Borders to crumble for Australian charities in 2021

Shortly before Christmas, Australia’s charity sector received the gift of national unified fundraising laws.

The Council on Federal Financial Relations (CFFR) agreed “to establish a cross-border recognition model to harmonise charitable fundraising laws”.

A lifting of charity financial reporting thresholds was also recommended in the independent review of ACNC legislation, signalling more progress in 2021.

Treasurer Josh Frydenberg and Senator Zed Seselja highlighted both these reforms to Australia’s charities in a joint media release, ‘Easing the Regulatory Burden on Charities’  on 15 December 2020.

The media release also emphasised that the Royal Commission into National Natural Disaster Arrangements had identified the crucial role of charities and ‘the complexities of operating across jurisdictions with distinct regulatory schemes’.

Cross-border fundraiser model

As we reported in September 2020, the Cross-border recognition model is designed to create border harmony to assist charity fundraising.  

Following the initial proposal and public consultation, all federal, state and territory treasurers have now signed an agreement on the model.

The agreed model will:

  • harmonise national fundraising laws
  • provide a single registration point for national operators.

The Australian Council of Social Service has welcomed the announcement as the first step towards charitable fundraising reform to ensure that charities that fundraise don’t have to register in each state. 

We will continue to monitor how the national model will work over the coming months.

Lift in thresholds for financial reporting progresses

The CFFR also agreed to develop a framework to lift charity financial reporting thresholds. The framework is scheduled for development by mid 2021 and will be based on the final report of the government’s 2018 review.

The proposed changes are set to benefit more than 5000 small and medium charities, according to the treasurer’s press release, allowing them “to redirect resources to help vulnerable Australians”.

The proposed framework would reduce red-tape for charities classed as small or medium under new thresholds. More than 3000 charities will no longer be required to produce financial statements and approximately 2000 will no longer be required to produce audited financial statements.

Watch this space…

While many charities will already be compliant under existing revenue thresholds, those with an annual turnover between $250,000 and $1 million are likely to have their reporting obligations minimised under the proposed changes. Those with an annual turnover between $250,000 and $1 million may also have some minimisation of reporting obligations.

Charities with a turnover more than 5 million will be considered large under the proposed changes and may have some additional reporting requirements regarding remuneration for responsible persons and executive, as well as related party transactions.

Irrespective of any changes, a charity must still keep good accounting records. Some advantages for a charity that exceeds the minimum accounting requirements for detailed records include:

  • Good governance
  • Enabling informed decisions based on detailed data
  • Promoting the charity to donors as a financially responsible organisation
  • Applying for grants as a responsible organisation that can produce detailed financial information.

Long-term benefits

We noted back in September 2020,At a time when many charities are dealing with the impact of COVID-19, any decrease in red tape would be welcomed so they can focus on the provision of much-needed community service.”

In 2021, with pandemic impacts continuing to stretch resources, the new model and proposed new thresholds will certainly assist Australia’s charity sector by reducing administration and costs.

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