Regulating Associations
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We need a single national regulatory regime for not for profits to be enforced by an adequately resourced regulator that understands the specific needs of the full range of not-for-profit organisations (in our case, one with a large membership base).
The not-for-profit sector makes a significant contribution to the economy both in terms of Gross Domestic Product (4.7% when the value of volunteer labour is added in) and employment (6.8% of total employment, over 4 million volunteers). I
In comparative terms in 2002, not-for-profit organisations added more to GDP than the mining industry (ABS 2002). But of even greater significance is the contribution that the sector, both nationally and in Victoria, makes to our social well-being.
The charitable sector underscores many basic values in Australian democracy. It exemplifies the principles of pluralism, free choice and the rights of citizens to participate in and take responsibility for their community (1995 Industry Commission Report)
In Victoria, not-for-profit organisations provide an important range of social services, education and research, culture, sport and recreation, health services, professional bodies and a wide range of other activities. These activities serve to link members of the community to each other which in turns improves social cohesion.
The following is an outline of what we regard as the preferred regulatory model.
Our preferred model
In order to ensure that we spend maximum time and resources on achieving our mission (including the provision of the high quality services for our Members), we need a regulatory regime that is clear, fair and consistent.
We need this regime to be enforced by an adequately resourced regulator that understands the specific needs of the full range of not-for-profit organisations (in our case, one with a large membership base).
- We need a fee scale that is graduated according to size but is also modest.
- We want accountability that is appropriate to the needs of not-forprofit stakeholders (such as members, donors, grant makers and the general public).
- Not for profit organisations need the flexibility of being able to operate and/or fundraise in other states without separate or additional regulation.
- We support a strong national regulatory framework that is based on these criteria because it will provide a foundation for stakeholder confidence in the sector and, in particular, a foundation for member confidence.
Without this confidence it will not be possible for us to secure the funding (via membership fees) that we need to pursue our mission, which in turn benefits the entire Victorian community.
Other not-for-profits rely on public donations; these are also underpinned by confidence that there are regulatory checks and balances in place to ensure that funds are used for the purpose for which they have been given. The right framework will benefit the entire sector.
In terms of a preferred model, we endorse the key findings of the report by Woodward & Marshall ‘A Better Framework: reforming not-for-profit regulation’ 2004, which is referred to in the Interim Report. In particular, we support the Woodward & Marshall recommendations for:
a. a single Commonwealth statutory regime for all corporate bodies (both for-profit and not-for-profit, including incorporated associations) should be introduced.
b. if ASIC is to be the regulator under this single Commonwealth regime (at least until a new national not-for-profit specific regulator is created), then it needs to take steps to make itself more friendly to not-for-profit users (e.g. a specialist division);
c. a range of modifications need to be made to existing Corporations Act requirements; in particular we would highlight the need for a plain language guide summarising the provisions/obligations relevant to not-for-profits;
d. a new not-for-profit specific legal structure needs to be developed drawing on the best aspects of the corporations law and the incorporated associations regimes, with consideration of the recent UK developments (community interest companies etc).
In our opinion these recommendations need to be implemented as a package.
We do not favour coming under a single Commonwealth regime based on the existing Corporations Act as administered by ASIC. If the combined changes were introduced then we would see it as a preferable system to the current two-tiered State (associations) and Commonwealth (companies) regimes.
The leu recommendations fo the Woodward & Marshall Report are consistent with earlier major reports commissioned by the Commonwealth government (1995 Industry Commission Report and Charities Definition Inquiry Report 2001), as well as the Nonprofit Regulatory Reform Program proposed by the National Roundtable of Nonprofit Organisations (press release, May 2004).
Download the file/The%20Case%20for%20Reform.pdf
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