NFP sector to regulate itself

5 Feb BRR Quote ImageNot-for-profits (NFPs) may be encouraged to self-regulate and face US-style assessments and the Australian Charities and Not-for-profits Commission (ACNC) would be abolished.

That was the word from Minister for Social Services Kevin Andrews, when speaking at an Australian Institute of Company Directors’ lunch in Melbourne last week.

Andrews said the Coalition government was considering adopting an evaluation model, possibly similar to that of the US-based NFP group Charity Navigator, which provides free ratings of the finances, transparency and accountability of NFPs.

He noted that this was a voluntary quality-assurance model that worked through moral persuasion rather than government intervention.

He said no decisions had been made yet, but the government was exploring the various options available.

Andrews said he hoped Parliament would pass a law abolishing the ACNC in the next few months. And, as part of his government’s plans to reduce the cost of regulation by at least $1 billion a year, the Department of Social Services would move towards a single comprehensive contract model with each organisation that delivered services on its behalf.

“We’ll simplify the auditing process so that only one financial report will be required annually from each contracting organisation,” said Andrews.

“We’ll work to streamline reporting arrangements, asking organisations to report on a small number of key outcomes through automated processes where possible.”

Andrews added that rather than a cumbersome top-down “government-knows-best approach” the government believed in a bottom-up, grass roots enterprise.

“We believe in adept and adroit private NFP organisations that can adapt to changing circumstances and evolving needs. We believe that no-one knows local communities better than local community members. They have the best grasp on the problems in their back yard and how to best address them.

“This bottom-up principle is the motivating force behind our decision to set up the National Centre for Excellence. The abolition of the ACNC and establishment of the centre will move the focus from the stick to the carrot. We want to transfer the focus from coercive compliance and regulation to collaborative education, training and development.”

Andrews saw the Centre of Excellence as a fount of both innovation and advocacy and said it could play an important role in helping NFP directors address their capacity challenges.

The centre’s ambit would include charities, clubs and associations that focus on social welfare, the arts, environment, health, medical research, animal welfare, education and more. Its mandate would encompass both organisations that received government funding and smaller local community groups that got little or no direct government support.

“A one-size-fits-all attitude can never work because the needs in the tiny rural hamlet of Fitzroy Falls, New South Wales, are vastly different from the needs in inner-urban Fitzroy, Victoria. And the requirements of a human service agency will be light-years away from an arts centre or educational institution,” said Andrews.

“It’s a fundamental tenet of the Coalition worldview that civil society is neither an instrument nor an agent of the state. You’ll always know your business better than we do and that’s why our ultimate aim is to transfer ownership of the centre to the sector itself.”

Andrews also planned to resurrect the Community Business Partnership, initially established under the former Coalition government of John Howard. It would be chaired by the Prime Minister, with Andrews as his deputy, and would bring together leaders from the business and community sectors to promote philanthropic giving in Australia.

“We know Australians are very generous,” he said. “Australian Taxation Office (ATO) data for tax deductible donations tells us that in 2010-11, NSW taxpayers claimed deductions for $860 million, Victorians for $599 million and Queenslanders for nearly $332 million. Altogether Australia donated $2.21 billion in 2010-11 to deductible gift recipients registered with the ATO. And these figures don’t even include donations for which people didn’t claim tax deductions nor raffle tickets and fundraising dinners that aren’t classified as eligible for deduction.

“This a good start. But we can and should do more. Philanthropy is a community-building exercise, not merely at the recipient end of the equation, but at the donor-end as well. The giving of charity promotes comity, unity and civic responsibility. And that doesn’t just mean giving money, but includes the giving of personal time as well.”

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