25/05/2015 - 12:32

Charities responding to ACNC

25/05/2015 - 12:32


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David Gilchrist says the ACNC’s light-touch approach has proved effective.

The Australian Charities and Not-for-profits Commission has published its first report card on regulatory compliance of Australian charities, and both the sector and the ACNC have performed well by any measure.

The report describes what the ACNC has focused on since its establishment in December 2012 and provides an overview of its regulatory and investigative activities. It also provides a breakdown of the issues it has found within the sector and a description of the extent to which the sector itself has met its obligations.

The ACNC analysis shows that 90 per cent of the registered entities lodged their first annual information statements for 2013 in accordance with their obligations; 98 per cent of those lodgments were undertaken electronically, despite the option for paper-based lodgement.

The compliance levels within the sector are particularly impressive given the uncertainty about the ACNC’s future. (In opposition and government, the Liberal-National coalition had stated its intent to dismantle the regulator, despite considerable sector support nationally.)

Since its inception, the ACNC has focused on building capacity and understanding, and creating a reliable register of charities. This is a significant contribution in itself, as data pertaining to the charitable sector, a subset of the much larger not-for-profit sector, has been noticeably scarce notwithstanding that significant social policy is built on the services provided to vulnerable people by these organisations.

The ACNC responded to 1,307 concerns raised by the public regarding charities, with more than half of these resolved by the ACNC’s advisory service – confirming the effectiveness of the regulatory body’s light touch approach to compliance and supervision.

Indeed, this light-touch approach has been effective in building trust within the sector and in building an understanding of the sector within government. However, the ACNC is not a toothless tiger and it has used its considerable powers where needed. Of the 324 charities that were considered at risk and reviewed by the ACNC, about 162 were large organisations and all were subsequently made to comply with their reporting obligations.

Further, nine charities had their deductible gift recipient status – the highest level of tax concession available – revoked. Other powers in the hands of Commissioner Susan Pascoe include the capacity to issue determinations, to give warnings, issue directions and to enter into enforceable undertakings. All of these powers were invoked during the reporting period.

Perhaps most tellingly though, and giving added weight to the importance of a national regulator in this critical sector, the powers of the ACNC have also been deployed to prevent charitable capacity and scarce resources from being lost to the sector. Indeed, the small resourcing provided to the ACNC represents great value for money when it is considered that investigations were undertaken into charities with assets of around $100 million resulting in the protection of these important resources for community benefit rather than private benefit.

For 2015-16, the ACNC has stated that it will be focusing its supervisory activities toward compliance with lodgement requirements, the accuracy of reported information, charities operating internationally and charities that provide private benefits to their directors or associates. Of course, it remains early days, but to date, the sector has responded well to the new regulatory environment and the ACNC has demonstrated that calls for a specific sector regulator by the Productivity Commission were well founded.

David Gilchrist is a director of Curtin University's Not-for-profit Initiative.



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