Transparency - sure thing!
Most of us in the charity sector believe in transparency, but it is both hypocritical and ill-informed for this government to argue the community is demanding more transparency from charities in disaster recovery or in any other area, writes CCA CEO David Crosbie.
The government is currently proposing to introduce a voluntary transparency code for charities receiving donations related to disaster recovery. What might appear to be a relatively benign suggestion to improve communication between charities and donors carries with it many implications about the role of government and the role of charities.
Few people would argue against the concept of transparency as a value within most organisations.
For the charities sector, transparency and engagement with donors is critical. The most important commodity traded by charities is trust. Authentic engagement with donors is the hallmark of effective fundraising. Given the highly competitive market forces that often apply in fundraising and donor retention, it would be counterproductive for charities to obscure their donor supported activities.
The charities sector itself has championed increased transparency through strongly supporting the establishment of the Australian Charities and Not-for-profits Commission including the requirement to lodge annual returns providing a significant level of detail about the people involved and the activities undertaken by every registered charity in Australia.
I have seen no evidence in any government discussion papers or any research into the charities sector suggesting charities have a problem with transparency.
I have seen no evidence suggesting that donors feel they are not getting the information they need or want from charities.
What we all too regularly see is ill-informed media commentary about charities and their overheads – often from people who make more money if they can be more sensational – and sometimes we see political grandstanding. It is not unusual for a government politician to deflect away from their own program failures by pointing their finger at another group. We saw quite a few examples of this behaviour following the catastrophic bushfires in 2019/2020.
When it comes to fundraising, however, there are clearly problems with the kinds of registration processes and disclosures currently required of charities by governments across Australia. As reports from the recent Royal Commission into Natural Disaster Management, the 2019 Senate Committee Inquiry, and two Productivity Commission reports have highlighted, our current fundraising regime is not fit for purpose.
A study by Piazza Research conducted in June this year of over 600 charities found that 39 per cent of the charities engaged in fundraising were non-compliant with all the required laws and regulations. This is not because these charities are engaging in civil disobedience, or trying to avoid scrutiny, but because the complexity of the whole process has made it almost impossible to meet every regulatory requirement.
If the government was serious about transparency, there would be one simple set of fundraising principles that would be at the heart of all fundraising requirements. These would include donor transparency measures. Provided the charity had agreed to meet these principles and report their activities through the ACNC, they should be granted a fundraising license.
This more transparent approach to fundraising and fundraising regulation has been strongly supported by the #fixfundraising coalition and most of the charities sector.
Having a separate charity fundraising transparency code for disaster recovery donations also seems to be ignoring key issues experienced by communities in coming to terms with disaster recovery.
In my experience the two groups that need more transparency when it comes to disaster recovery in Australia are governments and insurance agencies.
Insurance agencies are often private entities and have various commercial in-confidence and other requirements that might limit their transparency, but I still think that the insurance industry could do a great deal more to facilitate transparency around their actions in relation to natural disasters.
Governments are officially required to provide a level of transparency in their expenditure of taxpayer money. There are legal requirements covering the spending of public monies as set out in the Public Governance, Performance and Accountability (PGPA) Act including the following three principles:
- achieving value with relevant money;
- governance and accountability; and
- probity and transparency.
Meeting the requirements of the PGPA Act also requires the following: “The minister must not approve the grant without first receiving written advice from officials on the merits of the proposed grant or group of grants,” and “ministers (including senators) must report annually to the finance minister on all instances where they have decided to approve a particular grant which the relevant official has recommended be rejected.”
A strong argument can be made that the current federal government ignores many of these legal requirements and is among the most secretive and non-transparent Australian governments in history. For example, their record on responding to Freedom of Information requests in a timely way is, at best, poor. The prime minister’s own office complied with legally imposed deadlines in just 7.5 per cent of the freedom of information requests it received last year.
Nick Feik writing in The Monthly earlier this year drew on an extensive set of examples to argue that the Morrison led government “is a government that pursues those who keep it accountable, ignores ministerial codes of conduct, is unconcerned by conflicts of interest, is intent on shielding its workings from the public, and distrusts its own agencies and institutions”.
The contrast between charities and this government could not be starker. Charities have sought out accountability and actively work on building stronger relationships with their donors. The government has actively sought to cloud its decision making in secrecy.
Most of us believe in transparency, but it is both hypocritical and ill-informed for this government to argue the community is demanding more transparency from charities in disaster recovery or in any other area. It makes even less sense to develop a new stand-alone fundraising transparency code that will only apply to a particular set of donations. We need to fix fundraising once and for all.
CCA will be opposing the government proposal to develop a new voluntary transparency code for charities involved in disaster recovery. You can too by making a submission here.
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