Key Points:

COAG has established a NFP Reform Working Group to develop an effective approach to the regulation of the NFP sector and reducing the regulatory burden on the sector where possible.

At their most recent meeting earlier this month, the Council of Australian Governments (COAG) agreed to take the first steps towards developing an effective approach to regulation of the not-for-profit sector and reducing the regulatory burden on the sector where possible.

What's already happened

The Commonwealth Government has previously announced far-reaching reforms for NFPs, including:

  • the establishment of a national regulator, the Australian Charities and Not-for-profits Commission (ACNC), which is now scheduled for 1 October 2012;
  • reform of the governance principles applying to NFPs, both to remove unnecessary burdens and to promote good governance, accountability and transparency, with commencement to coincide with the establishment of the ACNC;
  • reform of the tax concessions available to NFPs for their unrelated commercial activities, to commence on 1 July 2012;
  • restating the "in Australia" special condition for tax concession entities to ensure that generally such entities must be operated principally in Australia and for the broad benefit of the Australian community;
  • the introduction of a statutory definition of "charity", which will take effect from 1 July 2013 and replace the common law definition;
  • negotiation with the States and Territories for the development of a national approach to charitable fundraising regulation (which is currently regulated differently in every State and Territory); and
  • review of the company limited by guarantee structure and its continuing appropriateness for NFP entities.

The Commonwealth Government has acknowledged that the regulatory overlap between Commonwealth, State and Territory jurisdictions has resulted in a high regulatory burden for NFPs, and has stated its commitment to progress national regulation through COAG.

COAG's NFP Reform Working Group

COAG has now established a NFP Reform Working Group and has endorsed the terms of reference, work plan and initial milestones for the group. COAG has asked the NFP Reform Working Group to review, develop and recommend NFP regulatory reform options to COAG, including:

  • considering the adoption or application of a Commonwealth statutory definition of "charity" for State and Territory purposes;
  • developing a nationally consistent approach to fundraising regulation;
  • reviewing legal, governance and reporting regulation for the NFP sector; and
  • considering approaches to harmonise the test for determining non-charitable activities of charities.

The NFP Reform Working Group will report to COAG at or before its next meeting, and before the Australian Charities and Not-for-profits Commission Bill is introduced into Federal Parliament.