When acknowledgement alone isn't enough

One of the real arts of politics is to make people feel heard and acknowledged but without making actual commitments that may cost time or money or require change.

I don’t know how many times I have made representations to government ministers, assistant ministers, and senior government officials about the folly of the current Australian Taxation Office (ATO) determination to force every not-for-profit in the country to provide an annual return.

And yet this folly is unfolding and will undoubtedly create concern for many local community organisations that pose no threat to our security, don’t have access to significant amounts of money, are not avoiding their obligations, and are generally focused on promoting community wellbeing.

Few people involved in our many community organisations will be pleased the ATO is asking them to provide a return, even if the motives are positive.

Many organisations will not be entirely up to date on the Australian Business Register (ABN registration) and few will have a designated responsible person who has a myGovID with a second level of security. Both steps are required before a community organisation can even access the new annual return.

Like most people in our sector, I am keen to see any inappropriate behaviour by charities and not-for-profits stamped out, and I support measures that will assist in this task. But targeting every single not-for-profit in the country seems to be overreach, particularly if the concern is primarily about potential lost revenue.

Why not target only not-for-profits that have a turnover in excess of $1 million or at least only those that employ staff? Only a very small percentage of the 150,000 not-for-profits that are not charities pose any form of risk at all to the ATO or other government entities.

It will be interesting to watch this new program of annual returns unfold as not-for-profit lodgements become due between 1 July and 31 October 2024.

This is not the only area where CCA and other advocates have failed to achieve the changes needed in the interests of our community and our sector.

The industrial relations laws that came into force in December 2023 seek to ensure there are no fixed term contracts longer than two years and staff have no more than two consecutive fixed term contracts before they must be offered permanency. While there are some exemptions, the result is a real restriction on fixed term contracting across charities and NFPs.

In a recent closed discussion with the Fair Work Ombudsman enforcement team, a CCA member raised a situation that presented an impossible choice because of the new IR requirements.

This organisation had received funding for an innovative program, but only initially for one year. The program became established and was starting to have an impact, so the funder offered another year of funding. Again, the program grew in impact. The funder decided to conduct a more in-depth evaluation over a period of four months to see whether the program might be working well enough to justify a possible longer-term funding commitment.

In practice this meant program staff had started on a one-year funding contract, then received another one-year funding contract for the same roles and were now looking at their third consecutive fixed term funding contract – this time for four months while the program was evaluated.

Under the new industrial relations requirements, the organisation has no choice but to put the staff on permanent contracts, or close the program, or put new staff on. This last option is clearly not an option because the skills required to run the program are not readily available, and even if they were, very few experienced skilled staff will take on a four-month contract.

Whether the organisation can afford to take the risk and make the staff permanent will depend on its size and capacity to absorb additional staffing costs, its risk appetite, and how important it considers the program to be in achieving its mission.

Most of us who work in the charity and community sectors accept that funding grants are generally made for set time periods and future funding is often uncertain. Governments and philanthropists rarely put charities and NFPs on ongoing or permanent contracts.

The typical funding grant is for a period of one, two or three years, rarely longer. It is logical and good management practice to employ staff only for the period you know you can guarantee them payment for their work.

CCA and others have repeatedly highlighted how charities and not-for-profits face a particular set of circumstances that make fixed term contracting more important to our work.

We made our case to ministers, assistant ministers and senior government officials before the new IR requirements were passed through the parliament.

Our efforts to provide more exemptions for charities on fixed term funding contracts failed. Now many charities are having to restructure their staffing arrangements, in some cases meaning additional costs and higher risk.

The IR law changes and the determination to make every NFP in Australia complete an annual return are just two examples of policies that will harm our sector through increased costs, making community group engagement more complex, and forcing charities into unreasonable risks in order to maintain quality staff and quality programs.

Our concerns with these two legislative changes were listened to and acknowledged.

But nothing was changed.

Models of change generally move through a number of steps or phases. Almost all change models say acknowledgement of the current situation is only the very first step.

The second is acceptance of the need to change. The third is usually about making some form of commitment to change, the fourth step is actually doing something different, implementing change, and the fifth step is sustaining that action or change.

It seems to me that charities and not-for-profits are often trapped repeating step number one over and over again.

It is clearly time we stopped accepting acknowledgement as an end in itself.

David Crosbie has been CEO of the Community Council for Australia for the past decade and has spent more than a quarter of a century leading significant not-for-profit organisations, including the Mental Health Council of Australia, the Alcohol and Other Drugs Council of Australia, and Odyssey House Victoria.