According to the Centre for Independent Studies (CIS), the Australian Charities and Not-for-profits Commission (ACNC) set up by the Federal Government in 2012 is not achieving its main objectives.

“The charities commission has failed as a model of regulation, and Australia would be better off following New Zealand’s lead and scrapping the charities commission altogether,” says Helen Rittelmeyer, author of the Independent Charities, Independent Regulators report.

“The ACNC was established to enhance public trust in the not-for-profit (NFP) sector, but public trust in charities was already high, and is unlikely to increase any further if the international record of charities commissions is any guide.”

Rittelmeyer is critical of the additional layer of reporting that the Annual Information Statement has added, and says that the types of fraud predominant in the Australian NFP sector are “ill-suited to the oversight a charities commission provides”. Instead, the CIS says Australia should embrace new forms of oversight that would allow the NFP sector to maintain its independence.

“Australia is a generous country, with nearly 70 per cent of us giving, yet by adding to the regulatory burden and taking time away from charities’ primary purposes, the ACNC risks discouraging charitable giving, particularly among high-wealth donors,” says Rittelmeyer.

Following the release of the CIS’ report, Philanthropy Australia re-affirmed its continued support for independent charities regulation in Australia.

“The ACNC has only existed for just over a year. So far the progress is promising and we want it to be given the opportunity to realise its full potential,” says Louise Walsh, CEO of Philanthropy Australia.

Philanthropy Australia says it is particularly concerned about current reform proposals, which involve returning responsibility for the registration and regulation of charities to the Australian Taxation Office (ATO). Philanthropy Australia says this creates a conflict of interest within the ATO given that it would both register charities and administer charitable tax concessions.

The Community and Public Sector Union (CPSU) has condemned the decision to wind up the ACNC as “short-sighted” and a sign the Federal Government is intent on removing checks and balances.

CPSU Deputy National President Alistair Waters says “[Federal Social Services Minister] Kevin Andrews calls it a war on ‘red tape’. We say they are removing crucial oversight that ensures the public’s contributions to charities are handled in the correct and proper manner.”

Waters cites the Commission’s report on its first year of operation as evidence of the ongoing need for its role. In the past year, the Commission received more than 200 complaints about charities: there are currently 55 cases open, eight of which involve investigations of a serious nature and some of which have been referred to the police.

“The role of policing the charity and NFP sector is best done by public servants who are independent and accountable. Australians are generous people but they rightly want to know that their money is going to the right places. The Commission plays a vital role in ensuring that is the case,” says Mr Waters.

The ACNC was established following a 2010 Productivity Commission assessment of the contribution of Australia’s NFP organisations that suggested a need for a national regulator.

Dr Cassandra Goldie, Australian Council of Social Service (ACOSS) CEO, says that ACOSS is “unclear” why the Federal Government plans to replace the national regulator with a United States-based model that evaluates charities based on league tables when the Productivity Commission did not propose this.

“A simple league rating system which fails to tell the full story could be the beginning of the end for many great Australian charities. Indeed, in the US, the call is now to have a proper national regulator, which we already have,” says Goldie.

“To support this vital sector [charities and NFPs], we need to develop a greater understanding of the diversity of our charities and the significant value they produce, much of which comes from small, locally-based and supported community organisations. This is particularly important for funders, including governments and philanthropists, to have real choice about who they want to support,” she says.