National regulation for charities proposed

Proposed recommendations would reduce red tape for charities, but stop short of establishing a single regulator.
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01.Charity changes proposed

A major research report by the Productivity Commission has recommended far-reaching changes to the regulation of Australia's 600,000 charities and not-for-profit organisations, including nationally consistent rules for fundraisers and a single registrar to consolidate Commonwealth regulation.

At present, charities are subject to different fundraising regulations in each state and territory, as well as federal legislation. The report also recommends greater transparency around financial reporting by charities. While crude comparisons of charities’ administration and fundraising cost ratios can mislead, inconsistent reporting requirements make it difficult for consumers to assess the effectiveness of their donations, and to compare charities on a like-for-like basis.

Referencing a 2008 charities report and member survey by CHOICE, the Commission recommends consistent public reporting of charities' activities. The report states that ”the variability and inconsistency in the way charities communicate key information to donors … if unaddressed, could potentially erode public confidence and trust in fundraising and hence the public's willingness to participate in or donate to fundraising activities."

The Commission believes new national regulation of not-for-profits, standardised financial reporting and effective self-regulation among fundraisers should deliver comparability across the sector that has otherwise been lacking. It recommends a process of "harmonisation" of fundraising regulation rather than reform and replacement with national regulation.

However, some of the recommendations have not met with universal approval. Dr Ted Flack, St Vincent de Paul Society Queensland’s manager of communications and fundraising, points out that the proposed national regulator will not replace existing state and territory regulation, but rather add an additional regulator.

The report's recommendations don't go so far as to recommend the establishment of a single specialist charity regulator, similar to the New Zealand and the UK, despite the unique needs of a sector that contributes $43 billion – 4.3% of GDP – to Australia's economy.

For more information on the recommendations, download the Productivity Commission report.


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