Funding agreements burdening NFPs

Commonwealth funding agreement obligations are imposing a greater burden on charities than legislative obligations, according to a study by Ernst & Young (EY). 

The report, Research into Commonwealth Regulatory and Reporting Burdens on the Charity Sector, was commissioned by the Australian Charities and Not-for-profits Commission (ACNC).

It found the average Commonwealth burden was $18,000 for small charities – those with revenue less than $250,000 per year - and $235,000 for large charities – those with revenue over $1 million per year.

However, it estimated the average annual burden imposed by ACNC reporting obligations was $150, or 0.1 per cent of total annual burden.

EY examined the experiences of 15 charities drawn from sectors in which there was anecdotal evidence of significant red tape and where research on the burdens imposed was lacking. These included social welfare charities, educational organisations outside of schools and universities and health/aged care entities.

It estimated that the Commonwealth reporting burden on the 15 charities averaged $108,000 for the 2012-13 year, with between $27,000 and $38,000 constituting red tape.

EY defined “red tape” as regulatory and reporting obligations that are excessive, unnecessary or confusing.

The report estimated that 25 to 35 per cent of Commonwealth obligations constituted red tape, with funding agreement obligations being the key source.

A full copy of the report can be found here.