketplace (an idea that has not worked anywhere in the world, backed up by zero research, not even supported by an effective business case).

These concerns reflect a failure of management, not structure. There are still many good people at the ACNC, and the fundamental ways of operating have not only proved to be effective, but were previously internationally recognised as world’s best practice.

What is needed now is not wholesale changes to what was a very successful organisation, but a reset of the organisational culture to one of engagement rather than enforcement, working in collaboration with the sector rather than acting as an external authority, giving back in return for the input of information provided by charities.

Charities and the communities they serve all benefit if we have a strong and effective charities regulator that enables us to operate in a safeguarded environment. A bad charity damages us all. We also benefit if the regulator is committed to actively informing us, producing reports, pooling our knowledge and value adding in ways that provide insight beyond the raw data. And we all benefit from a regulator that is able to proactively drive other regulators and authorities to use the information they have collected rather than requiring duplication and multiple data entries from charities.

Most importantly, a good regulator builds community trust in charities, and as every charity leader knows, trust is perhaps the most valuable commodity we trade in.

Like many in the charities sector, I think the ACNC needs to change the way it goes about its business, but we shouldn’t try to make the ACNC something it is not. The ACNC has been a good regulator in the past, and given time and good management, it can and will be a good regulator again. 

For the record: David Crosbie was a founding ACNC Advisory Board member and advocated to both establish the ACNC and ensure the Senate defeated government attempts to defund and disband it.

A reply from ACNC Commissioner Dr Gary Johns

It is not unusual for a regulator to encounter criticism. However, to ensure debate is constructive, it is important that any criticism of the ACNC be based on an understanding of our responsibility to maintain the interests of the public as well as the charity sector, and to remain neutral. 

It is imperative that a good regulator works collaboratively with the groups it is regulating. We have extensive stakeholder engagement – a sector forum, an adviser forum, a new consultation panel, regular meetings with individual charities and we work with the Australian Taxation Office and other regulators. We hold a Regulators Day with state regulators and professional body presentations to generate discussion about the work we do. 

We deliver guidance to the sector via our website, and regular communications to alert charities to resources available via social media and a monthly newsletter. This offering has vastly expanded in the last five years, during my term as commissioner. This month, we will launch the Governing Charities Program, online courses on key governance topics for charity leaders developed through extensive consultation with charities and advisers. 

Our public report on three charities involved in the 2020 bushfire response was a first in Australia, and set the record straight about what should be reasonable expectations of charities, balancing accountability with the need for timely support. 

There are sometimes criticisms that the commission tries to inhibit charity advocacy. This is wrong. I have often stated charities are free to advocate on policy matters, and that they can sing from the rooftop when they have a concern. We provided extensive guidance leading into the federal election to help charities stay within the rules while delivering on their charitable purpose. 

As the regulator, the ACNC must apply the law, and can only register a charity based on its purpose. Some sub-types have more favourable tax concessions than others, and on occasion, those who are not happy with the sub-type they are legally entitled to will attack the umpire for making the call.

In line with the Australian Public Service Commission framework, we have streamlined the ACNC governance structure to focus more resources on delivering services to charities and the public. We are a relatively small commission and it is not efficient to be too top heavy. 

Our performance as a regulator was independently audited by the Australian National Audit Office. The ANAO found the ACNC had been largely effective in its role, and we have done significant work on the recommendations for improvement. 

As to the criticism that we have “wasted energy and time pursuing the futile vision of a public donor marketplace”, there may be an incorrect link here to United States charity rating agencies that concentrate on providing financial data for donors. Donors do not necessarily follow financial performance, and that is why we chose to provide a search mechanism for charity programs on the Charity Register. Users can search for a charity based on what a charity does in their area of interest. 

The ACNC Act 2012 (Cth) requires the commission to “provide information to help the public understand the work of the sector”. The solution lies in the language that charities use to describe their work – the programs they run for their beneficiaries. 

Programs provide useful information for a wide range of potential users – philanthropists, donors, researchers, service users, volunteers, governments, and charities. In addition to 60,000 charities on the ACNC Register, there are now about 80,000 programs. This approach has been endorsed by leaders in philanthropy and across the sector who welcomed the addition of the program feature and its benefits. 

The public response to the enhanced register has been superb. Searches rose to 4.5 million last year, and are projected to rise to seven million by the end of this year. Seven million searches is a ringing endorsement of the register, and all of us at the ACNC can be rightly proud of that achievement.