Small parishes and churches that are exempt from financial reporting to government authorities already report financial information within their own denominational structures at levels far exceeding that required of other small charities, the latest RSA Webinar has heard.

At Wednesday’s webinar, guest speaker Dr Philip Saj shared findings from his research on Basic Religious Charities (BRCs) – the only type of charities exempt from reporting financial information to the Australian Charities and Not-for-profits Commission (ACNC).

Dr Saj, a Visiting Scholar at The Business School at University of Adelaide, noted that one of the justifications for introducing BRCs about 10 years ago was that small parishes and churches would have limited administrative capacity to meet financial reporting obligations.

However, Dr Saj revealed that small parishes and churches have not only greater human resources than other small charities but also have onerous financial reporting requirements within their denominational structures.

“…the overwhelming majority of Basic Religious Charities operate within a domination framework, and they have finance reporting requirements imposed on them through those frameworks which are far more onerous than those required under the ACNC Act,” he said.

“For small charities under the ACNC Act, they need to only report 12 line items of financial information – that is, small charities that are not Basic Religious Charities – whereas small Basic Religious Charities reporting within their denominational frameworks were required to report 20, 30, 40 lines of financial information.”

In his research, Dr Saj found that 81 per cent of 8086 BRCs were small parishes and churches, while 19 per cent were engaged in other activities, including Religious Charity Development Funds, property trusts, trading entities, welfare services, and governing, administration and coordinating bodies.

He found that 82 percent were considered small (revenue below $250,000), 14 per cent were medium (between $250,000 to $1 million) and 3.6 per cent were large (more than $1 million).

Dr Saj argued that removing the reporting exemption for BRCs would enhance public trust and confidence in the charities system – which was one of the key objectives of setting up the ACNC.

He said the category of BRCs had been a surprise addition to the ACNC Act in 2012, with the provision introduced during the legislative process with little commentary and the only public justifications made five years later.

Among the other justifications for BRCs having no need for external accountability included the argument that BRCs received their financial support from members and not from the public, and that BRCs already operated within denominational structures with binding financial reporting requirements.

“I think the rebuttal to that, of course, is that Basic Religious Charities, like all charities, receive indirect benefits through concessional tax treatment – income tax, fringe benefits tax, goods and services tax are not paid – and they get significant reductions in the payment of council rates, other levies, land tax and utilities connections and things like that.”

“The overwhelming majority of Basic Religious Charities do operate within a denominational framework. But the principles upon which the ACNC are based are based on public rather than private relationships.

“One of the three objectives of the ACNC Act was to promote trust and confidence in the charity sector. And promoting trust and confidence is achieved in large part through transparency of reporting.” 

Dr Saj will present his research to the Assistant Minister for Charities, Dr Andrew Leigh.

Also appearing during the webinar was Alec Spencer, a lawyer who is completing PhD research on the relationship between religious fiscal privileging and child sexual abuse.

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Si Gladman is Campaigns & Communications Coordinator for the Rationalist Society of Australia.