Not-For-Profit Sector Reform

The not-for-profit sector operates in an unnecessarily complex reporting and regulatory environment and has endured five major reviews over the past 16 years. The Australian Government is committed to delivering a reform package that will strengthen the not-for-profit sector and improve regulatory arrangements to better enable not-for-profits to focus less on paper work and more on innovation and building on current strengths.

To implement the reforms in the most effective and holistic way, the Government is focusing reform around three broad categories. These are:

• Establishing a national ‘one-stop-shop’ regulator for the not-for-profit sector (the Australian Charities and Not-for-profits Commission) to remove the complex regulatory arrangements currently in place and streamline reporting arrangements;
• greater harmonisation and simplification between Commonwealth, State and Territory Governments on not-for-profit issues, including regulation; and
• reducing red-tape for government funded not-for-profit organisations, including through streamlining contracting and funding arrangements.

To provide advice on the reform agenda, the Not-for-Profit Sector Reform Council was appointed in December 2010 as is chaired by Linda Lavarch from the Australian Centre of Philanthropic and Nonprofit Studies.

Reforms will also boost the not-for-profit sector’s governance, transparency and accountability. Increasing the public’s awareness and confidence in how the not-for-profit sector operates and how organisations manage funding and donations will improve sustainability of the sector and build greater public engagement through increased charitable giving, increased philanthropy and greater levels of volunteerism.

Reform of the not-for-profit sector is an important component of the social inclusion agenda and complements the Government’s wider social policy reform in areas such as health, disability services, homelessness, workforce participation and education.

To maximise the not-for-profit sector’s contribution to social inclusion, employment and economic growth the Productivity Commission was asked to undertake a study on the contribution of the not-for-profit sector. The final report, released in 2010 titled the Contribution of the Not-for-Profit Sector, provided recommendations which focus on measuring the sector’s contributions and removing obstacles to maximise contributions to society.

The Government supports in-principle or in-part, all but one of the PC report’s recommendations relating to the Commonwealth and is using them as a reference and guide for the not-for-profit reform agenda.

The Government will deliver better regulation by reducing duplication and simplifying processes that are poorly designed and overly demanding. The Government will strive for a national approach on matters affecting the sector by working with the states and territories on a statutory definition of ‘charity’ and harmonising regulation such as fundraising.

Specific reform activities underway include:

• Establishing a not-for-profit regulator
• Introducing a statutory definition of ‘charity’
• Reforms to taxation and regulatory policy settings
• Reducing red tape