The new state chair of the Institute of Chartered Accountants has raised a red flag over the federal government’s latest proposal for not-for-profit reporting.
David Gilchrist, who is also director of the Curtin Not-for-profit Initiative at the Curtin School of Accounting, claims the latest plan for replacing the Australian Charities and Not for Profits Commission could increase red tape rather than reduce it as intended.
Last week, Social Services Minister Kevin Andrews revealed the government was considering introducing a 'charity navigator' model to regulate the sector instead of the ACNC.
In a speech at an Australian Institute of Company Directors lunch, Mr Andrews said the ACNC was an unnecessary compliance burden.
He said a National Centre of Excellence would take its place based on the US Charity Navigator system, a not-for-profit body that compiles charity league tables.
Mr Gilchrist said such a model provided little scope for case-by-case evaluation.
“This type of exercise is dangerous for our sector because the judgements are made at a superficial level, do not consider the context in which charities operate, and make the judgements based on the compiler's definition of what is efficient and effective,” Mr Gilchrist wrote in a blog post on the topic.
“People will use these judgements to make financial allocation decisions, volunteering and other decisions and each charity's reputation will be at risk, leading to game playing in order to manage the risk rather than focus on the charitable activity.”
Mr Gilchrist also warned the US model collected data from tax returns and, thus, provided no scope for additional commentary.
“Commentary that is critical to people understanding the context within which to interpret the quantitative data,” he said.
“Red tape reduction is a major reason put forward for the dismantling of the ACNC and yet this idea certainly will not decrease it but may, in fact, increase it.”
Mr Andrews said he was aiming to introduce legislation abolishing the ACNC to parliament in the next two months.