Members

Facing up to uncertainty

David Crosbie October 22, 2014

4 min read

Government funding

Many of the government funding programs that support charities and not-for-profits (NFPs) are currently on hold pending review – both internal review within departments such as the Department of Social Services, as well as the broader economic review that is being undertaken as part of the budget process and the Commission of Audit.

The range of programs and organisations that have been affected by this uncertainty is very broad, and many Community Council for Australia (CCA) members have approached us saying they are unsure of how to proceed with their property leases, employment contracts – even their IT support contracts – when they are only guaranteed funding until June.

My understanding is that the Federal Government is looking to reduce red tape and compliance costs, and to have less of a direct role with charities and NFPs by extending as many of these programs as possible to five-year contracts. I believe that some of the delay in ascertaining the future of these programs has been caused by reviewing how this will be done, and the implications in terms of costs and what programs can or cannot operate on this basis.

In my discussion with government about this issue, I’ve suggested that there needs to be a short-term solution to ensure greater certainty for the sector while planning and reviewing is underway. I believe that solution is for the Government to agree to roll over all current funding to charities and NFPs for a further six-month period. This, at least, will allow organisations to plan their staffing, infrastructure and capital to the end of the year, and will also allow the government time to fully consider and plan the move to five-year program funding.

Like most of the people in the sector, CCA supports the five-year funding model; we believe it would be a real benefit, and are prepared to wait for it to be implemented. However, the current level of uncertainty surrounding its development is unacceptable.

The future of the ACNC

Although the Government has repeatedly stated that it is going to dismantle the Australian Charities and Not-for-profits Commission (ACNC), the sector has still not been informed on how that will happen or what will be instated in its place.

We are not sure who will be determining what organisations qualify as a charity. We are not sure whether the national register will continue. We are not sure who will be enforcing charity compliance or providing information to charities about their obligations and best practice. Nothing has been announced beyond the fact that the ACNC will no longer exist.

Senate Estimates questions and answers indicate that the regulatory function of the ACNC will be returned to the Australian Taxation Office (ATO); from CCA’s perspective, that would be a retrograde step and would not enhance the capacity of the sector – or civil society more broadly – to be able to operate efficiently and effectively as charities and NFPs.

The repeal of the definition of charity

Another uncertainty in the regulatory environment is the Government’s indication that it intends to repeal the definition of charity that came into force on 1 January 2014.

The new definition received wide support from across the whole sector – even more than the ACNC. This important piece of legislation provides a clean and clear definition of what a contemporary charity is, which is important for charities who cannot afford legal advice. It addressed issues that had not previously been formally listed in any legislation, such as allowing indigenous families to be treated as a charity and what is really meant – in contemporary terms – by ‘providing care’ to people. The definition also enabled charitable organisations to engage in advocacy, and we have had indications that this is the main reason behind the Government’s current intention to repeal it. The current government opposed the definition in opposition. While they support advocacy and while they support charities, they do not support the two in one entity.

It is unclear how the repeal would be executed, as the enforcement of the definition has resulted in changes to legislation that could result in a number of serious ramifications should they be reversed. For example, some organisations that are currently considered charities may no longer be considered charities, and vice versa.

If the definition was repealed, the sector would legally return to relying on court precedence and court law. This becomes problematic on a number of levels, the main issue being that the Government will be able to interpret legal cases however they see fit, with the sector’s only recourse being to take them to the High Court – an unappealing scenario for most charities.

If the repeal is to go ahead, it is essential that in making the necessary legislative changes, we do not make the situation worse for charities and NFPs.

Views fall on deaf ears

Given the huge amount of support shown for both the ACNC and the formal definition of a charity, it is difficult to comprehend the Government’s intentions.

A majority of the sector wants to keep the ACNC; surveys have indicated that less than 6 per cent of the sector wants to go back to being regulated under the ATO, so the Government would effectively be going against over 90 per cent of the sector in making the policy move to dismantle the Commission. Most people in the sector have also indicated that they want to keep the clear definition of charity that was established this year, and do not see a need to change it again. Despite this, the Government intends to move ahead with what it feels is important.

The Government has actively engaged the sector and listened to its opinions on these matters, but it has so far been dismissive of the sector’s views. I’m not sure on what basis a government that says it is committed to listening to civil society and responding to it chooses to ignore the policy positions that civil society supports.

Positives on the horizon

Amongst these issues, there are still some positive developments that the sector can look forward to in the near future. I believe that the move towards five-year contracting and the establishment of the Community Business Partnership is very positive. I also think that the creation of a Centre for Excellence could be very helpful for NFPs, provided its establishment is done with sector engagement.

There are certainly some positive things on the horizon, but there are very few – if any – details on how any of those things will operate, so there is uncertainty surrounding the positives as well.

The current situation highlights the need for the NFP sector to be taken more seriously, to become more active as advocates, and to support advocacy across the sector. This includes participating in forums, becoming members of influential bodies and supporting sector publications.

We need to collectively push the dialogue about the sector up the agenda.