Not for Profit Sector Needs its Own Independent Regulator

Specialist legal service for Not for Profit community organisations PilchConnect says it's disappointed that the Productivity Commission has missed the opportunity to clearly articulate the need for an independent, specialist regulator for charities and community organisations in Australia.

In a major report on the Contribution of the Not-for-Profit Sector released today, the Productivity Commission revealed that, in addition to obvious social and community benefits, Australia’s Not for Profit sector also contributes close to $43 billion (4.3%) to the country’s economy. 

The Productivity Commission’s report makes recommendations aimed at simplifying regulation for charities and NFP community organisations, in order to maximise the valuable contribution they make to Australian society.

Sue Woodward, Senior Lawyer at PilchConnect says while the Commission has ultimately recommended a new national, specialist Registrar for Community and Charitable Purpose Organisations, it has suggested that a division of ASIC may be an appropriate interim ‘regulator’ for Australian Not for Profits for at least the next 5 years.

Woodward describes this as a messy compromise.

She says she is the most disappointing aspect of the Productivity Commission’s report which otherwise explains and quantifies the value of the Not for Profit sector.

Woodward points out that in other countries like England, New Zealand and Singapore they have long recognised the importance of the sector and have established specialist regulators or charity commissions. 

She asks why should Australia’s Not for Profit sector, worth $43 billion and a major player in delivery of government services, be short changed in this way? 

Pilch Connect is still looking at the detail in this report, but they are concerned that a Registrar within ASIC is inadequate and does not take into account the significance, and completely different needs, of the Not for Profit sector.

Woodward says that tiered, on-line and nationally consistent reporting to a specialist regulator would enable the compliance burden for all NFP organisations to be significantly reduced, while at the same time enhancing the transparency and accountability of NFP organisations. 

She notes that the Rudd Labor Government’s 2009 platform expressed a commitment to a national regulatory framework for Not for Profits and she urged the Federal Government to establish a separate, specialist regulator from the outset.

Woodward says the sector touches every Australian in some way – people volunteer, they’re a member of a club, they may receive welfare services from a Not for Profit or donate time or money to a charity or community group -  and clear, urgent and comprehensive reform is vital for a sector that has immense economic and social significance, but is struggling under regulatory red-tape.