Third Dimension - What next for the Australian Charities and Not-For-Profits Commission?

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By Andrew Egri, Lawyer

Treasury released the terms of reference and the panel for the five year statutory review of Australian Charities and Not-for-profits Commission (ACNC) late last year. The terms of reference said that “[t]he review should be informed by public submissions, by international experience, through round table discussions and by consultation on substantive issues identified before recommendations are made to government”.

It is the ACNC’s own submission, however, that has attracted the greatest attention and scrutiny.

Sensible solutions

The submission by the ACNC made forty recommendations to be considered by the review panel. Many of the recommendations seek to address some of the teething problems arising over the last five years. For example, the ACNC proposes changes to resolve ambiguity surrounding charitable companies and their regulation under the Corporations Act 2001 (Cth) and the Australian Charities and Not-for-profits Commission Act 2012 (Cth).

Other recommendations look to improve the quality and transparency of charity information through the ACNC register. If enacted into law, the recommendations would see additional information contained on the register, such as the reasons for revocation of an organisation’s charitable status.

These recommendations are supported by many who are active in the sector, and address many of the common frustrations.

Much needed accountability or overreach?

One recommendation of the ACNC has many in the sector concerned as to its new direction under the ACNC Commissioner, Dr Gary Johns. The ACNC Act has recommended to the review panel that two additional objects be included in the ACNC Act.

The ACNC Actcurrently sets out the following three objects:

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

The ACNC recommends that consideration be given to including the following two objects:

  • to promote the effective use of resources of not-for-profit entities; and
  • to enhance the accountability of not-for-profit entities to donors, beneficiaries and the public.

The Commissioner says that the proposed objects reflect the regulator’s powers in the United Kingdom and are designed to encourage the responsible and accountable use of charitable resources.

“There has been a great deal of scrutiny recently about the effectiveness of charities and whether charities use their funds and resources to achieve the best results,” the Commissioner said.

“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.”

Sector leaders weigh in

Some leaders in the sector, however, have questioned whether it should be the role of the ACNC to oversee the effective use of resources for not-for-profit entities. Traditionally, it is the donors, members and other stakeholders to determine if a charity is using its resources effectively or not, and whether it is worthy of their support.

With the proposed objects attracting significant public attention, the ACNC’s advisory panel made its own submission to the review panel.

The ACNC advisory panel supports and advises the Commissioner. Its members are appointed by the Minister and consists of experts in the not-for-profit sector, law, taxation or accounting, and office holders.

The advisory panel’s submission notes that there has not been any widespread effort in the sector to amend the ACNC Act to resolve any perceived problems, and that such amendment may impose greater burdens on those in the sector.

The advisory panel also discussed the ACNC’s role regulating not-for-profit organisation in the future. “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”, advisory board chair Tony Stuart 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.”

A report on the review’s findings and recommendations will be made to government by the review panel by 31 May 2018.

For further information, please do not hesitate to contact us.

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