Since 1995, there have been seven major reviews of the Not-For-Profit (NFP) Sector, including the Productivity Commission Research Report on the Contribution of the Not-for-Profit Sector released in 2010. In 2011 the Federal Government made an election promise to support a reform agenda which lead to the establishment of the Office for the Non-Profit Sector in the Department of Prime Minister and Cabinet and, subsequently, the Australian Charities and Not-for-Profits Commission (ACNC) Taskforce.
Reprieve for ACNC
9 February 2015
Scott Morrison is on the record as saying to journalists that closing down the ACNC was currently not on his agenda. In questions from the Fairfax Media he responded that axing the ACNC was a low priority and he would be focussing on the new families package.
ACNC's achievements and impact
19 November 2014
ACNC's Second Annual Report
Despite working in an environment of considerable uncertainty the ACNC was able to report that they are finalising the Charity Register and the information technology platform for the Charity Portal, have achieved further red tape reduction initiatives and have worked with charities to improve governance practice in the sector.
Proposed amendment to Corporations Legislation
As part of the Federal Government’s red tape reduction agenda, the Corporations Legislation Amendment (Deregulatory and Other Measures) Bill 2014 was introduced to the House of Representatives. The Bill’s amendments only apply to companies limited by guarantee who are not registered with the ACNC. These changes have already been turned off for companies that are charities registered with the ACNC.
Charity regulation - developments overseas
Ireland has announced that it is establishing an independent regulatory agency for its charity sector noting that this represents a critical first step in reforming and strengthening the Irish charity sector. In addition Charity regulators from across the United States are looking to the ACNC for advice on cutting the red tape burden that charities face.
ACNC Interpretation Statement Hunger Project
12 Sept 2014
Interpretation statements are developed to provide guidance on how to ‘understand the law that applies to charities, including to explain the law made by judges ('common law'), parliament (legislation) and any legal issues that may arise.’ They reflect the ACNC’s current understanding of the law on charity and are binding on ACNC staff. The statement provides an overview of the facts and the issues. It also states in Section 6 how the ACNC will apply the case when making decisions as to whether an organisation is a ‘public benevolent institution’ and as such can access the related tax exemptions.
Survey and consultation support the retention of the ACNC
8 Sept 2014
Latest Pro Bono Survey on State of the NFP Sector
The latest survey held by Pro Bono in conjunction with Net Balance has found that the three biggest issues facing the sector are Federal Government policy, regulation and funding. The survey sampled the views of 1250 Not for Profit leaders and managers (including 800 CEOs), staff and volunteers. The survey confirmed the sector’s support for the ACNC with 82% seeing it as having an important or extremely important role in developing a thriving Australian NFP sector and remains the preferred form of regulation for the sector for 60% of those surveyed. The survey also looked at the Sector’s performance, drivers of performance both now and over the past year and the outlook for the coming year and compared the results.
ACNC options consultation closed, what now?
Consultation on the Options Paper, Australia’s Charities and Not-for-profits has now closed. The Department of Social Services website states that they will provide a written summary of stakeholder feedback on their website in September. There appears to be no intention of making the individual submissions public however several can be accessed online, however much of what can be accessed supports the continuation of the ACNC in its current form. The final report on the National Centre of Excellence was due at the end of August. It is yet to be publically released.
ACNC announces revocation of charity status
7 August 2014
The ACNC has begun the process of deregulating organisations currently listed as charities that have failed to respond to communication from the ACNC or completed the Annual Information Statement. After being revoked, the charities will no longer have access to the charity tax concessions administered by the ATO. There remain a further 3,800 charities which the ACNC is still seeking to contact.
A further two charities will also have their charity status revoked following “a five month investigation into the charities’ activities and purposes, with the ACNC determining their operations were not solely charitable.” Both charities have the opportunity to object to the decision and can reapply for registration once they have addressed the ACNCs’ concerns.
Next stage of NFP reform announced
4 July 2014
Senate Inquiry Report on ACNC Repeal Bill released
The Senate Inquiry report has now been released and despite the high level of support for the ACNC expressed in the written submissions, the report concludes that:
The ACNC Act has significantly and unnecessarily increased red tape for many charities, thereby creating a burden with no apparent benefit either to those they serve or the wider community. Given the Commonwealth's limited legislative powers in this area, and the low probability of achieving nationally consistent regulation, the Act should be repealed.
In part it justifies this decision on the grounds that the abolition of the ACNC was a pre-election commitment and “part of the government's effort to 'remove the regulatory impost on the sector as soon as possible', to ensure that organisations were not reporting unnecessarily” (Sec 2.4 of Report).
Despite the fact that the submissions supporting the repeal of the ACNC only accounted for 10% of the 155 submissions, there was a high reliance on these views in the final report. Of the 35 references to the written submissions, 15 were taken from these papers. However, the ACNC and Robert Fitzgerald were provided with the opportunity to respond.
The committee concluded that:
In the process of developing and administering the ACNC legislation, a great deal has been learnt about what constitutes effective regulation of the not- for-profit sector. The regulatory regime that replaces the ACNC Act can apply these lessons. (Sec 2.40)
The report includes two dissenting reports, one each from the Labor and Green senators.
Consultation on the ACNC's Replacement
An options paper in now available on the Department of Social Services website detailing the ACNC replacement arrangements and providing options on how key functions will be transitioned to the Australian Taxation Office and Australian Securities and Investments Commission. The website includes links to a submission template and information on public consultation sessions. Sessions will only be held in capital cities. Sydney will have two sessions, one in the morning and one in the afternoon on Wednesday 23 July. Registration is online via the website.
Consultation into the Civil Society National Centre of Excellence
There is a separate online consultation being carried out by the Centre for Social Impact (CSI) into the creation of the Civil Society National Centre of Excellence (NCE). The regulatory functions of the ACNC are not part of the NCE’s scope.
The survey can be accessed on the NCE website. CSI research along with the results of the survey will form the basis of the Interim Report to go to the Federal Government in July 2014. This will be used to feed into the second phase of consultation which will include workshops and a second online survey.
Tax- Full Federal Court confirms the Hunger Project Australia is a Public Benevolent Institution
The Federal Court has unanimously held that Hunger Project Australia (HPA) does not need to directly give aid in order to be endorsed as a Public Benevolent Institution (PBI). The Court also rejected all four arguments presented by the Commissioner. Makinson d'Apice Lawyers note that:
“This finding provides important guidance regarding what is a PBI and is likely to provide comfort for many charities who were awaiting the outcome of this appeal.”
The Unrelated Business Income Tax is gone
The Better Targeting of NFP Tax Concessions, or unrelated business income tax (UBIT), was introduced as part of the 2011-2012 Budget but there has been a delay in introducing it for a number of years. The Acting Assistant Treasurer issued a press release stating “the Government has considered alternatives to the previous government’s better targeting of not-for-profit tax concessions measure. We have concluded that they are not required at this time”.
ACNC Senate Inquiry hearing
28 May 2014
Respected Not-for-profit legal expert Professor Ann O’Connell has noted that despite 80% of the written submissions opposing the abolition of the ACNC, of the 12 organisations and individuals invited to give evidence before the Inquiry, seven supported the repeal of the ACNC Act.
“Several aspects of the inquiry suggest that the outcome of the inquiry is a foregone conclusion – that is, that the Committee report will follow party lines and recommend passage of the legislation. For example, there are concerns about the treatment of some submissions; the choice of persons invited to give evidence to the Committee not representing the balance of the submissions and the notion that the Department of Social Services has been engaged in consultation about the proposal.”
Sector strongly opposes abolishing ACNC
16 May 2014
The Senate Inquiry in the Bill to repeal the ACNC has closed. Two bills are under consideration, one to repeal the ACNC Act, the second to establish new regulatory arrangements. The Inquiry received 145 submissions from organisations including peak bodies representing a broad range of membership, and individuals.
Based on analysis by Emma Tomkinson, Social Impact Analyst, 118(81%) opposed the Bill and 14 (10%) supported it. The remainder (13) commented on the Bill without taking a stand.
Tomkinson has provided a detail analysis of the submissions on her blog based on themes arising from the submissions. These include the value of the ACNC, its effectiveness in working towards its key objectives and its potential to build on these achievements.
ACNC may be fatally wounded but survives another day
1 April 2014
The proposed bill to abolish the Australian Charities and Not-for-profits Commission (ACNC), although introduced into Parliament on 26 March, was not debated nor was it listed with the other red tape reforms during the highly publicised "Autumn Repeal Day" event. It has subsequently been announced that the bill has been referred to the Senate Economics Legislation Committee who will report back to the House on 16 June 2014.
It was speculated that the Minister would introduce a bill to repeal the Charities Act 2013 (Cth) however this is yet to occur.
Minister Kevin Andrews has begun a consultation process where interested parties including the ACNC are making submissions to his department proposing future models for the ACNC.
NFP's open letter asking that ACNC be retained- Andrews' response
20 March 2014
Signatories from 54 quite disparate organisations have vigorously argued in an open letter to the Commonwealth Government that they
“…..want to make it very clear to the Commonwealth Government and wider community that like most charities across Australia, we value the Australian Charities and Not-for-Profits Commission, and we want to see it continue its impressive work.”
and strongly reject the proposal to dismantle the national charity regulator.
Despite this call, the Federal Minister for Social Services, Kevin Andrews, remains intent on ensuring that the ACNC legislation will be repealed and the regulator abolished.
Andrews believes that the independent regulator had not proved to be the best use of government funding and maintains he has been in ongoing consultations with major stakeholders and heard overwhelming evidence that the ACNC needs to go.
To this effect he announced on 19 March that the repeal of the ACNC is the first stage of a two-stage process. The first Bill proposes to repeal the Australian Charities and Not-for-profits Commission Act 2012, while the substance of replacement arrangements will be dealt with in a later Bill.
The repeal day is scheduled to occur in the House of Representatives on Wednesday 26 March but because the Coalition does not hold the balance of power in the Senate it is unclear how, when or with what amendments the passage of the Bill will take.
For the time being, charities will still be required to lodge their Annual Information Statements and comply with all relevant provisions of the ACNC legislation.
Repealing of charity legislation unsuccessful
18 March 2014
Attempts to repeal both the Charities Act 2013 and the Australian Charities and Not for Profits Commission Act 2012 was defeated in the Senate. However it is accepted that the Abbott Government has not walked away from its commitment to repeal the two Acts.
Academics from both Curtin University and the University of Melbourne have separately noted that the repeal may well result in unintended consequences.
David Gilchrist, Industry Professor within the School of Accounting at Curtin University notes that:
“the removal of the Charities Act from the statute books will not return the legal position of the Charities Sector to the position it was in before the Act was passed last year.”
University of Melbourne Professor of Law, Ann O’Connell and University of Melbourne Law Lecturer, Associate Professor, Matthew Harding observed that:
“The lack of a national regulator with a focus on reducing red tape will inhibit the reduction of red tape at the State and Territory level, mean a loss of graduated powers and a return to ATO compliance and a return to under-regulation by State and Territory Attorneys-General and other bodies.”
ACNC future, Support for ACNC, tax concession rebate, red tape solutions
28 February 2014
Based on evidence presented at the Senate’s Estimates Committee, the Australian Tax Office (ATO) has started planning to take over the regulatory role of the ACNC. Andrew Leigh MP, shadow Assistant Treasurer noted in his press release that neither Minister Kevin Andrews’ promised discussion paper on the future of the Australian Charities and Not for Profits Commission, nor the formal consultation process are in evidence.
The Senate Estimates also heard that the ATO would need additional resources if it was to take on the charity regulator role, suggesting that there are no real cost savings in closing down the ACNC.
Response to CIS' advice to remove the ACNC
Articles continue to be written in support of the ACNC. Krystian Seibert’s ,(Policy & Research Manager – Philanthropy Australia, formally a policy advisor in the previous Federal Labor Government) article for Pro Bono News (PBN)systematically analyses and responds to the CIS report.
Seibert notes that a major benefit of the ACNC is the possibility that there could be aggregated NFP sector wide data which would be a crucial resource. He concludes:
“Whatever happens to the ACNC, we certainly need a more effective means of data collection on the NFP sector. This will be critical to supporting the growth of philanthropy and the broader NFP sector going forward.”
The final report of the Not for Profit Sector Tax Concession Working Group (NFP Sector Tax Concession WP)has been released under Freedom of Information provisions. It includes a call for the extension of Deductible Gift Recipient Status (DGR) to all charities registered with the charity regulator.
Red tape reduction and principles of good charity regulation
ACNC has released two documents. The first was produced by the ACNC Advisory Board outlining eight principles for effective regulation. They include independence of decision making, clarity, transparency and accountability amongst others.
The other document is a report based on the proceedings of the Measuring and Reducing Red Tape in the Not-for-profit Sector held on 4 December 2013 at the Australian National University. The report summarises the forum and includes the red tape reduction recommendations arising from it. It was prepared within the context of the Federal Government’s system-wide deregulation agenda being implemented across Commonwealth departments and agencies and the proposed National Centre for Excellence for Civil society.
The 18 recommendations fall into five categories, National Approach, Risk, Outcomes, Funding Agreements and Reporting and Sector Capacity.
Loss of ACNC is a loss to the future
13 February 2014
Karen Mahlab argues that abolishing the ACNC is shortsighted. She points out that the information it could pull together over for example a five year period would be invaluable for government, policy makers, sector organisations, researchers, etc. She believes the ACNC is about much more than cutting red tape, harmonising fundraising legislation and prosecuting fraudulent charities.
CIS advises “slash” ACNC
6 February 2014
Centre for Independent Studies has advised the Federal Government to act on its pre-election promise to abolish the ACNC it “is not achieving its main objectives, which were to improve public trust in the not-for-profit sector, reduce red tape, and police fraud and wrongdoing”.
Proposed option to replace ACNC
30 January 2014
Speaking at the Australian Institute of Company Directors' NFP Directors Lunch in Melbourne Social Services Minister, Kevin Andrews, has indicated that the ACNC would be replaced by a National Centre for Excellence with the ultimate aim being to transfer ownership to the social sector. He referred to Charity Navigator , an independent United States NFP that posts charity evaluations and compiles charity lists as a possible model for an alternative to the ACNC.
Charity Act and the future of Not for Profit Reform
Charity Act - potential delay
Minister for Social Services, Kevin Andrews introduced a late amendment to the Social Services and Other Legislation Amendment Bill 2013 to delay the introduction of the Charities Act 2013 from 1 January 2014 to September 2014.
The Government introduced the Social Services and Other Legislation Amendment Bill 2013 to the House of Representatives in November. The Bill already covered a range of amendments including to the ACNC Act, gambling reform, the NDIS, Family Tax Benefit, Parenting Payment, Age Pension, Youth Allowance, and income management on Cape York and Child Care.
In early December it was introduced to the Senate where it was referred to a Senate Committee of Inquiry. The Committee reported on 12 December and the Bill was returned to the Senate for debate. However, it was not finalised before the Senate rose for the holidays.
Because the Bill was not passed, the Charities Act will commence from 1 January 2014 as originally legislated. It is unclear whether the Government will still attempt to amend or repeal the Charities Act now that it has commenced operation.
Future of the ACNC
The Minister for Social Services, Kevin Andrews, confirmed his plans to abolish the ACNC at the Disability Services CEO conference. He stated that “to benefit civil society as a whole, the Government has committed to abolishing the Australian Charities and Not-for-profits Commission, with repeal legislation to be introduced into Parliament next year”.
It is understood that the some of the ACNC’s functions will be replaced with a “Centre for Excellence”. However it is unclear which agency or department will perform the other functions of the ACNC (including determining charitable status). Changes to the ACNC in 2014 will not necessarily be tied to amendments to the Charities Act.
It should be noted that while the Government has said it will abolish the ACNC, this is yet to occur. Therefore organisations registered with the ACNC will still need to comply with the current laws, this includes submitting the Annual Information Statement due in March 2014.
NFP Tax reform
As part of the Government’s drive to address “the backlog of legislative matters and restore integrity to the Australian taxation system” three charity related measures were identified as requiring “further consultation”. The results of the consultation were:
1. Better targeting of not-for-profit tax concessions Also known as the Unrelated Business Income Tax (UBIT), the Government will not be proceeding with the measure to ‘better target’ not-for-profit tax concessions at this stage.
2. Reforming the “in Australia” requirements This legislation will proceed when Parliament resumes in 2014
3. Defining ‘not-for-profit’ in the tax laws. The purpose of this measure was to standardise the term ‘not-for-profit” across Commonwealth legislation. The definition will be removed from the “in Australia” legislation.
ACNC post the Federal election
Following the Federal election, Susan Pascoe, the ACNC’s Commissioner has now met with both the Assistant Treasurer, Senator Arthur Sinodinos AO, and the Minister for Social Services, Hon Kevin Andrews MP.
Her Column for 26 November 2013 briefly outlines the ACNC’s relationship with the two Ministers and notes there will a formal consultation process with the NFP sector on how the Government’s election commitments will be implemented before finalising their plans for the sector.
However the Minister for Social Services, Kevin Andrews, confirmed his plans to abolish the ACNC at the Disability Services CEO conference. He stated that “to benefit civil society as a whole, the Government has committed to abolishing the Australian Charities and Not-for-profits Commission, with repeal legislation to be introduced into Parliament next year”.
Office for the Not-for-Profit Sector disbanded
On 18 September 2013 the Prime Minister, the Hon Tony Abbott MP, was sworn in by the Governor-General. On this day, the Governor General signed the Administrative Arrangements Order and the Social Inclusion Unit and the Office for the Not-for-Profit Sector was disbanded.
- Website: Australian Charities and Not-For-Profits Commission (ACNC)
- Website: Australian Treasury – Not-for-profit Reform
- The Act: Australian Charities and Not-for-profits Commission Act 2012 (Cth)