The long awaited and much anticipated legislative review into the Australian Charities and Not-For-Profits Commission has finally been released! This makes for very good reading, and overall the conclusions and recommendations appear sensible.
The review makes 30 recommendations. The following are worth particular mention:
4. The ACNC Act be amended to replace the term ‘responsible entity’ with ‘responsible person’.
12. Registered entities be required to report based on size, determined on rolling three-year revenue, with thresholds of less than $1 million for a small entity, from $1 million to less than $5 million for a medium entity and $5 million or more for a large entity.
13. Minimum reporting requirements for small registered entities be amended to allow in an Annual Information Statement (AIS) an option to provide a simplified balance sheet or a statement of resources.
14. Registered entities be required to disclose related party transactions.
15. Large registered entities be required to disclose the remuneration paid to responsible persons and senior executives on an aggregated basis.
17. The Commissioner be given a discretion to disclose information about regulatory activities (including investigations) when it is necessary to protect public trust and confidence in the sector.
24. The ACNC Act be amended to provide that certain not-for-profits with annual revenue of $5 million or more must be registered under the ACNC Act to be exempt from income tax and access Commonwealth tax concessions.
25. The Australian Consumer Law be amended to clarify its application to charitable and not-for-profit fundraising and a mandatory Code of Conduct be developed.
Reporting Entity Size
A constant complaint from organisations is about the burden of reporting in 'such a small organisation'. The requirement to prepare compliant financial reports, the need to be audited, etc. The review recommends significant increases to the reporting thresholds as detailed in the below table.
Also noted is the significant complexity for organisations conducting fundraising activities, and the varied regulations that apply in each state of our federation.
Moving forward there is a recommendation for larger not-for-profit organisations not currently required to register with the ACNC being able to do so.
And a very sensible suggestion to wind back the secrecy provisions, such that when the ACNC is conducting an investigation that they should be able to make more information available to the public.