Charity regulator is failing us.

Oct 11, 2020

Charity scams are on a rocket trajectory. Since 2019 they have risen by a massive 70%. There have been more than 1000 charity scam reports since the beginning of this year.

What stands between us with our generosity and gullibility and the sociopaths who wish to use those virtues like passwords to get into our bank accounts? Why the Australian Charities and Not-for-Profits Commission (ACNC), of course.

There is much that is wrong with this regulator. For example, it has an imbalance in its mix of responsibilities. Its compliance budget is half its IT budget. The Commission’s annual reports no longer publish the number of compliance staff, presumably because it is too embarrassing for them. There are about 17 staff in the compliance section. Just a football team plus reserves to oversee 58,000 registered charities!

Clearly the ACNC is too small for its purpose. With such limited resources the ACNC must rely largely on self-assessment and denouncements. There is abundant evidence that charities regularly lie to the regulator about their accomplishments. Take homelessness. As the number of people without permanent shelter rises to crueller heights so do the number of charities working in that area. Shouldn’t this relationship be an inverse one?

The most recent reliable figures on homelessness in Australia show that for every 10,000 people, 50 are homeless. Yet, and remarkably so, 46,716 registered charities claim that combatting homelessness is one of their core missions. In other words, 81% of all charities registered with the national regulator in mid-2019 say they are working in the homeless area. There is something very wrong here and it would take a massive research project to get to the bottom of it. Charity fraud, fallacious reporting and non-performance by charities, along with the charity regulator’s reliance on self-reporting from charities as to what they do (to secure luscious tax advantages) should be targets of a lot more research and political action.

The charity regulator also operates in an inflexible culture of secrecy. It does not provide details of its enforcements. So, the donor community will never know what the Australian Foundation for Disabled Children & Youths Ltd and Pockets Australia Pty Ltd did to deserve licence revocation. Nor will it ever know the identity of the key players in these organisations.

The captain of this ship, Gary Johns, is paid a salary of $350,000 salary. Questions have been asked as to whether he is the right man for the job. The Community Council for Australia’s chief executive, David Crosbie has said:

The ACNC commissioner is a very tough gig. It requires real expertise, personal capacity, and a commitment to enhancing the valuable work done in our charities sector. Dr Johns has demonstrated none of these characteristics. I fail to see how Dr Johns could manage an agency of over 100 dedicated staff, administer a complex set of laws and regulations, provide responsive services, reduce red tape and build community trust and confidence in the charities sector. Only a government committed to attacking the charities sector would put someone like Gary Johns in as head of the ACNC.

Certainly, Johns’ interesting career matches the ideological shift in public policy since the 1970s. He has gone from being a Labor politician to a senior fellow at the influential citadel of capitalism, the Institute of Public Affairs, to chair of the ACNC.

As a 35-year-old, Johns won the north Brisbane working-class seat of Petrie at the cliff-hanger 1987 federal election. Johns represented Petrie until his defeat in 1996. He was there at the end of “old Labor”. His parliamentary apprenticeship was served under the leadership of the Bob Hawke and Paul Keating.

Johns was there at this important phase of change. It was formative for him. He served his ideological internship in this new market-loving paradigm that Hawke and Keating shaped.

John Howard brought the conservatives back to power in 1996 as the (false) champion of the Aussie battler. Johns was defeated by the Liberal candidate Teresa Gambaro. He soon secured employment with the IPA. As a senior fellow, he headed the IPA’s Non-Government Organisational Unit, set up to investigate charities that attacked business. Now he runs the charity regulator.

I always said you really belonged on our side Gary … I’m sure we’ve got a spare blue T-shirt somewhere here we can give you …

This statement was made in July 2015 by the then Liberal member for Petrie, Teresa Gambaro, as she launched Johns’ book, The Charity Ball: How to Dance to the Donors’ Tune, at a function organised by (another) right-wing organisation, the Brisbane-based Australian Institute for Progress. Gambaro now claimed Johns as a firm friend.

Johns’ book sets out his views on charity. At the launch, Gambaro summarised it thus:

As Gary quite bluntly, but regrettably and very accurately puts it, too many charities in Australia do little or no charity work. Too many receive most of their income from government and too many lobby governments for even more.

The ‘charitable purpose’ being pursued here is all too often the pursuit of the charity’s own existence.

I see a lot to agree with here. The worry is Johns’ attitude to advocacy charities, the ones that dare question government policy. In 2006, a small charity entered the cross hairs of the Howard government. The full force of the Australian Taxation Office (ATO) was applied against Aid/Watch, a charity whose purpose was to monitor and campaign around the delivery of overseas aid. Aid/Watch had been accepted by ATO as a charitable institution and as such received various taxation exemptions.

The ATO Commissioner revoked these exemptions in October 2006 on the grounds that he believed Aid/Watch was a political organisation. From that point on Aid/Watch was in a four-year David & Goliath legal struggle with the ATO. After the Tax Commissioner disallowed an objection to his decision, Aid/Watch appealed to the Administrative Appeal Tribunal and won. The AAT found that Aid/Watch’s major objective was the relief of poverty, but the Full Court of the Federal Court found that Aid/Watch’s main purpose was not charitable but political. The matter was decided by the High Court in December 2010. By a 5:2 majority Aid/Watch got its charitable status returned because the Court said it contributed to public welfare. End of story?

Gary Johns’ response to the High Court decision in Aid/Watch decision was a little worrying:

The Abbott government promised to abolish the Charities Act 2013, which includes advocacy as a charitable purpose. It must make good that promise in a way that makes it clear to the High Court that advocacy is not a charitable purpose.

The ACNC’s first strike against a so-called advocacy charity was Catholic Education Melbourne. A week before the Batman by-election on 17 March 2018, Catholic Education Melbourne distributed leaflets and put through more than 30,000 robocalls to electors. The purpose of the action was to ask voters not to vote for the popular Greens candidate but to vote for the star Labor candidate, Ged Kearney, and thereby send a strong protest vote to Canberra about the government’s school funding policy. There is no doubt that this activism helped the Labor candidate win Batman.

The ACNC bided its time and finally swooped in early July 2018. As its chair, Johns said:

We are undertaking this investigation [of Catholic Education Melbourne] because of the activities and statements made on behalf of this one charity during the recent by-election for the federal seat of Batman… It has arisen from a concern that the charity may … not be entitled to be a registered charity.

So far, so good for Catholic Education Melbourne. It remains registered with the ACNC as having the charitable purpose of “advancing education”. That move against Catholic Education Melbourne was significant because it showed the resolve to rein in charities that criticise government action.

It is also significant because it shows a double standard. It seems there are advocacy charities that the government likes and advocacy charities that it doesn’t like. In the March 2017 Western Australian election, registered charity the Australian Christian Lobby handed out political leaflets in targeted polling booths urging electors not to vote for the ALP candidate because of their support for the controversial Safe Schools Program. This is exactly what Catholic Education Melbourne is accused of but there is no evidence of the ACNC investigating the Australian Christian Lobby.

There you have it. A national charity regulator that is too small, too timid, too confused, and too powerless.

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