Options for cutting red tape for charities

A key function of the Australian Charities and Not-for-profits Commission (ACNC) is to help reduce the regulatory burden on the Australian not-for-profit sector. To achieve this, the ACNC has embarked on a research program to measure the red tape burden on charities and identify target areas for red tape reduction.

The ACNC commissioned Deloitte Access Economics to undertake research on a range of options to align the regulatory obligations of the ACNC and states and territories. These options seek to identify and quantify the benefits that could accrue to charities through red tape reduction in three key areas that are the responsibility of the states and territories: fundraising (including gaming), state taxation (principally eligibility for taxation concessions), and incorporated associations legislation. Regulation of the charitable sector relating to these three areas is estimated to cost charities approximately $34.9 million annually.

The report states that fundraising imposes the greatest regulatory burden on charities — it costs the charity sector $13.3 million per year. Legislation differs from state to state, which increases the administrative costs attached to fundraising. Moreover, the range of legislation assumes that fundraising will be undertaken in one state or territory only, and does not provide for online campaigns that seek to raise funds nationally and internationally.

The dual compliance regime that is in place due to incorporated associations legislation in each state also imposes red tape on the charitable sector. Interestingly, while the sector does not regard these duplicative reporting as onerous, the sheer number of incorporated associations means that the impost on the charitable sector as a whole is estimated to be approximately $8.8 million per year annually.

The absence of a standard definition in relation to eligibility for state taxation concessions and significant challenges attached to the search and application processes also creates red tape for charities, costing $11 million every year in red tape.

The report sets out three options to reduce red tape:

  1. Option 1 — ACNC obligations fulfil state and territory regulatory requirements
  2. Option 2 — Alignment of state, territory, and ACNC regulatory obligations
  3. Option 3 — ACNC as a central regulatory body.

The report finds that option 3 could save Australian charities up to $29 million. Existing ACNC obligations could replace state and territory regulatory requirements if the Federal Government aligned state, territory, and ACNC regulatory obligations.

The full report can be downloaded here.

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