Australia: What’s happening with the ACNC and the charities and not-for-profit sector?

Minister Kevin Andrews has not yet finalised his plans for the future of the ACNC.

He is publicly recorded as stating that it will be closed down but there is a consultation process underway presently where interested parties including the ACNC are placing submissions to his department concerning their opinions as to the future model for the ACNC. Minister Andrews has suggested it could be replaced by a "National Centre of Excellence for Civil Society" which would have an educative role in the not-for-profit sector. It is hoped that the Centre would retain the register which ACNC have built as a sector resource.

Meanwhile, Commissioner Susan Pascoe continues to circulate her Commissioner's column and is focused on the achievements of ACNC during its first 12 months.

One of the main objections to ACNC which Minister Andrews has accepted is the increased reporting and red tape burden which has been placed on charities especially the small ones. In the Commissioner's column published in Feb 28 (link) she indicates ACNC has commissioned research on that burden and has contracted Ernst & Young to conduct a high level survey. She also announced that incorporated associations and other entities lodging financial reports with State or Territory entities for 2014, could lodge the same report with ACNC as part of their Annual Information Statement. This should avoid some duplication. She also reports the results of a December 2013 forum (link) dealing with "measuring and reducing red tape in the not-for-profit sector". The forum dealt with five themes.

  1. A national approach.
  2. The significance of risk.
  3. Outcomes especially how to measure them.
  4. Funding agreements and reporting.
  5. Sector capacity

Some matters contributed to the Forum discussion were:

  1. National approach

The inability of ACNC to have a national approach has been a criticism of ACNC before its inception: incorporated associations are particularly burdened by the need to report in duplicate.Only South Australia and the ACT have, so far agreed to forego their regulatory regimes in favour of ACNC.COAG has not given the matter any priority. The Commissioner's recent announcement that ACNC will accept financial reports filed with state and territory entities is a welcome development in this regard.

  1. Risk

The Forum identified too much focus on risk and inadequate focus on outcomes.The not- for- profit sector should not be burdened with reporting regulations that go beyond those imposed on the for- profit sector.

  1. Outcomes

Would bring a positive focus to the work of charity in lieu of the current focus of negative regulation.

  1. Funding agreements and reporting

Funding and acquittals take up a large component of time devoted to red tape.The Forum suggested rather than acquittal, ie. how you spend money, outcomes should be measured, ie. what is done as a consequence of a not- for- profit's activity.Government was encouraged to provide early notice in the final 12 months of a grant period as to whether it is to be renewed.

Concerning the requirement for reports, the Forum suggested that a helpful measure of whether a report is required was the test "if the Government had to pay for it, would it be required".This ran parallel with the question of whether the information was for the benefit of the public or to ease administration for government.

  1. Sector capacity

The Forum encouraged ACNC not to overburden charities especially those in regional, rural and remote Australia with unnecessary tasks which would reduce their effectiveness.

Annual Information Statement 2013

Any charity with an end of reporting period 30 June is reminded that its first Annual Information Statement must be lodged with ACNC by 31 March 2014. (See comment above on reports also lodged with state and territory authorities). If it is obliged to lodge a financial statement, that will be due by 31 December 2014. Link here. For any charities with 31 December end of year reporting period, the first Annual Information Statement must be lodged by 30 June 2014 and, if required, the first financial statement by 30 June 2015.

ACNC Advisory Board

The Advisory Board was set up with the inception of the ACNC. It comprises experts in law, taxation and accounting and makes recommendations to the Commission.

The Advisory Board met on 31 January 2014 and determined to develop a paper on "what constitutes good charity regulation". We assume the paper will be submitted to Minister Andrews during the current consultation period to assist in his remodelling ACNC. Link here.

The critical areas which the paper covers are:

  • Independence of decision making (free of sector, political or commercial influence).
  • Effectiveness and efficiency in achieving clearly defined policy goals.
  • Clarity, transparency and accountability.
  • Fairness and natural justice in decision making and administrative processes.
  • Integrity and certainty.
  • Proportionality consistency and regulatory necessity.
  • Understanding of and respect for the contribution of the sector.
  • Integration consistency and support of the laws agreements and international obligations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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