Five year review of the ACNC

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Five year review of the ACNC

Last year the ACNC celebrated its five year anniversary. After surviving a rocky start and calls for its abolition in 2014, the ACNC has gone on to become a trusted regulator in the charity and not-for-profit sector.

The legislation that established the ACNC in 2012 included a requirement that the legislation be reviewed after five years. Late last year the Terms of Reference for the review were released, clarifying that the review would focus on the following issues:

  1. the relevance of the objects of the ACNC legislation;
  2. the effectiveness of the regulatory framework established by the legislation;
  3. whether the powers and functions of the Commissioner are sufficient; and
  4. whether any amendments are required to the legislation, including in relation to the Commissioner’s powers.

The ACNC’s wish list

The ACNC has provided a submission to the review which includes some 40 recommendations, ranging from recommendations to amend the objects of the legislation, create further powers for the Commissioner and to fine tune the legislation to address gaps, inconsistencies and contradictions that currently create uncertainty for the regulator.

We discuss three of the more interesting recommendations below.

  1. The ACNC has proposed that two new objects be added to the ACNC Act:
    • “To promote the effective use of the resources of not-for-profit entities; and
    • To enhance the accountability of not-for-profit entities to donors, beneficiaries and the public.”

The Commissioner has explained that the new objects are not intended to create restrictions or impose limitations on charities, but to enable the ACNC to analyse charity performance and educate the public about the effectiveness and outcomes of registered charities.[1]

Many commentators have, however, expressed concerns about the difficulty of pinning down an objective standard of effectiveness and the appropriateness of the ACNC promoting this in a sector that otherwise celebrates a diversity of missions and methods.

  1. The ACNC recommends that the Commissioner be given the discretion to:
    • extract information from a charity’s AIS, including financial information, and display it on the face of the register; and
    • display information on the register in a graphical format to make it more accessible to users.

Few charities would argue that the ACNC should not make reported information more accessible to donors. However it is unclear how the discretion would be applied in practice, and whether it would be used to negatively highlight charities’ spending on certain lawful activities, and whether it would impact the current uniformity of the register.

  1. The ACNC has requested that the secrecy provisions be relaxed to permit it to publish:
    • reasons for approving or rejecting a charity’s application for registration;
    • reasons for revoking a charity’s registration; and
    • information about investigations and enforcement action taken by the ACNC, when it is in the public interest to do so.

These amendments would enhance transparency in the ACNC’s regulation of the sector, creating precedents for other charities and keeping the public abreast of the ACNC’s enforcement activities.

Contribute to the review

The review is a good opportunity for charities to provide feedback about the functioning of the ACNC and to highlight any areas in which it could better meet its objects of (a) maintaining trust and confidence in the NFP sector, (b) supporting and sustaining the sector, and (c) promoting the reduction of unnecessary red tape.

The terms of reference say that the review should be informed by public submissions, by international experience, through round table discussions and by consultation. Submissions are open until 28 February.

[1] Commissioner’s Column, 25 January 2018, http://www.acnc.gov.au/ACNC/Comms/Com_Col/CC20180125.aspx

Alice Husband

Alice brings to CRH Law a passion for working with the not-for-profit sector, especially in relation to employment law and the complex legal and human issues that arise during the growth of successful community business organisations.