We speak with Sue Woodward AM, Chief Adviser of Not-for-profit Law for Justice Connect about the most urgent challenges for the sector. Sue will be part of the panel discussing the agenda for reform at the Not-for-profit Governance Forum in Brisbane on 29 July.

Sue Woodward AM, who is one of Australia’s leading voices for the not-for-profits and charities sectors, started out studying law at university, thinking she would end up in legal aid or criminal law. ‘Social justice and helping people somehow! But the only clerkship I got was in a major commercial law firm, doing acquisitions and mergers.’ Sue then worked overseas in international finance, all of which she says was great training. The problem was it didn’t connect with her heart. When she returned from London after a couple of years away, she was looking to make that change, to somehow get connected with the charities sector and feel greater purpose in what she was doing.

‘It took me a few steps to get to where I am today including lecturing for more than a decade in the Melbourne University Law School. That role eventually led me to doing research which was my stepping off point into the sector. I found the connection between corporate law and the not-for-profit sector’s regulatory needs. Then I was lucky enough to find a well-regarded organisation that was prepared to consider implementing one of the main recommendations from my research. I was an academic who wanted to do something practical, so this was like finding gold.’

Sue went on to help establish and manage what today is Justice Connect’s Not-for-profit Law service; a service whose contribution to the sector over 14 years has been immense, providing free legal information, advice, and training and taking more than 1,700 enquiries annually.

Back at Justice Connect (after several years at the Australian Charities and Not-for-profits Commission (ACNC)), Sue’s role has evolved further in the last year, ‘With the benefit of some philanthropic funding, I feel lucky I can now focus almost exclusively on policy and advocacy work. At this point in my career, I think this is where I can give the best value’. ‘I work with a great team and can combine my expertise and networks with all the feedback and evidence we have gained from the people and not-for-profit organisations we help, to try and advocate for system-level change — better regulation and less red tape for the sector.’ Sue’s leadership and advocacy for the sector saw her awarded as a Member of the Order of Australia (AM) in the 2021 Queen’s Birthday Honours list.

Lifting awareness of what was a hidden sector

Sue sees a considerable shift in thinking and in the way the charities and other not-for-profits are understood. ‘Back when I was working at the University, it was described as a hidden sector by the late Professor Mark Lyons because no one had an appreciation of its size or importance. And there was barely a handful of specialist lawyers or academics working in the field. Thankfully it has really developed from there. We now have the ACNC Register, and that data has enabled the sector — at least the charities part of it — to be seen and have its contribution called out. We now have some boutique practices and teams in many of the larger firms who specialise in charities, not-for-profits, and social enterprises. This has improved the quality of the legal advice that the sector can get and adds to the ongoing significant pro bono contribution of lawyers that Justice Connect harnesses’.

There is, of course, much more that can be done, Sue points out. But all of this has given the sector the opportunity to have a greater voice.

One example of this voice from recent times is the development of the JobKeeper initiative. The charities sector was almost forgotten despite employing one in eight Australians. But that changed through advocacy including by the Charities Crisis Cabinet (initiated by Community Council of Australia) of which Sue was a member. With better data that could help explain the impact of the pandemic on the sector and how important the sector was for delivering critical services, change was made to the eligibility criteria: charities were included in the JobKeeper program with a more realistic lower threshold. ‘That is a very powerful example of the change that has taken place. It wouldn’t have happened previously because there wouldn’t have been a coordinated sector-wide voice, and there wouldn’t have been the data to support it.’

The difference a specialist sector regulator makes

Sue was among the sector leaders whose voice helped establish the ACNC. She then went on to be the inaugural Director, Policy & Education at the ACNC. ‘I think it is fantastic that the ACNC survived its troubled start so that it now has essential bi-partisan support. I believe in the value of having a free, public register, so there is transparency for everyone — charities can look up other charities, donors and government can look up the charities, people who are looking for services or to volunteer can look up charities. I think we are only going to see more and more benefit from this information being available at people’s fingertips.’

‘I am grateful that I had the opportunity to help establish the culture of the Commission. To establish a regulatory approach based on support and education and a mindset that the vast majority of charities were trying to do the right thing. But for the rare examples of poor behaviour, potential harm to beneficiaries or improper use of funds, there was a specialist regulator that could act firmly and swiftly.’

‘It’s rare that a sector calls and fights for a regulator to regulate it! And having a specialist regulator rather than have one within the ATO or ASIC has made a big difference because it understands the nature of the sector. More than 65 per cent of charities are small, and more than half are entirely volunteer run. These differences are critical when it comes to understanding how best to regulate them.’ This is not to say that you excuse someone for malpractice because they are a volunteer run organisation, Sue points out. ‘But as a regulator you must understand how to get the messages to them, what support they need, and remember that in so many cases non-compliance will be because they haven’t got the capacity, knowledge, time, or resources rather than deliberate non-compliance. They don’t have an HR department, they don’t have IT support, they don’t have a lawyer or an accountant. Their volunteers often have full time jobs and families. I hope the new Commissioner will keep this front of mind’.

The biggest challenge is the workforce

When it comes to the key policy areas that are currently challenging operations and sustainability for the sector, Sue thinks the biggest one is the workforce. There are issues for this sector’s workforce that are different to that of the workforce issues of other sectors. ‘Some issues are the same obviously. All sectors would say their staff are burnt out. All sectors would say recruitment and retention is an issue. But there are extra issues for this sector.’ The difference, Sue says, is that there is both a paid and a volunteer part to the sector’s workforce. The sector cannot survive without volunteers. ‘A lot of the industrial awards that apply to the sector — a widespread one is the Social, Community, Home Care and Disability Services Industry (SCHADS) Award — are complex and out of date. It is very difficult for organisations to work out how to comply with it. There are structural issues like this that also add to difficulties for the sector, and we could improve.’

Another key issue is short-term funding contracts. It is hard, Sue points out, to retain staff if you are thinking in April that you only have funding until June. How do you plan, and how do you retain staff for whom there is so much demand for?

‘There are other things too that we can fix, like worker screening checks. Why don’t we have a nationally consistent screening check for working with vulnerable people in a document like a passport or a driver’s licence which gets updated and means people can move from one organisation to another and respond quickly in a crisis?’ Fundraising regulation is another big challenge related to the workforce because it affects the funding for paying the workforce. ‘So, I think workforce is the biggest issue with multiple parts to it that need to be unpicked and addressed. The funding contracts and fundraising laws, the industrial awards, screening checks, and the barriers to volunteers returning to the sector are just some.’

Fix fundraising: Outrageous that it hasn’t already been done

Sue leads the #FixFundraising campaign. ‘Fixing fundraising — it’s just outrageous that it hasn’t been done. It is a barrier to basic operations for the charities sector. And we can fix it. We have come up with so many possible solutions. I think we are close. The message has finally got through. It has clearly got bi-partisan support because the previous Minister Michael Sukkar started a process with the states, and I am optimistic that Assistant Minister Andrew Leigh will make sure there is greater momentum given his long-term commitment to this issue. And to be frank, if the states don’t all agree, it may be that the Commonwealth will have to say, look let’s do something about this in a different way.’ The sector has done the work, Sue points out, having drafted a set of principles that can be applied in a nationally consistent way, tested them and been open to feedback from governments.

Assistant Minister Leigh has said that fixing fundraising is one of his early priorities and committed to working on standardising what he referred to as the ‘hodgepodge of fundraising laws’. The sector currently must contend with seven different sets of fundraising laws — in every state and the ACT —which were developed prior to the internet, the Australian Consumer Law, and the ACNC. A charity currently needs permission under each of these laws to fundraise online and must comply with and report to seven different state and territory regulatory bodies. They must also then comply with the Australian Consumer Law, criminal laws, and local government laws regarding door knocking and street collections and various codes. What is missing in this modern digital age is clarity for charities and their fundraisers on the rules they must follow even just to add a donate button on their website.

Justice Connect, as the lead for the #FixFundraising coalition of peak sector and professional bodies (including Governance Institute), have clearly laid out the three things that are urgently required to fix fundraising.

  1. Single point for registration — ‘whereby if a charity has been registered with the ACNC and is complying with its ACNC requirements (ie, has its ACNC ‘tick’), it shouldn’t have to apply for an authority to fundraise in every state and territory.’
  2. Single set of rules to help ensure ethical fundraising practice — ‘introducing the Australian Fundraising Principles (AFPs), which are backed up by the Australian Consumer Law and self-regulatory codes.’
  3. Single place of reporting — ‘report once, use often’ via the ACNC — ‘with this regime in place, fundraising charities would only be required to report once a year, to one regulator: the ACNC.’

According to the 14 ethical fundraising principles in the Australian Fundraising Principles (AFPs), a charity registered with the ACNC would pledge to take all reasonable steps to ensure their fundraising is lawful, truthful, and transparent. These principles would provide a national standard for fundraising that would replace the current chaotic and complex fundraising laws. ‘If I put my donor hat on and I read those principles, I’d have comfort. For example, as a donor you need to know where the money is going. You need to know whether the person collecting the money is a volunteer. They are common sense, ethical principles for fundraising behaviour.’ Why has it taken so long to secure the states agreement to fix fundraising when the need and the reasons are so obvious and urgent? ‘I don’t think there has been the right political champions or the right priority attached to it. We’ve been in this cycle of getting one state on board, then there will be another state with an election, or the federal government reviewing the ACNC and so it has gone around in circles. And the states have been very attached to their own legislation and not able to see the overall picture from the charity or donor perspective; the donate button on a website.’

Sue has a list of other issues that she would also love to have addressed. ‘A systemic approach to various thorny issues the sector faces, such as volunteers not being covered for covid. I believe we could think creatively and collaboratively to reduce costs and barriers so that more services can be provided for more communities more efficiently. I also think there is something about legal structures for social enterprises that needs to be worked through. And if you are a tiny not-for-profit, what legal structure do you need? Again, you might operate nationally because you have a website, but you’ve got all these varied and complex incorporated association Acts so how can we have something simple, low cost that still provides basic transparency?’

‘Coming down the pipeline is the review of over 140,000 not-for-profits that currently self-assess for income tax purposes. How will this transition be managed and how will these groups be supported when so many of them don’t have paid staff or access to accounting and legal support. Some big stuff coming!’