Australian Charity Regulator is Safe for Now

February 09, 2015 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: News, Global Giving, Ethics and Canadian Charities, Avoiding 'Charity' Scams

A few years back the Australian government set up the Australian Charities and Not-For-Profit Commission (ACNC).   Then a new government came into power and decided that having the ACNC was just red tape and that it should be abolished.  Thankfully that new government has done some reconsidering.   Here is an article from Pro Bono Australia http://shar.es/1oiJBZ 

When it comes to charity regulation you want a fair and strong regulator. Otherwise you will have some real scammers hiding behind charities and no one can do anything about it.   There are many different models of regulation from self-regulation to an independent regular (such as a charity commission) to having a government department such as the CRA or IRS handle regulation.   Unfortunately around the world we have seen too much musical chairs when it comes to charity regulation and in other cases dramatic cuts to resources.   

You also want to have ONE regulator.  Nothing worse than having two or 14 different groups telling you to do things differently or to file different forms every year.  Even if you don't like the regulator - better to have one you don't like and can manage than lots of them and you have to work to the lowest common denominator.    Australia was moving toward having more functions with the ACNC and less reporting etc. with each state.  That is a good idea and actually reduces unnecessary paper work. In an age of increasing terrorism and misuse of charity assets the Australian government should keep its hands of the ACNC.  

In the US the IRS exempt area has had significant budget cuts and is mired in a scandal.  Essentially there is little oversight of the 1.4 million 501(c)(3) except at a state level which is patchy at best.  A perfect environment for people to abuse the trust in charities. The main regulator of charities in the US seems to be the media - yes they get the bad guys but news coverage can be like a nuclear weapon with a lot of collateral damage and distrust of the sector created.      

In Canada, we largely have the Charities Directorate handling regulation of charities, although they only regulate registered charities.   Some have suggested that every province and territory should get more actively involved in the regulation of charities - I think that would be a disaster.  A national charity in Canada would then have to deal with 14 different regulators with different demands and lots of overlap.  I like regulation but that strikes me as excessive.  Sort of you like you can love eating hot dogs but a hot dog eating contest is something else! 

The Charity Commission of England and Wales has had its workload increase and budget slashed by almost 50%.  Not a sustainable model.  New Zealand set up a charity commission and took it down and placed it in government.

Enough with all the tinkering - try to have one charity regulator in each country and provide it with the resources that it needs.  Otherwise you are either providing a free ride to those who want to take advantage of charities or you are drowning charities in unnecessary regulation.

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Charity Lawyer Mark Blumberg

Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.

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