Not-for-profit reforms: latest developments

Despite experiencing a number of deferrals some important developments have occurred in the Federal Government's Not-for-profit sector reforms. These include the commencement of the Australian Charities and Not-for-profit Commission (ACNC), greater clarity on the process for agreeing governance standards and signs of harmonising regulatory requirements.Establishment of the ACNCThe ACNC commenced operation on 3 December 2012, initially enabling registration of charities only. Organisations currently registered as charities with the Australian Taxation Office will automatically become registered with the ACNC (unless they choose to opt out). Charities will need to be registered with the ACNC to gain access to tax concessions.Governance and external conduct standardsCharities must comply with governance standards and standards for dealing outside Australia to be registered with the ACNC. Further, failure to comply can result in a charity's registration being revoked. The object of the governance provisions is to achieve accountability and to minimise the risk of mismanagement and misappropriation of the charity's funds. These standards are set out in regulations to be made after the legislation passes. The draft legislation is currently available for consultation by the sector.HarmonisationOne of the aims of establishing the ACNC is to reduce the regulatory burden on charities. To achieve this Federal and State and Territory Governments must co-ordinate so an additional layer of regulation is not created. Recent movements include:

• South Australian announced on 11 October 2012 that it would amend its association incorporation and charitable collections legislation to harmonise reporting and authorisation requirements
• the Federal Government announced on 17 October 2012 that the Commonwealth Grants Guidelines would be amended to ensure organisation seeking grants would not be asked for information that was already available to the Government through the ACNC.

Nonprofits, and particularly charities should monitor and review the ACNC legislation and ascertain what they need to do to ensure compliance, particularly in respect of governance and reporting.