Religious exemptions may be impacting public trust and confidence, says the charities regulator

Si Gladman / 07 May 2024

The national charities regulator has conceded that special exemptions given to a category of religious charities may be impacting public trust and confidence in the charities system.

In a submission, the Australian Charities and Not-for-profits Commission (ACNC) also said the “reduced transparency” around Basic Religious Charities (BRCs) was slowing down the regulator’s compliance work.

ACNC Commissioner Sue Woodward made the submission in late February to the Productivity Commission’s draft report for the inquiry into philanthropy.

“Currently, BRCs are not required to provide any financial information. This means that 16.3% of charities on the Charity Register do not have information about their finances publicly available, other than the small number of BRCs that provide information voluntarily,” said Ms Woodward.

“This reduced transparency may impact public trust and confidence in the charity sector and slows our reactive and proactive compliance work. It also means that there are incomplete data about the charity sector available to users, such as other government agencies and researchers.”

The ACNC’s comments add weight to the growing public calls for greater transparency and accountability of religious charities.

Late last year, the independent Productivity Commission recommended, in its draft report, removal of the BRC category in order to enhance “public transparency and accountability” in the charities system.

The Productivity Commission referenced the Rationalist Society of Australia’s submission noting concerns about different governance and reporting requirements contributing to a lack of transparency and accountability.

In a submission in February to the Productivity Commission’s draft recommendations, the RSA welcomed the Commission’s support for removing the BRC category.

The Productivity Commission is due to deliver its final report to the Albanese government this week, with the government required to table the report in parliament within 25 sitting days – which will be about mid-August.

A 2018 ACNC review of charities legislation recommended amendments to reduce the burden of financial reporting by BRCs if the exemptions to governance standards and financial reporting were to be removed.

That report recommended reviewing the exemptions only if reforms were adopted to remove the powers of the ACNC to replace a responsible person and to allow an entity to be presumed as complying with governance standards if it already complied with comparable government requirements.

But research shows that the overwhelming majority of BRCs operate through denominational frameworks already subject to far more onerous financial reporting requirements than required by the ACNC.

Also, some religious charities are incorporated and already subject to full governance and disclosure rules.

Si Gladman is the Executive Director of the Rationalist Society of Australia. He also hosts ‘The Secular Agenda’ podcast.

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