Australians who donate to general fundraising charities can be more confident their donations will reach people most in need, following proposed changes to the way those charities are regulated.
Releasing a discussion paper on the proposed regulatory changes today, the Assistant Treasurer and Minister for Financial Services and Superannuation, the Hon Bill Shorten MP, said "Charities taking donations from the public for general causes, which are called public ancillary funds, need to have the trust of the people who donate to them. The proposed changes will improve the accountability of those funds and give Australians more certainty that their donations are being used wisely. Public ancillary funds have a duty to distribute these donations as efficiently as possible to the many worthy charities seeking valuable public support."
"The Gillard Government announced these changes in the 2010-11 Budget to provide trustees of public ancillary funds with greater certainty as to their philanthropic obligations and provide donors and the charitable sector with greater confidence that donations are being used effectively."
"In 2007-08, Australians provided over $2.3 billion in tax deductible donations to various charities around Australia, some of which passed through around 1,500 public ancillary funds, including groups like the Australian Koala Foundation, Comic Relief Australia and various workplace charity funds. The regulation of these funds is an important issue, involving significant amounts of money and the trust of many very generous Australians."
"I have no doubt the vast majority of the charities involved do their best, but this proposed new regulatory framework will give donors more confidence their donations are being distributed properly."
The proposed changes introduce a new regulatory framework similar to that introduced on 1 October 2009 for private ancillary funds. The measure will start on 1 July 2011.
The discussion paper outlines the Government's views on the essential characteristics of a new framework for public ancillary funds. It proposes several changes to the current regulatory system, including the introduction of legislative guidelines.
As outlined in the discussion paper, these guidelines will allow for regular valuation of assets, will clarify investment and distribution rules and will contain a system of administrative penalties for small breaches instead of the harsh 'all or nothing' penalty system that currently applies.
"I am very pleased to release this discussion paper on improving the integrity of public ancillary funds. The measure recognises that a strong philanthropic sector must be accountable, particularly when it comes to organisations benefiting from taxpayer funded incentives," said the Assistant Treasurer.
"The new framework will provide fund trustees with greater certainty as to their obligations and provide donors and the charitable sector with greater confidence that donations are being used effectively."
The Assistant Treasurer encourages interested parties to provide their comments on the paper by 17 December 2010.
The discussion paper is available on the Treasury website at www.treasury.gov.au.