Report on regulation of not-for-profits

The Productivity Commission has released its draft research report on the contribution of the not-for-profit sector.

The report recommends, amongst other things, clearer governance and accountability of NFP's via a consolidated regulatory framework that provides a simple one-stop-shop for Commonwealth registration and tax endorsement for NFPs. This would bring together the multiplicity of governance, taxation and fundraising regulatory arrangements, especially at the Commonwealth level.

The Commission proposes the establishment of a ‘one-stop shop’ for Commonwealth regulation in the form of a Registrar of Community and Charitable Purpose Organisations. This could be a new organization or a statutory division of the Australian Securities and Investments Commission, and would replace the equivalent functions in existing regulators, including incorporating the Office for Registrar of Indigenous Corporations.

The Registrar would:
• register and regulate a new Commonwealth Incorporated Associations regime, Companies Limited by Guarantee, and Indigenous Corporations
• register and endorse NFPs for all Commonwealth tax concessions
• potentially register NFPs for cross-jurisdictional fundraising
• establish a single portal for the lodgement, maintenance and access to public record corporate and financial information, proportionate to size and risk-based on the principle of ‘report once use often’. Such a facility could be used as a single place for corporate and basic financial ‘health checks’ for government contracting purposes and/or by prospective donors.
• investigate complaints
• provide education and guidance on governance issues.

About not-for-profits

According to the Productivity Commission:

• On a rough estimate, there are 600 000 NFPs (excluding body corporates such as for strata titles). The majority, about 440 000, are small unincorporated organisations (such as neighbourhood tennis, babysitting, or card clubs).
• Of the remainder, the ABS classifies 58 779 as ‘having an active tax role’ (on the basis that they employ staff or access tax concessions). These ‘economically significant’ NFPs employed 889 900 staff, around 8 per cent of employment, and contributed just under $43 billion to Australia’s GDP in 2006-07.
• The ratio of the NFP contribution to GDP has increased from 3.3 to 4.1 per cent between 1999-00 and 2006-07.

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