Steps toward a stronger sector

Posted on 18 Dec 2023

By Andrew Leigh

16:9 crop Parliament House at dusk Canberra ACT

With 2023 drawing to a close, Charities Minister Andrew Leigh recently took the opportunity in a speech to federal parliament to highlight the value of charities and how government reforms are designed to strengthen the sector.

Modern Australia could not function without charities.

Charities improve our natural environment. Charities assist people living in poverty overseas. Charities organise sporting events.

Charities run arts festivals. Charities help settle new migrants. Charities assist when natural disasters strike.

And over the coming weeks, charities will be there for vulnerable families, handing out hampers to put food on the table and gifts to go under the tree.

The charity and non-profit sector comprise over one-tenth of employment and nearly one-tenth of national income.

It is larger than the agricultural and financial sectors combined. From Parkrun to Clean Up Australia, Vinnies to Girl Guides Australia, millions of people volunteer in their local communities.

Calling a truce in the war on charities

Yet despite the social value of charities, the Coalition’s nine years in office was a rolling war on the charity sector.

They came to office pledging to abolish the Australian Charities and Not-for-profits Commission (ACNC) and would have done so if they thought they could get it through the Senate.

When they couldn’t abolish it, they appointed Gary Johns to run the charities commission, a charities critic with extremist views about Indigenous people.

Charities Minister Andrew Leigh.

In 2014, the Liberal federal council voted to strip environmental charities of their charitable status.

The Coalition government then set up an inquiry which recommended that environmental charities lose their charitable status if they did not devote at least a quarter of their expenditure to "environmental remediation".

This isn’t ancient history. Just a few weeks ago, the leader of the Nationals suggested that the Australian Conservation Foundation should lose its charity status because the organisation wrote a letter he didn’t like.

The war on charities saw attacks on public advocacy by community groups. Community legal centres, anti-poverty groups and overseas aid organisations were among those whose funding was threatened by gag clauses and behind-closed-doors threats.

In the Coalition’s worldview, charities should be seen and not heard. These attacks led to three open letters from the charity sector to successive Liberal prime ministers, asking the Coalition to stop undermining the community sector.

The war on charities ended with the election of the Albanese government.

We welcome the informed voices of charities in the Australian public debate. We have taken action to rebuild the relationship with charities and collaborate with the sector to build community.

Today, I outline seven of these initiatives.

"We’ve asked the Productivity Commission to identify the opportunities and the obstacles around increasing charitable giving – something we see as crucial in not only supporting vulnerable Australians but building community connections."

Consultation not confrontation

First, we’ve embarked on Australia’s largest ever charity consultation, involving over a dozen major town hall meetings in capital cities and regional centres.

These town hall meetings, to which all charities are invited, have covered every state and territory.

Charity leaders are welcome to raise any issues facing their organisations. The conversations focus on better understanding the challenges and opportunities facing the community sector, and how the Australian government can work with charities and non-profits to build stronger communities.

Review of philanthropy

Second, we’ve initiated a once-in-a-generation Productivity Commission review of philanthropy, to help meet our goal to double philanthropy by 2030.

We’ve asked the Productivity Commission to identify the opportunities and the obstacles around increasing charitable giving – something we see as crucial in not only supporting vulnerable Australians but building community connections.

Last Friday, the Productivity Commission handed down its draft report, which noted the value of philanthropy as "risk capital" to encourage innovation, boost wellbeing and build social capital.

The report concluded that rules around deductible gift recipient status for charities could be made simpler, fairer and more transparent.

The Productivity Commission also recommended modernising the powers of the charities commission, to improve collaboration with states and territories. It proposed the creation of a new Aboriginal and Torres Strait Islander philanthropic foundation.

These recommendations are all in draft, and I encourage interested stakeholders to read the report, and let the Productivity Commission know where you agree and disagree. The Australian Government looks forward to receiving the final report in the first half of 2024.

A blueprint for the sector

Our third area of charities reform is a blueprint for strengthening the capacity and capability of Australian charities.

Led out of Minister Rishworth’s Department of Social Services, a group of nine sector representatives are working with sector experts to develop a blueprint that will ensure Australia’s non-profit sector reaches its potential.

Charities Minister Andrew Leigh and ACNC Advisory Board chair Sarah Davies.

The blueprint is expected to include options to strengthen social capital and to support the vibrance and vigour of our best and smartest charities.

The Blueprint Expert Reference Group has recently published an issues paper and they’ve invited comment on a 10-year vision for the not-for-profit sector with submissions closing on 20 December.

Among the issues that the Blueprint will cover are leadership and staff development, sustainable funding, cyber security, outcome measurement and social finance.

ACNC advisory board

Fourth, we’ve appointed a new head of the Australian Charities and Not for Profits Commission, and a new advisory board.

In Sue Woodward, we have a head of the charities commission who has spent her life working constructively with charities.

And we now have an advisory board for the charities commission that looks more like the sector it speaks for. Our new charities commission board, chaired by Sarah Davies, is majority women and includes First Nations and CALD representatives. Members were appointed following an open, transparent and merit-based process.

IMG 1429
Andrew Leigh addresses sector attendees at a town hall event in Melbourne.

Lifting the veil of secrecy

Fifth, we’re amending the legislation to allow the Australian Charities and Not-for-profits Commission to discuss ongoing investigations where it’s necessary to maintain trust and confidence in the sector.

Earlier this year, there was considerable media attention around Hillsong Church. Yet the charities commission could only confirm that it was investigating because Hillsong Church itself publicly confirmed that it was under investigation.

The risk of the current laws is that if the regulator is muzzled from speaking out under any circumstances, it undermines trust and confidence in the sector.

Our reforms will mean that – subject to a public harm test – the regulator can disclose that it is investigating allegations of misconduct.

This will increase confidence in the sector as people see the regulator pursuing misconduct. It brings the Australian Charities and Not-for-profits Commission into line with other charities regulators in advanced countries, and with the way that other regulators operate in Australia.

Streamlining fundraising laws

Sixth, we’re continuing to work with the state and territory governments to harmonise charitable fundraising laws.

Earlier this year, treasurers agreed to a set of nationally consistent fundraising principles to give charities and donors a clear understanding of appropriate conduct.

This includes things like always explaining the purpose of the charity, record keeping, privacy obligations and agreed times for door-to-door and telephone fundraising activities.

States and territories are now in the process of embedding those principles in legislation.

Coins donate charity
"Growing the sector is all the more important given the trends of the past generation."

Deductible gift recipient reform

Seventh, we’re streamlining the process by which charities receive deductible gift recipient status, by bringing four groups of organisations – environmental organisations, harm prevention charities, cultural organisations and overseas aid organisations – under the administration of the tax office, alongside the other 48 tax deductibility categories.

This is expected to reduce the time to obtain deductible gift recipient status for these four groups of organisations from up to two years to around one month.

Under the former Coalition government, we saw organisations held up from obtaining deductible gift recipient status for purely political reasons.

For example, the application from Grace Tame’s charity languished after she criticised the former prime minister. We’re ending that ideological score settling and making life easier for charities.

Our reforms also recognise that community charity trusts and community charity corporations don’t always fit neatly into existing deductible gift recipient categories.

So, we’ve introduced legislation to create a new framework to allow up to 28 community foundations to be endorsed as deductible gift recipients.

The seven reforms that I’ve outlined are simply the beginning of the Albanese government’s plan to work with charities to build community.

Through the Productivity Commission’s report into philanthropy and the blueprint process, we are committed to growing and strengthening the community sector.

Growing the sector is all the more important given the trends of the past generation.

As Nick Terrell and I documented in Reconnected: A Community Builder’s Handbook, recent decades have seen a drop in the share of Australians who play organised sport, who are members of a union, or who attend religious services.

There has been a drop in the share of people who volunteer, a decline in the share of people who give to charity, and a fall in the proportion of people who are active members of a community group.

Compared with the mid-1980s, the typical Australian has only about half as many close friends and knows only about half as many neighbours.

Turning those trends around is a challenge for all of us, and the Australian Government stands ready to do our part.

A more connected Australia will be a healthier community, with a stronger economy, and a fairer society.

If we are to boost the wellbeing of Australians, we need to help the helpers.

A thriving charity sector is a significant goal for the Albanese government.

More information

DGR tax rules 'not for for purpose': Productivity Commission

Submissions open for community sector consultation

Have your say on ACNC secrecy reform

Have your say on the future of the NFP sector

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