Federal not-for-profit sector reform
This page provides details of PilchConnect submissions on the following topics.
If you want to know about the implications of the Federal NFP reform agenda (including the Australian Charities and Not-for-Profits Commission), go to Federal NFP reform package.
Charities Bill and Governance Standards passed
On 27 July 2013, two key pieces of the federal not-for-profit reform agenda were passed:
- the Charities Bill 2013, and
- Governance Standards for registered charities.
The statutory definition of charity means that there will be a codified definition that will be applied by the Australian Charities and Not-for-profits Commission (ACNC) when assessing whether or not an organisation is a charity, removing the need to rely on 400 years of case law to determine charitable status. The definition is anticipated to come into effect in January 2014. While the ACNC will assess whether or not an organisation is a charity, access to charitable tax concession will still be determined by the Australian Taxation Office.
The Governance Standards for registered charities also made their way through Parliament (after a motion to disallow was lifted). These Governance Standards come into effect on 1 July 2013, and provide a governance framework for charities registered with the ACNC. In this period of transition, we encourage all registered charities to continue to take a "best practice" approach to governance, which will ensure that they meet the requirements of both the Governance Standards, and any other laws that apply to them.
2013 Submission on proposed statutory definition of charity
PilchConnect made a submission on the proposed statutory definition of charity.
PilchConnect is an advocate for a clear statutory definition of charity and we are pleased that the Government has taken steps towards this outcome.
2014 Submission on Draft Annual Information Statement for registered charities
PilchConnect recently provided comments to the Australian Charities and Not-for-profit Commission (ACNC) on the Draft 2014 Annual Information Statement (AIS) for registered charities. The consultation paper released by the ACNC sought feedback on information that groups will be required to provide to the ACNC in the 2014 AIS.
PilchConnect provided brief responses to the questions posed by the ACNC, including the following key points:
- the draft question regarding related party transactions is unlikely to be an effective or useful tool for identifying the activities of organisations that provide private benefits to individual members
- the Consultation Paper does not adequately explain the need for charities to separately disclose information specific to their business activities in the draft AIS. PilchConnect has some concerns about the need for (and potential difficulties with) asking about a charity's business activities, and
- PilchConnect supports requiring all registered charities to undertake some level of financial reporting. Whilst we acknowledge that many small charities may not have had reporting obligations before, if our suggested changes are adopted, the AIS reporting for small charities will not be overly onerous.
PilchConnect considers that where the AIS requests exceed existing reporting requirements for charities, a clear and compelling justification for those requests should be articulated by the ACNC.
Note that from 30 June 2013, all registered charities need to submit an AIS to the ACNC within six months of the end of their reporting period, but only non-financial information will be required in the 2013 AIS. From 2014 onwards, registered charities will be required to provide financial and non-financial information to the ACNC.
PilchConnect's submission can be found below.
2013 Regulatory impact assessment of potential duplication of governance and reporting standards for charities
In February 2013, PilchConnect made a submission to the Council of Australian Governments on the regulatory impact assessment of potential duplication of governance and reporting standards for charities. This is in response to draft governance standards proposed to apply to charities registered with the Australian Charities and Not-for-profits Commission (ACNC). The proposed standards originated from a consultation paper released by the Australian Treasury in late 2012.
PilchConnect's submission can be found below.
2013 Submission on proposed governance standards for registered charities
In February 2013, PilchConnect made a submission to Treasury in response to draft governance standards proposed to apply to charities registered with the Australian Charities and Not-for-profits Commission (ACNC). The proposed standards originated from a consultation paper released by the Australian Treasury in late 2012.
In acknowledging that the draft standards are a significant improvement on previous proposals, PilchConnect makes a number of recommendations aimed at clarifying obligations for charities, in particular, the small to medium groups that have limited resources to comply with additional governance obligations.
PilchConnect's submission can be found below.
2012 Submission on the Exposure Draft of the Human Rights and Anti-Discrimination Bill 2012 (PILCH)
In December 2012, PILCH made a submission to the Senate Legal and Constitutional Affairs Committee on the Exposure Draft of the Human Rights and Anti-Discrimination Bill 2012.
PILCH commends the Australian Government on the Exposure Draft Bill and recommends that the Committee support its passage by Parliament. The PILCH submission makes recommendations to improve the Bill as currently drafted, including a number of recommendations relevant to the not-for-profit sector. These recommendations particularly focus on the application of anti-discrimination laws to volunteers and clubs and member-based organisations.
This submission is informed by PILCH’s expertise and experience working with and for Victoria’s not-for-profit organisations.
2012 Submission to the Senate Standing Committee on Community Affairs: Enquiry into the Australian Charities and Not-for-profits Commission and Special Conditions for Tax Concessions Bills
After being tabled in the House of Representatives on Thursday 23 August, the Australian Charities and Not for-profits Commission Bill 2012 (ACNC Bill), and the related Not-for-profits Commission (Consequential and Transitional) Bill 2012, together with the Tax Laws Amendment (Special Conditions for Not‐for‐profit Concessions) Bill 2012 were referred to the Senate Standing Committee on Community Affairs and the Parliamentary Joint Committee on Corporations and Financial Services. The Committees invited public submissions addressing the Bills, and are expected to report on 12 September 2012.
PilchConnect made a submission to the Senate Standing Committee on Community Affairs, making the following key points:
- We do not support the inclusion of the Tax Laws Amendment (Special Conditions for Not‐for‐profit Concessions) Bill 2012 in this current consultation, and continue to have reservations about the policy intent and impact these proposals will have on the NFP sector. Appendix A of our submission outlines our concerns in further detail.
- We support the passage of the Australian Charities and Not‐for‐profits Commission Bill 2012, however we note ongoing concerns with some aspects of the legislative approach. Appendix B of our submission outlines these concerns in further detail.
- We have not had an opportunity to properly scrutinise the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill and therefore cannot provide substantive comments.
PilchConnect's submission is available, below.
2012 Submission to the House Standing Committee on Economics: Enquiry into the Australian Charities and Not-for-Profits Commission Exposure Draft Bills
On 5 July 2012, the Assistant Treasurer requested that the House of Representatives Standing Committee on Economics (the Committee) enquire into and report on the Australian Charities and Not-for-profits Commission (ACNC) Bill and associated Bill and Explanatory Materials, over the Winter Parliamentary break. The Committee invited public submissions addressing the Bills.
PilchConnect's submission reiterates our broad support for the Federal Government's commitment to establish the ACNC as an independent national regulator the sector. In this context we identify five key concerns with the Bill, particularly as it would impact on small-to-medium charities, that are addressed in our submission. They are the:
- absence of governance and external conduct standards;
- proportionality of sanctions for small charities;
- concerns about procedural fairness and natural justice;
- real or perceived independence of the ACNC; and
- overall drafting approach.
PilchConnect's submission is made with the view to the ACNC opening its doors on 1 October 2024 with a legislative framework that strikes the right balance between monitoring compliance, supporting and educating organsiations, and promoting public trust and confidence in the charitable sector.
2012 Treasury Consultation Paper - Revised Exposure Draft regarding special conditions for tax concession entities (including the ‘in Australia’ conditions).
In July 2011, the Federal Government released for consultation an Exposure Draft restating the ‘in Australia' requirement for tax concession entities. The consultation process revealed a number of concerns from the sector. Responding to these concerns, in April 2012 the Assistant Treasurer released for public consultation a revised Exposure Draft of legislation that will restate and standardise the special conditions for tax concession entities (including the ‘in Australia' conditions). The proposed legislation would introduce requirements for entities to operate ‘in Australia' for the purposes of tax concessions, and introduce a standard definition of ‘not-for-profit'.
Whilst PilchConnect acknowledges that a number of our original concerns (as set out in our previous submission, available here) have been addressed by the Revised Exposure Draft, we remain concerned about the impact of the proposed measures on small/medium not-for-profits. In particular, the proposed test for the ‘in Australia' requirement is unclear. The additional requirements on DGRs to pursue their purposes solely in Australia is unnecessarily restrictive and the effect of failing to comply with the special condition particularly harsh.
PilchConnect endorsed the recommendations put forward by Melbourne University in its submission, and urged the Treasury to have due regard to the matters raised in this submission.
2012 The Australian Charities and Not-for-profits Commission - Implementation design
In December 2011, the ACNC Implementation Taskforce released a Discussion Paper regarding the functions and operations of the ACNC. The Discussion Paper and PilchConnect's response, consider the functions and operations of the new ACNC. In particular, registration and reporting processes (and transitional issues), approach to financial reporting and use of online tools, what/how information should be available via the ACNC's information portal, and guiding principles and scope of the ACNC's educational role.
2012 The Australian Charities and Not-for-profits Commission Bill - Exposure draft
PilchConnect's submission focuses on points of particular concern for small to medium not-for-profits, highlighted in parts through case studies. It endorses the detailed submission of the University of Melbourne Law School's Not-for-Profit Project.
On 9 December 2011, the Assistant Treasurer released for public consultation an exposure draft of legislation (the Bill) to establish the Australian Charities and Not-for-profits Commission (ACNC).
PilchConnect's submission focuses on several points of particular concern for small to medium not-for-profits, highlighted in parts through case studies. It endorses the detailed submission prepared by the University of Melbourne Law School's Not-for-Profit Project.
In light of our broad support for the Commonwealth Government's commitment to establish the ACNC, our submission seeks amendments to the Bill which we believe will better achieve the creation of a regulator that is independent, has a clearly defined ambit and is established on clear constitutional grounds. In our view the regulator requires a clearer hierarchy of objects and a clearer range of functions. It should also have the power to share and receive information with and from other regulators where appropriate.
2012 Treasury Consultation Paper - Review of not-for-profit governance arrangements
On 9 December 2011, the Assistant Treasurer also released a consultation paper on governance arrangements for the not-for-profit (NFP) sector.
PilchConnect's submission outlines a range of serious and fundamental concerns with the suggestions raised in the governance consultation paper and, in light of them, recommends that any changes to NFP governance arrangements be deferred. Much more work is required before reforms should be introduced. Further consultation with both the sector and State and Territory governments is also needed. The aim should be for any agreed reforms such as uniform core legislative duties) to be ready for commencement as part of a more cohesive package of changes on 1 July 2013.
2011 Treasury Consultation Paper - Charity definition
In our view, it should be possible for a non-lawyer to work out from reading the legislation if the NFP they are involved with is clearly eligible for charity status.
On 28 October 2011, the Assistant Treasurer released a Consultation Paper outlining the background to a statutory definition of charity, including previous recommendations and inquiries, as well as developments that have occurred since exposure draft of the Charities Bill 2003 was released (but not proceeded with).
PilchConnect's submission emphasised several points of particular concern for small to medium not-for-profit's (NFPs) and endorses the detailed submission prepared by the University of Melbourne Law School's Not-for-Profit Project.
In our view, it should be possible for a non-lawyer to work out from reading the legislation if the NFP they are involved with is clearly eligible for charity status. While specialist charity law advice will always be necessary for those at the margins of the definitions, the need to pay for legal assistance for those which are clearly eligible diverts scarce financial resources away from NFP service delivery. For many small groups, the lack of clarity also means they do not obtain the concessions they are eligible for.
2011 Treasury Consultation Paper - Scoping study for a national not-for-profit regulator
2011 Treasury Consultation Paper exposure draft - 'In Australia' special conditions for tax concession entities
2009 - 2010 Productivity Commission study into the contribution of NFPs
On 17 March 2009, the Federal Government requested that the Productivity Commission conduct a study into the contribution of the not-for-profit sector to Australian society. The Commission released a draft report on 14 October 2024 and its final report on 11 February, 2010. PilchConnect made detailed submissions on initial Discussion Paper and on the Draft Report.
The study was to inform the Government on what it can do to improve the measurement of the NFP sector's contribution, and remove unnecessary obstacles (ie. red tape) to maximise the sector's contribution. It was a major undertaking with 318 submissions received.
The main recommendations in this issue are:
- the establishment of a national ‘Registrar for Community and Charitable Purpose Organisations' to regulate national not-for-profit entities
- development of nationally harmonised fundraising laws and a national fundraising register
adoption of a statutory definition of ‘charitable purposes'
- provision of a 'one stop shop' for tax endorsement of not-for-profits
- implementation of a single reporting portal for not-for-profits with the view to 'report once, use often', and
- establishment of an ‘Office for Not-For-Profit Sector Engagement' to drive the Commission's recommendations.
The Commission's final recommendations set out a road map for major reform of the regulatory environment for the not-for-profit sector.
2009 Commonwealth Senate Inquiry - Access to Justice
2008 Commonwealth Senate - Henry Tax Inquiry
2008 Commonwealth Senate - Disclosure regimes inquiry
2008 Commonwealth Parliament Senate (Economics Commitee) Inquiry into disclosure regimes for charities and not-for-profit organisations.
PilchConnect's submission emphasised the need for better underpinning for the not-for-profit (NFP) sector including:
- an independent national regulator for the sector
- improved NFP-specific legal structure(s) that allow the benefits of incorporation with minimum expense but also flexibility to met the needs of the diverse range of organisations within the sector, and
- uniform fundraising and disclosure requirements based on a sliding scale, where disclosure obligations are proportionate to NFP size.
The submission draws together the recommendations and findings of numerous government, independent and academic reports with PILCH's experience of 14 plus years of brokering pro bono legal assistance for NFPs. Sue Woodward, PilchConnect Manager, was invited to attend an expert panel hearing of the Senate Committee. The Inquiry has now completed its final report with many of the PilchConnect recommendations being adopted (see below for links to the PilchConnect media release, comparative table and the final Senate Committee report.)
On 22 June 2024 the Government tabled its response to the inquiry. The Government was cautious in its response, deferring the vast majority of the Senate Committee's recommendations until the completion of the ongoing Henry Review and Productivity Commission study - each with relevance to the NFP sector and to which PilchConnect also made submissions.