PilchConnect has welcomed the Federal Government’s 2011 Budget announcement that an independent regulator will be established for Australia's not-for-profit sector in 2012.

The Budget, released on 10 May 2011, provides for $53.6 million over four years to fund the establishment of the Australian Charities and Not-for-profits Commission (ACNC). Numerous inquiries and reviews have highlighted the need for an independent regulator, including a 2010 Productivity Commission Report and a 2008 Senate Inquiry into regulation of the sector.

PilchConnect has been advocating for the establishment of an independent regulator since our official launch in 2008 as part of our policy and law reform campaign work. While there are many details on the ACNC that are still unknown, a summary of the announcements to date reveals the following key points:

The ACNC is set to commence operations from 1 July 2012, with an implementation taskforce to be formed by 1 July 2024 to prepare for the regulator. An advisory board assisting the ACNC will be chaired by Mr Robert Fitzgerald AM.
An Australian Charities and Not-for-Profits Commissioner will be appointed to drive the reforms and guide the ACNC through its implementation.
The ACNC will be a fully independent statutory authority, reporting directly to Parliament via the Assistant Treasurer.
The ACNC will be initially responsible for determining charitable, public benevolent institution and other NFP status for all Commonwealth purposes.

The ACNC will also act as an education and support resource to the sector and implement a report-once use-often general reporting framework.

There are a number of important details still to be announced, and it is difficult to predict with any certainty what lies ahead for the ACNC. What is clear, however, is that Australia's not-for-profit sector is entering an exciting time, with the next few years providing a real opportunity for positive reform to improve the regulatory landscape for community organisations.

Towards a statutory definition of 'charity'

In addition to the abovementioned announcement on the establishment of the Australian Charities and Not-for-profits Commission (ACNC), the Federal Government has also announced its intention to introduce a statutory definition of 'charity' to Australian law.

Currently, in order to be endorsed as a charity, an organisation must demonstrate that it is established and maintained for 'charitable purposes'. The definition of charitable purposes is based on over 400 years of common (judge-made) law. According to Assistant Treasurer Bill Shorten, this has resulted in a definition that is "complex, inconsistent between Australian jurisdictions, outdated and creates considerable uncertainty for the sector."

The new definition will be based on the 2001 Inquiry into the Definition of Charities and Related Organisations, and will take into account the High Court's recent decision in Aid/Watch Incorporation v Commissioner of Taxation, which extended the definition of charity to include further types of advocacy-based groups.

PilchConnect believes that the adoption of an explicit definition of charity will provide much-needed consistency and clarify tax concession eligibility for the sector.

The Government will provide the new ACNC with $2.9 million over four years to develop new guidance for the sector, re-assess the charitable status of entities under the new definition and implement other necessary changes.

For further information on these, and other Federal Government initiatives, visit the website of the Office for the Not-for-Profit Sector below.