Learning from the past to reform the NFP sector

David Crosbie nominates his three most important recommendations from a report that summarises all major recommendations from the key national inquiries into charities and NFPs over the past 30 years. 

“Those that fail to learn from history are doomed to repeat it.”
Winston Churchill

This is the most important report I have seen in several years: Are any more recommendations worth implementing from nearly 30 years of Commonwealth nonprofit reform reports? (ACPNS) (qut.edu.au) 

Professor Myles McGregor-Lowndes has summarised all the major recommendations from the key national inquiries into the charities and NFP sector over the last 30 years, as well as the Henry Review of Taxation.  For those of us interested in improving the capacity of charities and NFPs to serve their communities, this report is a compelling reference point.

The reports examined are: – The Industry Commission 1995: Charitable Organisations in Australia – The Productivity Commission Report 2010: Contribution of the Not-for-profit Sector – Senate Inquiry 2008: Disclosure Regimes for Charities and Not-for-profit Organisations – Australia’s Future Tax System (The Henry Review) 2010 – The Not-for-profit (NFP) Sector Tax Concession Working Group 2012 – The Australian Charities and Not-For-Profits Commission Legislation Review 2018.  

Myles notes in his review , “In these reports alone, I counted over 160 recommendations, with 21 implemented, 113 unimplemented, and 33 partial or no longer applicable implementations.”

ProBono News has asked me to discuss which three recommendations of the 113 that have not been implemented should now be prioritised.  This was a difficult task because I believe around 100 of the recommendations listed in the report still deserve serious consideration.

The issue of better demonstrating our value and our impact is important to us at CCA.  For this reason, I would prioritise this recommendation from the 2010 Productivity Commission Report:

“Australian Government to establish, through tender, a Centre for Community Service Effectiveness. This will provide a portal for gathering and disseminating evaluations, providing guidance for impact evaluation, and support meta-analysis of the effectiveness of government funded services.”

Ideally such a centre would look beyond community services, but as a starting point, having a well-resourced national clearinghouse of ideas and reports about the effectiveness of many government funded charities would be a huge step forward in documenting the value charities provide.  In 2014 there was a national consultation around establishing a Proposed Civil Society National Centre for Excellence in response to this recommendation.  Unfortunately, it did not eventuate.

In 2012 the Not-for-profit Sector Tax Concession Working Group produced one of the best reports on taxation related matters for the charities and NFP sector.  Most of the recommendations remain relevant and would benefit the sector. 

One that CCA and others continue to champion is:

“DGR status should be extended to all charities that are registered with the ACNC, but use of tax deductible donations should be restricted to purposes and activities that are not solely for the advancement of religion, or the advancement of education through child care and primary and secondary education, except where the activity is sufficiently related to advancing another charitable purpose.”

As CCA pointed out in our recent submission to The Treasury around proposed changes to DGR, the goal of the DGR process should be to encourage community involvement, engagement, and ownership of issues they are concerned about.  Encouraging citizens and civil society to own their issues of concern and support charities is both good public policy and good economic policy.

It is difficult to justify the current unequal distribution of DGR eligibility which reflects the arbitrary ad hoc way DGR eligibility has developed.  It makes good policy sense that all donations made to registered, complying charities should be tax deductible.  This is generally the practice in comparable countries like the UK and Canada.  

CCA understands that exemptions outlined in the recommendation from the NFP Sector Tax Concessions Working Group were primarily about making revenue neutral recommendations.  Excluding schools and churches, as described in the recommendation, is a way of making this measure affordable. 

Given there is a well-functioning regulator determining charitable status through an effective process, and given charitable status is grounded in demonstrating public benefit, DGR should be directly associated with charitable status.  

My final priority recommendation from the 113 would be to again return to the Productivity Commission recommendation:

“An Office for NFP Sector Engagement within a central Commonwealth agency should be established to drive the reform agenda. Each state and territory level also needs to build the capacity of their agencies to implement long overdue reforms.”

As Myles has demonstrated in his analysis of sector reform, “The government has produced nearly 3,000 pages of reports, and the sector made over 4,500 written formal responses generating about 29,000 pages.” We are talking millions of words.  Yet most of the great work done in consultations, submissions and putting together these reports has gone unrewarded.  Only 21 out of 160 recommendations have been fully implemented.  

There are notable exceptions of course, like the establishment of the Australian Charities and Not-for-Profit Commission. But in some ways these exceptional reform successes serve to highlight how much stronger the sector could be if more of the substantive reform recommendations had been implemented.

Part of the reason for the failure to follow through on so many recommendations is that charities don’t have a home in government.  Where would a reform agenda be based and who would drive it?  Without central leadership, appropriate resourcing and significant input into policy that crosses many departmental silos, reform will be patchwork and negligible at best.  

And that is exactly where we are now. The Assistant Minister for Charities sits outside of Cabinet and has been allocated very limited resources to drive any reform across the sector.  Cabinet has relegated the Sector Blueprint Planning to a line agency with limited clout, and sector reform is not a significant priority on the government agenda.

If anyone in government is serious about both productivity and community resilience, they might do well to read this report and ask why so many sensible recommendations have been ignored or dismissed.  

The unimplemented recommendations detailed in this report should be a touch stone for sector reform, now and into the future. 

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