Put charities commission on backburner

The New Zealand Charity Commission was in operation for half a decade before the NZ government decided it wasn't providing value for money and abolished it. In the UK, the Charity Commission for England and Wales has stuck around for decades despite multiple reports declaring it is not providing value for money – the latest such report was released just this week by the Parliamentary Accounts Committee and deemed the commission 'not fit for purpose.'

Compared with those countries, Australia is lucky. We can abandon our experiment with this failed model of charity regulation after just one year.

The Australian Charities and Not-for-Profits Commission (ACNC) was created by the Gillard government in December 2012 to reduce red tape, enhance public trust in charities, and police fraud and wrongdoing in the sector.

So far, the ACNC has not made significant progress on these goals, and the international record of charities commissions suggests that future success is unlikely. On public trust, for example, it is noteworthy that in early 2013 Australians already rated charities more trustworthy than Federal Parliament, the High Court, or the ABC. More importantly, trust levels in Australia were approximately the same as in England and much higher than in New Zealand, both of which had charities commissions at the time.

On red tape reduction, the ACNC has so far failed to obtain the cooperation of the state governments of NSW and Victoria. Considering the large portion of the charity sector's regulatory burden that state governments represent, no serious effort to reduce red tape can proceed without those governments' cooperation.

Donors must be able to give to charities with confidence. Fortunately, the kind of oversight that gives donors confidence can now be conducted without added layers of red tape.

Wealthy philanthropists, who represent an increasingly important segment of Australia's charitable donation market, usually conduct their own research. They review a charity's finances and operations, and after their donation has been spent, they evaluate what kind of 'social return on investment' the charity was able to achieve.

For small household donors who may not have the means to conduct extensive research on their own behalf, a new resource has emerged: online charity evaluators. These sites compile information about charities – statistical data as well as more holistic information – and then organise this information in a way that is accessible to the average non-specialist who just wants to write a cheque to a good cause.

It is vitally important to preserve the separation between the institutions of civil society and government. Abolishing the ACNC is the first step in preserving charities' independence and returning their regulatory burden to a reasonable level.

Helen Rittelmeyer is a Policy Analyst at The Centre for Independent Studies and author of Independent Charities, Independent Regulators, released this week.