As we mark the end of the financial year, we take time to provide an update on the progress of several different NFP-related developments in Australia, including the 10th edition of the Australian Charities Report, which shows how cost-of-living pressures are impacting charities.
- Address to the Fundraising Institute of Australia (Charities Minister, Andrew Leigh)
- Australian Charities Report – 10th edition (ACNC)
- Consultation on the Disability Royal Commission Final Report (Department of Social Services)
- Inquiry into Philanthropy Final Report (Productivity Commission)
- Not-for-Profit Private Sector Financial Reporting Framework (AASB)
Address to the Fundraising Institute of Australia
On 22 May 2024, the Assistant Minister for Competition, Charities and Treasury, Andrew Leigh MP addressed the Fundraising Institute of Australia, focusing on privacy and philanthropy in Australia.
Against the backdrop of the government’s upcoming reform of the Privacy Act, Leigh has promised to be an ally in making the case that charities will need the same transitional support as small business. Leigh also highlighted last year’s hack of telemarketer Pareto Phone as a concerning incident that exposed data management practices that led to the publication on the dark web of personal details of tens of thousands of donors to dozens of well-known charities. Leigh noted that staff spoke of client data that was 15 years old.
On philanthropy, Leigh highlighted the point that negative experiences of individual donors when making charitable fundraising requests has a flow-on impact on public trust and confidence. Leigh reminded attendees that the National Fundraising Principles should be seen as the “minimum necessary standard in maintaining a social license to operate” and highlighted the following principles as particularly relevant for fundraisers and charities.
National Fundraising Principles
- Principle 8 – Never exploit the trust, lack of knowledge, lack of capacity, apparent need for care and support, or vulnerable circumstances of any donor.
- Principle 9 – Always make it clear whether a donation is a one‑off or an ongoing donation and clearly explain how to end an ongoing donation.
- Principle 11 – Conduct all reasonable due diligence when engaging third parties to assist, support or deliver fundraising activities on its behalf.
- Principle 15 – Ensure information covered by the Privacy Act 1998 (the Act) is collected, used and managed in accordance with the Australian Privacy Principles where required under the Act.
Australian Charities Report – 10th edition (ACNC)
On 5 June 2024, the Australian Charities and Not-for-profits Commission (ACNC) released the 10th edition of the Australian Charities Report, from data submitted by 51,536 charities.
ACNC Commissioner, Sue Woodward AM, said “data shows that cost of living issues had an impact on charities in 2022, with increases in expenses and liabilities outpacing increases in revenue and assets (in percentage terms)”. Woodward highlighted that most of the sector operates on low revenue with no paid staff. The report notes the percentage of Australians that volunteer with charities has yet to fully recover following the COVID-19 pandemic, but there are signs that volunteering is returning to pre-pandemic levels.
This report also focuses on extra small charities (those with revenue less than $50,000) as they comprise nearly a third of all Australian charities. The ACNC data shows that this group has not received sufficient revenue or donations to keep pace with the increases in the cost of operating and delivering services. The five-year figures show there was a significant drop in the number of volunteers (-17per cent) and paid staff (-18per cent) for extra small charities.
Key highlights from report:
- Revenue – Total revenue in the sector increased by $11 billion to a record high of just over $200 billion. Donations grew by 4.4 per cent in 2022. Donations and bequests totalled $13.9 billion, an increase of more than $584 million over 2021 figures.
- Expenses – Expenses increased by $22 billion. The amount charities spent on employees in 2022 increased nearly 10 per cent when compared to 2021 – the highest annual percentage increase recorded. Charities also spent $11.7 billion on grants and donations to others, an increase of 21 per cent on the previous year.
- Workforce – Charities account for 10.5 per cent (1.47 million people) of the Australian workforce. More than half of all charities reported that they operate with no paid staff. Volunteer numbers increased to 3.5 million up from 3.2 million, although still below 2018 when the sector had 3.77 million volunteers.
Consultation on the Disability Royal Commission Final Report (Department of Social Services)
After four and a half years of inquiry, the Disability Royal Commission released its final report on 29 September 2023 and the Australian Government is now considering its 222 recommendations.
On 11 June 2024, the Department of Social Services released a summary report of the Government’s public consultation on the final report recommendations which received 118 submissions and 335 questionnaire responses. The AICD made a submission supporting a number of proposals, such as recommendation 10.17 on best practice governance models for NDIS providers, including the publication of safeguarding indicators to enable meaningful discussion of safety, quality and risk issues.
Several key themes emerged through the consultation process including:
- Human rights – Many stakeholders strongly support better legal protection to realise the human rights of people with disability, reflecting the centrality of the United Nations Convention on the Rights of Persons with Disability (CRPD).
- Inclusion – All stakeholders agree better accessibility and inclusion for people with disability across mainstream education, employment and housing settings is critical.
- The central role of people with disability in implementation – Stakeholders emphasised the importance of centering the voices and experiences of people with disability throughout implementation, including through disability representative organisations. There was a strong focus on governments taking a genuine approach to co-design and disability leadership throughout every level and stage of reform.
As part of the AICD’s updated Not-for-Profit Governance Principles, we also included a targeted resource on how to elevate the client voice (e.g. lived experience) into the board’s decision-making.
Inquiry into Philanthropy Final Report (Productivity Commission)
In May 2024, the government received the final report from the Productivity Commission on its Inquiry into Philanthropy. Recommendations in the Draft Report include improving the deductible gift recipient (DGR) system, strengthening the ACNC, and establishing an Aboriginal and Torres Strait Islander philanthropic foundation. The final report will be tabled later in the year.
Not-for-Profit Private Sector Financial Reporting Framework (AASB)
The Australian Accounting Standards Board (AASB) is continuing to develop its Exposure Draft of a proposed Tier 3 financial reporting framework for NFP entities, such as its approach on an accounting policy choice for non-financial assets acquired at significantly less than fair value and whether disclosures of key management personnel remuneration should be required. The AICD made a submission last year supporting the development of a Tier 3 Accounting Standard that is simple, proportionate, consistent and transparent for application by smaller NFPs. The exposure draft is expected to be released in late 2024.
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