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ACNC review calls for national scheme to cut “unnecessary red tape”

The charity sector has welcomed the Treasury’s review into the governance and policies of the ACNC

The charity sector has welcomed the Treasury’s review into the conduct and policies of the Australian Charities and Not-for-profits Commission (ACNC).

The report made 30 recommendations aimed at implementing a national scheme and reforming fundraising to cut “unnecessary red tape” and enhance accountability. The panel also recommended secrecy provisions be altered and reporting changed.

The panel found that common themes of the report was the need for a national scheme which requires the referral of powers from the state to the Commonwealth.

ACNC Commissioner, Gary Johns, welcomed the recommendations and concerns raised by the sector, adding: “The report provides a balanced analysis of the potential changes that could provide additional support for our regulatory framework.”

Currently, Australia has eight separate jurisdictions with regulatory regimes that impact on charities and NFPs, on top of the Commonwealth’s regulatory requirements and through the ACNC Act and the tax systems.

“The results in inconsistency, complexity and inefficiency for charities,” the report read.

“The Panel is strongly of the view that a national’s scheme is the best option for the sector going forward, especially in areas such as governance, fundraising and regulation. In the absence of a national scheme, the sector will continue to be subject to an unacceptable level of unnecessary red tape.”

The panel recommended an overhaul of the current revenue thresholds and minimum reporting requirements for registered entities, including thresholds to be increased to less than $1 million for small charities, from $1 million to less than $5 million for medium charities and $5 million or more for larger charities.

An advisory board was also suggested, which would be appointed by the Minister and consist of eight members with expertise in the sector, law, taxation or accounting. It would then provide advice and recommendations, but would not govern.

“I note that there are many similarities between the ACNC’s submission to the review, and the final recommendations of the review panel – particularly in relation to the current secrecy provisions and changes to the ACNC regulations,” Johns said.

As it stands, the ACNC are prohibited from commenting on investigations, a move that has caused issues in the media with the ACNC accused of not abiding by regulations. The panel suggested that this secrecy provision be lifted at the ACNC’s discretion.

“The secrecy provisions of the ACNC Act are overly restrictive and should be amended to allow the Commissioner to disclose information in a wider range of circumstances, including to protect public trust and confidence in the sector,” the report read.

“The ACNC’s inability to make any comment in respect of whether it is (or is not) undertaking an investigation in respect of a complaint against a registered entity is harmful to the perception of the ACNC as an effective regulator.”

The panel suggested that the Australian Consumer Law is amended so that it clarifies its application to the sector and that a mandatory Code of Conduct is put into place.

Responsibility for the aspects of regulation of entities should also be transferred from the Australian Securities and Investments Commission to the ACNC, except when it is a matter of a criminal offence, allowing for more governance.

“Australia needs a vibrant and innovative charities and not-for-profits sector,” it read. “The Panel was conscious of the need to find a balance between supporting the sector, reducing red tape, enhancing accountability and addressing misconduct.”

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