The Australian Charities and Not-for-profits Commission (ACNC) is the national regulator of charities and not-for-profits. It is responsible for ensuring public trust and confidence in the charities and not-for-profits (NFP) sector. This includes maintaining accountability and transparency, supporting and sustaining a strong, independent and innovative sector, and promoting the reduction of unnecessary regulatory obligations.

After five years of operation, the Australian Charities and Not-for-profits Commission Act 2012 must be reviewed by the government.

On 20 December 2017 the Government released the terms of reference for the review and announced appointments to the review panel: Mr Patrick McClure AO chaired the panel, accompanied by Ms Su McCluskey, Dr Matthew Turnour and Mr Greg Hammond OAM.

The review considered forty recommendations submitted by interested parties. Attention was given to matters such as the:

• Constitutional powers and limitations of the ACNC;
• inclusion of objects promoting the effective use of resources by NFPs and encouraging their accountability to their “donors, beneficiaries and the public” within s 15(5) of the ACNC Act;
• ACNC’s ability and scope to collect information about not-for-profits and their “responsible persons”;
• ACNC’s discretion to publish, or even require not-for-profits to publish, this information;
• tightening of conditions for charity members to be classified as “responsible persons”;
• transparency of decision-making; and
• rights and obligations of ACNC auditors.

Submissions by interested parties

Written submissions by all interested parties to the terms of reference were also encouraged. For example, the Law Council of Australia submitted its own seventeen-page review of the ACNC Legislation, accessible here.

The ACNC also filed its own review, found here. A potentially contentious finding of the ACNC’s review was that “there may be benefit” in the ACNC extending its objects to include determining whether not-for-profits were using their resources effectively. The review acknowledged that the ACNC would require additional powers, functions and resources for this change. Could this be regulatory overreach?

Furthermore, the ACNC suggested that the constraints of secrecy provisions provided by Division 150 of the ACNC Act weaken their operations “as an effective regulator”. Limitations cited and addressed by the review included:

• the ACNC’s inability to publish reasons for registration decisions (accepting or revoking); and
• the ACNC’s inability to publicly comment on compliance investigations of certain charities.

The ACNC’s review suggested that reducing the restrictions of the secrecy provisions could encourage public understanding of and trust in the ACNC as a regulator. It also suggested that there may be a “broader public interest” or “precedential value” in publicising decisions.

What now?

The final review was given to the government 31 May 2018 and Assistant Minister to the Treasurer, Michael Sukkar, will return it after consultation with the government.

Further information can be found on the Australian Government Treasury consultation website.

If you have any questions, contact Peter McNamara today.