Sue Woodward AM reforms the NFP sector

As the Australian Charities and Not-for-profits Commission moves into its second decade, the regulator’s new boss wants to use data to build sustainability, community trust and confidence. 

After a long and at times turbulent journey for national regulator the Australian Charities and Not-for-profits Commission (ACNC), there’s a sense of right time, right place for its new commissioner, Sue Woodward AM.

The respected NFP law and governance adviser became its third commissioner last December after the June 2022 resignation of Gary Johns, a former Labor MP, who criticised some parts of the sector for drifting in purpose and ideology-based advocacy.

As a Melbourne Law School academic, Woodward made a seminal contribution in a 2004 Australian Research Council report, A Better Framework: Reforming not-for-profit regulation, which called for a single national regulatory regime, arguing that the NFP sector was at risk and that a lack of nationally consistent reporting obligations impeded accountability and could jeopardise donor confidence. She went on to play a central role in the formation of the ACNC, serving as its first director of policy and education when it was set up by the Gillard government under founding commissioner Susan Pascoe AM FAICD in 2012.

Eleven years on, Woodward says she’s able to return with insight and the necessary skills for the ACNC’s next stage, joking, “it did feel a bit strange walking into the boss’ office”.

“It’s given me some distance,” she says. “We did give blood, sweat and tears to start it up. I feel I can come back with fresh eyes and knowledge on this next stage. It’s exciting to look at a more mature regulator and see how this can continue. I believe that the regulator is seen as an important part of the framework of maintaining public trust and confidence. It’s shown that the framework that set up the commission and the associated Charities Act 2013 (Cth) is strong and fundamentally sound. The sector fought very hard when it was under threat and I’m relieved that there is now bipartisan support. Now it’s an opportunity to take this organisation forward because the foundation is there. So what can be learned and what can be done better?”

In Woodward’s first year in the top job, she’s acutely aware of the straitened circumstances confronting charity boards and management. She says charities are being squeezed by cost-of-living and funding pressures while having to meet the greater needs of those they serve, “remembering that this is a sector where increased demand doesn’t equal increased revenue”.

“There’s a lot of pressure on charities and they can’t just put up their prices like a business. That’s the bigger complexity.”

Dealing with the data

Set up under the Australian Charities and Not-for-profits Commission Act 2012 (Cth), the ACNC administers the national regulatory framework for around 60,000 charities, which are required to report annually.

As commissioner, Woodward is guided by the three objects of the Act — to maintain, protect and enhance public trust and confidence in the sector; support and sustain a robust, vibrant, independent and innovative NFP sector, and to promote the reduction of unnecessary regulatory obligations.

“In particular, I see my North Star as public trust and confidence,” says Woodward. “Because public trust and confidence in registered charities has a flow-on effect to the community. People will feel confident to donate.”

The data yielded via the Charity Register is available, easily searchable and free, so donors can look up information and check for the ACNC’s charity tick, all on their mobile phone. It has revealed the substantial contribution of a sector once described as the “hidden sector”. The charity sector employs 10.5 per cent of the paid workforce — more than the mining sector — and 50 per cent of charities are run solely by volunteers.

“The sophisticated data we can now produce is streets ahead of where we were,” says Woodward. “If we can have robust data, we can share back with charities, over time. It strengthens the sector. Now we can look back and see the trends.”

For example, data has revealed a substantial decline in the rate of volunteering in the community. Between 2018–21, an estimated 596,000 people have been lost to volunteering, partly as a result of COVID-19 — one stimulus for the federal government’s National Strategy for Volunteering.

Red tape tangles

There is still much more work to be done on the regulation and red tape front. A long-time advocate of reduced red tape, during her career Woodward has worked in private practice, in NFPs and philanthropic organisations, as an adviser to government and as an NFP board member. She has served on the boards of the Victorian Council of Social Service (VCOSS), the Human Rights Law Centre, the Australian Communities Foundation and SANE Australia. As chief adviser for NFP law with JusticeConnect, Woodward worked with a coalition of peak bodies and governments to tackle the costly, complex, paperwork demands of fundraising.

The #FixFundraising Coalition campaign for nationally harmonised fundraising laws — for which the AICD has been a strong advocate — finally made progress. In February, the federal and state governments announced 16 National Fundraising Principles, to be implemented across all states and territories from 1 July 2024, which will help to reduce compliance costs and paperwork.

Assistant Minister for Competition, Charities and Treasury Andrew Leigh said the principles would give charities and donors a clear understanding of appropriate conduct, while allowing for greater flexibility as to how charities achieve compliance. Woodward is thrilled, but aware more needs doing.

The ACNC’s work on reducing red tape covers a number of areas, including a “report once, use often” framework, making the charity information it collects available securely to other government agencies, streamlining reporting requirements and harmonising its regulatory requirements with the numerous state and territory laws that cover charities. It has commissioned research to inform its work and provides guidance to help charities meet their regulatory obligations.

But has it made much difference to the regulatory burden? “It’s been a slow grind, but I think so,” she says. “We also have to look at processes that are within our control. What’s not within our control are things like fundraising law reforms and state and territory decision-making. For example, getting a single definition of charity.”

In the same vein, understanding the pressures on the sector’s workforce — burnout following COVID-19, hybrid working and how organisations manage those models — and on the other side of that, the volunteer. “A big issue is the cumulative effect of a variety of reforms,” says Woodward. “They can be worthwhile reforms, but there’s a need to be aware there is a cumulative effect on small organisations. For example, cybersecurity and privacy rules, new accounting standards and having to report on related-party transactions.”

After enduring political heat over charity advocacy, the sector is pleased to see the spotlight move to how its funding can be improved with the Productivity Commission inquiry into philanthropy, which aims to find new ways to increase giving to meet Labor’s election pledge of a doubling of philanthropy by 2030.

In July, a refreshed advisory board was announced that will meet quarterly to support the commissioner. Alongside chair Sarah Davies AM MAICD, CEO of the Alannah and Madeline Foundation, are deputy chair Heather Watson MAICD, Anna Bacik, David Crosbie, Ian Hamm MAICD, Sara Harrup GAICD, Myles McGregor- Lowndes OAM and Rosina Loria.

Care factor

“It’s in my DNA to care about the sector,” reflects Woodward. Her parents were active volunteers. Her father was a treasurer with his local church and every Thursday, her mother drove ladies to morning tea and craft for Vision Australia, ultimately receiving a Life Governor’s award for her contribution.

“I think of my father, a volunteer treasurer in a small church as a retired bank manager and auditor, imagining all the things he would have possibly had to be aware of,” she says.

“With my work at JusticeConnect, I’d deal with a variety of organisations and I’d go to regional areas and do training with people on the town hall committee and the local sporting club, talking to them and explaining governance to them. I always remember those faces and those people when we discuss as a regulator, should we have another question on the reporting form and when we give support and guidance.”

These things are the lifeblood of volunteering, feeling connected and part of the community.

“That’s the tapestry that makes our society healthier, stronger and gives meaning to lives,” says Woodward. “My role is to give recognition to that by producing the data and ensuring public trust and confidence. I never thought a register and regulation would be groovy, cool and sexy, but it is.”

This article first appeared under the headline 'Faith, Hope, Charity’ in the October 2023 issue of Company Director magazine.