24/04/2007 - 22:00

Not-for-profits wary of reclassification costs

24/04/2007 - 22:00

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Not-for-profit groups and associations in Western Australia could be faced with increased administrative costs and a tighter regulatory environment, if proposed legislation becomes law.

Not-for-profits wary of reclassification costs

Not-for-profit groups and associations in Western Australia could be faced with increased administrative costs and a tighter regulatory environment, if proposed legislation becomes law.

 

The state government is currently reviewing the Associations Incorporations Act 1987, and has called for public submissions to a Green Bill.

 

One proposed change that has caused concern for large charities is an increase in the power of the Commissioner for Consumer Protection, to direct that ‘large or complex’ associations be reclassified under other legislation.

 

St Vincent de Paul Society WA president Brian Bull said while he supported the general intent of the reforms, to improve accountability and transparency, the potential for large organisations to be refused classification as an association, according to their asset base or income level, was of concern.

 

“It might be fine for wealthy associations like sporting clubs, but it shouldn’t apply to charitable organisations,” Mr Bull said.

 

While he agreed the commissioner should have the discretion to refuse registration under certain circumstances, the additional costs incurred by becoming a company limited by guarantee, for example, would be a burden for charities. 

 

However, MercyCare general manager finance and administration Peter Jack does not believe the changes will affect the structure of his organisation.

 

While MercyCare is a company limited by guarantee, its subsidiary providers – Mercy Community Services and the Mt Lawley Mercy Hospital – are incorporated associations.

 

“We thought we may need to change our incorporated associations to limited companies, but reading the fine print, I don’t think we need to,” Mr Jack said.

 

Surf Life Saving WA chief executive officer Paul Andrew said there were several areas of concern for the organisation, which acts on behalf of its 27 surf life saving club clients.

 

“While I can appreciate the legislation is looking to get greater compliance and some uniformity across the board, we need to be careful that we don’t go through a one size fits all approach,” he said.

 

A proposal to give voting rights to every member of an association is one change that Mr Andrew said would be inappropriate for surf life saving clubs.

 

For the majority of clubs in WA, voting at an annual general meeting is restricted to certain categories of membership; in effect the active membership.

 

“If a club’s constitution and regulations are clear and fair in regards to the voting rights of people, the club should be self-determining,” Mr Andrew said.

 

Western Australian Council of Social Service executive director Lisa Baker said any amendment that added to the financial reporting costs of not-for-profit groups was of concern.

 

“But if there’s some movement in the Green Bill we’d be in agreement that small not-for-profits and charities be given minimum compliance requirements,” she said.

 

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