Sector lacks transparency: report

THE Productivity Commission has proposed wide-ranging reforms to remove unnecessary burdens and costs and improve accountability in Australia’s not-for-profit sector.

In a research report released last week, the commission outlined its final recommendations to the federal government to consolidate regulatory oversight and enhance transparency.

The ‘Contribution of the Not-for-Profit Sector’ report was commissioned in an attempt to improve the measurement of the sector’s contributions and remove obstacles that may hinder the delivery of not-for-profit services.

The commission proposes an integrated approach to reform, one element of which is stimulus for social innovation to develop new and better ways of tackling social problems and other issues.

The Productivity Commission has recommended, among other changes: the introduction of a national measurement framework to promote best practice; a “more coherent” endorsement process for tax status; and an overhaul of government purchasing and contracting arrangements.

The final report highlights the need for government-purchased services to be competitively funded so not for profits can attract and retain suitably skilled staff.

The Productivity Commission was critical of the federal government’s current purchasing and contracting arrangements of not-for-profit services, labelling contractual and reporting requirements “heavy-handed”, with poor risk management.

It recommends strengthening the capacity for charities to access debt financing for social investment, as well as the introduction of a separate chapter in the Corporations Act dealing with not-for-profit companies and rules on the disposal of assets.

Other key points raised in the commission’s research highlight a complex regulatory framework for the not-for-profit sector, which was found to lack coherence, sufficient transparency, and to be costly to charitable organisations.

Productivity Commission commissioner Robert Fitzgerald said better regulation, improved funding arrangements, and enhanced opportunities for innovation would improve outcomes for the community and the public’s confidence in the not-for-profit sector.

“The proposed reforms would directly address concerns about the multiplicity of regulatory requirements, poor collaboration between the sector and governments and emerging capacity constraints,” he said.

“They would thereby create a much stronger foundation for this expanding sector.”

Productivity Commission associate commissioner, Dennis Trewin, said the report proposed a “one-stop shop” for Commonwealth-based regulation in the form of a registrar for community and charitable organisations.

“Australia has 600,000 not-for-profit organisations which contributed $43 billion to Australia’s GDP, growing at an annual rate of 7.7 per cent since 2000,” he said.

“If you count the contribution of 4.6 million volunteers, with an imputed value of $15 billion, this would make it a similar contribution to the retail industry.”

Western Australian Council of Social Services chief executive Sue Ash said the report acknowledged the “invaluable” work carried out by the not-for-profit sector and the far-reaching benefits this work had, not only for the direct recipients of those services, but for the wider community.

“However, it also highlights the strain the sector is under, in terms of the burden of regulatory compliance and reporting, and inadequate funding levels,” she said.

“While we support not for profits being accountable for the financial support they receive, we often see that costly and complex burden of compliance undermining an organisation’s ability to provide vital services to vulnerable members of our community.

“The immense value and importance of the not-for-profit sector cannot be taken for granted any longer.

“It is time for government and the sector to work together in considering the recommendations of the commission’s final report, and to develop a common strategy.”