This year's global events, on top of Australia's natural disasters, have created numerous challenges for the charity and not-for-profit sector. Many organisations have had to shut down due to social distancing restrictions with others have faced significant increases in demand for services whilst also dealing with reduced volunteer availability and stock due to panic buying impacts.
Job losses and business closures have reduced donations. Not-for-profit clubs and associations, who generate revenue from membership fees and small profits on canteens, have faced requests for refunds whilst having no change to ongoing expenses. Is now the right time for the sector to deal with regulatory change? Let's examine the key reforms a little more.
There is no doubt the Australian bushfires followed by the Coronavirus pandemic have drawn a light on the sector. Trust and transparency were at the forefront of discussions in the news and on social media. Questions were raised about how donated funds are spent and whilst this is a constant challenge it created reputational damage for some of Australia's largest charities at the start of 2020. As a result, there are high expectations placed on the sector – to be accountable and transparent about how appropriately, efficiently and effectively resources are allocated.
The overwhelming generosity shown by donors towards various bushfire appeals was moving and in particular the funds donated to the campaign established by Celeste Barber. Barber's campaign raised more than $51 million from about 1.3 million donors. Why did people choose to donate to Barber's campaign instead of one of the many charities who were supporting those impacted? It was because of the lack of trust in how the money would be spent and the speed at which those who needed it most would receive help.
The court's recent decision preventing the distribution of the funds from the NSW Rural Fire Service to other charities has given rise to this issue again. This presents a significant challenge for the sector in future fundraising efforts. Each charity and not-for-profit will struggle to address the public's concerns on their own so regulatory reforms which address this will help.
Calls for increased transparency across corporate entities, government and the charities and not-for-profit sector continue to build momentum. These calls were already gaining traction before the pandemic but are even more so now. The implications of Australia's push for an independent review of how Covid-19 began continues to have impacts on the country's export industry yet is supported by public opinion and other countries with a view that transparency, as defined by the Cambridge dictionary, creates "a situation in which business and financial activities are done in an open way without secrets, so that people can trust that they are fair and honest".
Dr Gary Johns became Commissioner of the ACNC in December 2017. A former Labor minister and author who prior to his appointment had argued, in his book "The Charity Ball: How to Dance to the Donors' Tune", that too many Australian charities have focused on activism and influencing government policy and lack transparency in how they spend donated funds. In a recent interview for In the Black he stated "I'm motivated by the desire to make the charity sector more transparent".
In the interview Dr Johns stated he "endorses charities that focus on delivering tangible and quantifiable benefits". He is driven by the donor's question of "how much will make it to the cause".
From July 2020 organisation's will be required to detail what programmes they are running, who they are running those programmes for and where they are being delivered. This is now a requirement when organisations complete their ACNC Annual Information Statement.
This is a change from the previous questions which were about the principal activity, who it is for and where it is done. The ACNC is seeking to understand the detail of what is being done, where and who is benefiting. They want to enable donors to search for programmes they may be interested in supporting not just the overarching organisation. This will mean lesser known charities and not-for-profits may be found by donors when searching for programmes rather than only being able to search by organisation name.
Whether it is driven by Dr John's while he is Commissioner, the outcomes of the ACNC review or demands from the public the need for charities and not-for-profits to be transparent is not going away.
It is not a stretch to see the slight change for reporting from July 2020 is just the start.
We aim to provide charities and not-for-profit organisations with more information about the future regulatory changes in the next article in our series so keep any eye out for more.
In the meantime, if you haven't already, getting your organisation assessed for a Social Impact Rating will assist with providing you with a benchmark for areas that need improvement and enable you to be more transparent in your level of governance by displaying your rating for your stakeholders.
