June 2013: Not-for-profit Blog

Complaints about Charities

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The Australian Charities and Not for Profit Commission (ACNC) treads a diplomatic and political tightrope in pursuing the rogues in the charity sector that can give everybody a bad name (one of the catalysts for the Government creating the ACNC), and showing its soft, supportive educative role, which is the principal function supported by the Coalition.   The Coalition strongly opposes the ACNC having a policing function, as it does not believe that there has been sufficient evidence of problems in the sector to justify the ACNC’s powers.

One of the ACNC Assistant Commissioners has quietly announced on the ACNC website, (but not did not provide a media release) that in the five or so months that the ACNC has been operating, it has received 119 complaints or referrals.  Of the 37 which have been investigated further, the largest category was fraud-related (28%).

These complaints have presumably been elicited by the ACNC’s gently- worded whistleblower mechanism, fronted by a section on its website entitled Raise a concern about a charity.  The site identifies that the ACNC will only usually take action if:

  • there is a serious risk to public trust and confidence in the sector, and
  • the allegations relate to a charity’s compliance with requirements of the ACNC Act.

The examples provided of the type of “concerns” include:

  • conducting sham charities
  • funding for terrorist activities
  • illegal and criminal activities
  • harming the people it is supposed to benefit
  • providing benefits to members.

Naturally, serious mismanagement and sums of money disappearing also feature.  It is noted that complaints relating to fundraising are not covered by the ACNC, as this is an area for the States and Territories, even though it is an intrinsic part of most charities’ operations.

Sanctions available to the ACNC under the ACNC Act to address “concerns” include informal assistance and advice, letters, warnings, directing a charity to do something, and as a final resort, suspending or removing a member of a charity’s governing body and revocation of charity registration.


Disability Care (NDIS)

The Gillard Government’s 2013 federal budget delivered the NDIS together with the expected funding boost to get it started and to commit to its future. The 0.5% increase in the Medicare levy will commence from 1 July 2014, and most supporters believe that this is the necessary step to sustainably embed the funding for the future.  The first full year of operation for the scheme will only be in 2019-20 at a cost of $22 billion, but commencing in July 2013, trials will run in the Hunter region in NSW, the Barwon area in Victoria, and in South Australia and Tasmania. Starting July 2014, further trials will commence in the Barkly region of the Northern Territory and the ACT. Queensland, citing current budget constraints, has committed to join the scheme in 2016, leaving only Western Australia, once again resisting any perceived takeover by Canberra.

It is now anticipated that DisabilityCare will assist up to 460,000 people once it is fully operational.


What is a Charity? A definition for the 21st Century.

The Federal Government’s attempt to contain the definition of charity in legislation rather than relying on the common law definition (origins in the 17th century), was introduced into parliament on the 29th of May, Public consultation on Treasury’s draft Bill only closed on May 2nd. The Government hope is that if the Charities Billand the related legislation is passed the new definition will commence 1 January 2014.

The Bill attempts to capture the evolving nature of what the community believes to be a charitable purpose, and clean up an area which has required specific acts of parliament to be passed to enable charities dealing with, for example animals, to be recognised as charities for taxation purposes.  Treasury advises that the draft legislation retains the flexibility for the courts to develop the definition to allow it to remain relevant.

Key features of the legislation as outlined in the Treasury factsheet  require an entity must not be for profit, and all charitable purposes must be for the public benefit. “Charitable purposes” expand the original definitions of relieving poverty, advancing education and advancing religion, to include the following:

  • Advancing health, education, social or public welfare, religion, culture, and the natural environment.
  • Promoting and protecting human rights, preventing or relieving the suffering of animals, and protecting the safety of the general public.

The “public benefit” is also explicitly pinned down in the Bill. For a director of a charity who is not a lawyer, this is a very convoluted area.  Public benefit does not mean a benefit to the public at large, but requires a benefit to a “not negligible section of that section of the public who might benefit”.

This could be a very good time for organisations to sit down with their legal advisors and review the explicit wording of their charters and constitutions, as their future solvency could be at stake.


Housing and Homelessness

Ministers from the States, Territories and the Commonwealth sitting on yet another COAG committee (the Select Council on Housing  and Homelessness) have confirmed their  commitment to agreeing sometime in the future to a National Partnership Agreement on Homelessness, which would see a coordinated approach to tackling homelessness

In a more tangible commitment, the Federal Government committed to further funding the National Rental Affordability Scheme, which allows organisations to compete for funds to build affordable rental housing for low to moderate income earners. This has set a cracking pace with funding being provided for 1000 dwellings to be completed by June 2014, and a further undisclosed large number for completion by 2015-16.

And last but not least, a National Regulatory Scheme will commence for community housing, being rolled out in NSW first in July 2013, with a six months trial and evaluation, with an 18 month transition period to commence 1 January 2014. With an increasing amount of Government public housing being passed to not-for-profits, and the Governmental support being provided to enable leveraging of community housing stock to allow for more community housing development, the regulatory system will provide what is essentially a comprehensive risk  management framework for tax payers money. It will also enable organisations to be registered and to operate in more than one State or Territory after meeting only a single set of registration requirements.

Compliance with Current and Future Child Protection Laws – Embedding a Child Protection Culture. How can this be achieved?

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