Why your non-profit organisation needs to monitor the ACNC

ACNC Watch

 

 Estimated read time: 4 minutes

 

The starting date of the Australian Charities and Not-for-Profits Commission (ACNC) has been pushed back once again by a delay in debate in the House of Representatives. As we await a debate of the Bill in the Senate expected in October and anticipate the Commission’s starting date later that month, let us consider why leaders of non-charitable non-profit organisations should be interested in and track the progress of the ACNC.

 

The forthcoming ACNC is likely to have a significant impact on the way the non-profit sphere functions in Australia. It is the intention of the Federal Government that charities and other non-profit organisations operate in an atmosphere of openness and accountability and that reporting processes become streamlined to minimise administrative burden on the sector.

 

The ACNC will initially only have jurisdiction over charitable non-profit organisations, however, it is expected that the reforms will be expanded to include non-charitable non-profit organisations in the future – probably sometime after 2013. It is important, therefore, that all non-profit organisations have an understanding of the forthcoming reforms and keep an eye on how the charitable sector responds to these changes in order to anticipate some of the possible implications they might have on the wider non-profit world.

 

Here are 3 key reasons why it is important for board members of non-profit organisations to keep track of the progress of the ACNC and related reforms:

 

1. Changed reporting obligations may cause an increase in administrative burden. 

 

The introduction of the ACNC is likely to result in an initial increase in administrative undertakings. Although the Commission seeks to lessen the administrative burden on the sector, there will unquestionably be a teething period in which the new system must be learned and adjusted to and perhaps more time and resources allocated to this area. The ACNC will, for the time being at least, operate alongside some existing reporting frameworks, rather than replacing them. In many cases organisations will still be required to report to state or territory governments or to meet specific industry standards. Although this process may be have been streamlined by the time other non-profit organisations come under the Commission’s jurisdiction, it is likely that this process of change will remain a challenge as it occurs at the level of individual organisations.

 

Over the coming years, non-profit organisations will have an ideal opportunity to observe the impact that the new reporting schemes have on charitable organisations. When these changes are introduced to the wider sector, boards that have kept up-to-date with the progress of the reforms will be more informed about their new reporting responsibilities and more effective in the monitoring and implementation of new practices.

 

2. Previously unknown data will be collected. 

 

The non-profit world has long been shrouded in uncertainty and mystery. There has been a great deal of debate over even how many non-profit organisations are in operation within Australia. The size and contents of the industries and sectors, which the non-profit sphere encompasses, is also unclear. New registration requirements introduced by the ACNC will permit the government to collect data on all charities and (eventually) NFPs, allowing all stakeholders access to a more accurate account of what the non-profit sphere is and how it operates.

 

In theory, the establishment of a more complete picture of how the non-profit sphere functions will be useful for the purposes of both government review and cooperation and collaboration between organisations. The ACNC Register is intended as a free platform for organisations to make this information available to potential donors and other interested parties. It will also provide a source of data on other organisations and general statistics about the non-profit world. Board members will be able to use this information to understand their organisation’s place within the non-profit sphere and enrich strategic planning.

 

It is in the interest of leaders in the non-profit sphere to monitor how effective the register is in describing and assisting charitable organisations to prepare for any positive or negative outcomes that its introduction might have for their organisations.

 

3. The potential for generation of league tables. 

 

The ACNC’s online Register has the potential to be used to generate an industry or sector league table, especially if it focuses primarily on financial data. A league table is a tool for comparing different entities in the same sector based on particular standards or figures. An example of this is the My School website, which compares and ranks schools based on the standardised NAPLAN testing system. League tables carry the risk of being used to prompt superficial judgments or incomplete assessments of organisations based on a limited amount of information. Although the ACNC Taskforce has made assurances that it does not have any intention of establishing league tables, there will nevertheless be very little preventing a third party to establish one using the data made available by the Commission.

 

The construction of league tables is likely to have a significant impact on fundraising and grant-seeking practices and could result in increased competition in this area or the dominance of those organisations with favourable rankings. League tables may encourage growth within the sector but they also have the potential to inappropriately discredit some organisations or present others more favourably based solely on possibly fallible financial records.

 

Non-profit organisations will benefit from monitoring how this situation develops during the initial stages of the ACNC establishment. If league tables are constructed, leaders will have more time to assess the impact this might have on the organisation and what they can do to prepare for them. It is important for non-profit board members to keep in mind, when making significant financial decisions or developing strategic plans, that financial reports might have to be made public in the future and that decisions made now have the potential to affect how their organisation is perceived under changed transparency conditions.

 
 

The forthcoming ACNC and its related reforms will have a significant impact on both how non-profit organisations operate and how the sphere is perceived as a whole. Although the changes will not have an immediate effect on non-charitable organisations, it is critical for other non-profit entities to monitor the impact of these reforms in preparation for their eventual inclusion under the scope of the Commission’s powers.

 

The ACNC Taskforce and Designate Commissioner Susan Pascoe have made numerous reassurances that the Commission will focus on educating the sector about new reporting and compliance measures and will guide it through this transition period. The Taskforce has been proactive in conducting a number of community consultations, which may be helpful for those still concerned about how the ACNC might affect their organisation.

 

Nevertheless, non-profit organisations will face many changes and challenges as a result of these reforms and boards should have an understanding of the extent to which their organisation can expect to be impacted by the reforms now or in the future.

 

For more information on the reforms and to keep track of the development of the ACNC Bill take a look at the ACNC Taskforce website.

 

About Julia Duffy

Julia is a writer and researcher at Better Boards. She has a passionate interest in the non-profit sector, particularly its legal and regulatory complexities and she follows all news and developments in this area keenly. Prior to joining Better Boards, Julia served as an intern at Philanthropy Australia. Julia has a Bachelor of Arts from the University of Melbourne, majoring in Political Science and English Literature.

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