Australian charities hit hard by the impacts of the COVID-19 pandemic will receive relief from burdensome financial reporting requirements under an agreement signed by all Federal, state and territory treasurers.
Inconsistent and outdated regulations across jurisdictions create an estimated regulatory burden of $13.3 million a year for the charitable fundraising sector. The recent Royal Commission into National Natural Disaster Arrangements highlighted the crucial role charities play in disaster recovery efforts, but noted the complexities of operating across jurisdictions with distinct regulatory schemes.
Charity financial reporting
The Council on Federal Financial Relations (CFFR) agreed to develop a framework by mid-2021 to lift the financial reporting thresholds to benefit over 5,000 small and medium charities, allowing those charities to redirect resources to help vulnerable Australians.
Over 3,000 charities will no longer need to produce reviewed financial statements, saving each charity around $2,400 in accounting expenses annually. In addition, approximately 2,000 charities will no longer be required to produce audited financial statements saving around $3,000 annually.
These changes were recommended by an independent review of the ACNC Legislation, Strengthening for Purpose: Australian Charities and Not-for-profits Commission Legislation Review 2018, to reduce the regulatory burden whilst retaining the transparency required to maintain public trust and confidence. At a minimum all charities registered with the ACNC must produce an annual information statement which contains financial information as well as information covering their governance and activities.
The reforms will simplify financial reporting requirements and maintain transparency to ensure charities can dedicate more of their time and resources to assist vulnerable communities.
Charity cross-border recognition model
CFFR also agreed to establish a cross-border recognition model to harmonise charitable fundraising laws. The model will provide a single registration point for national operators, which will reduce the costs and administrative burdens for charitable fundraisers that operate across multiple jurisdictions.
The Morrison Government will continue to work with the States and Territories to reduce the administrative and financial burdens on charities ensuring they can dedicate their time and resources to assisting vulnerable communities and giving Australians confidence that their donations are directly contributing to assisting those in need.