Don’t Save the Charity Commission

An interesting letter arrived at the CIS office this week. Dr Andrew Leigh MP wrote to inform the Centre that ‘Kevin Andrews and the Coalition Government want to abolish the Australian Charities and Not-for-Profits Commission’ and the Labor Government is trying to ‘save’ it.

Just a few months ago, the Centre published a paper explaining why the ACNC is not the right regulatory model for the not-for-profit sector and should be abolished, but perhaps it is time for a refresher.

In 2012, the Gillard government created the ACNC as a regulator for Australia’s charities, modelled after similar commissions in the UK and New Zealand. From the beginning, the ACNC was a solution in search of a problem. Australians’ trust in the charity sector was high by international standards, charitable donations and volunteering rates remained similarly high, and what little fraud existed was well-covered by existing laws.

The biggest problem facing the sector was an excess of red tape, but a brand new federal regulator with a multi-million-dollar annual budget and unprecedented powers over small churches and charities was not the most obvious solution to that problem.

In his letter, Dr Leigh lauds the ACNC for having ‘improved transparency of charities, critical to maintaining public confidence.’

But public confidence in the not-for-profit sector was already high before the ACNC came into operation and shows no sign of declining. Charities score higher in trust surveys than the ABC, the Reserve Bank, and even federal parliament.

As for transparency, that too has been trending upwards for reasons having nothing to do with the charity commission. The rise of online giving has created a more competitive giving market; and because donors want to know where their charitable dollar is going, charities have begun to provide that information voluntarily.

It is true that the ACNC has not added to charities’ red tape burden much. It has instituted an ‘Annual Information Statement,’ which can be burdensome for small charities with little staff power, and some of the questions on the AIS involve information that charities do not already have to provide for other government reporting requirements.

The real problem is the ACNC’s fundamental structure. Like the UK charities commission, the ACNC was designed to serve the sector as both policeman and advisor. The advisory side of its mission is important because many charities are run by amateurs, part-timers, and volunteers who want help navigating the paperwork involved in registering and incorporating a not-for-profit organisation.

But as the British precedent has demonstrated, a charities commission that is half regulatory and half advisory will end up prioritising one side of its mission at the expense of the other. In the UK, it is the regulatory side that has predominated and the advisory side that has been short-changed.

Minister Kevin Andrews wants to replace the ACNC with a national Centre of Excellence, one that will respect the independence of civil society and better serve the charity sector’s needs. By giving all of its focus to advising the sector and cutting red tape, without the distraction of an additional regulatory mandate, this national body stands a much better chance of success than the flawed experiment of the ACNC ever did.

Helen Andrews is a Policy Analyst at The Centre for Independent Studies.