We have urged that the Charities Directorate in Canada be given more leeway to provide information to the public when charities are involved with serious non-compliance. Here is an example of a submission we recently made to the Finance Committee in Canada.
It is interesting to see the Australian government moving towards providing the Australian Charities and Not-for Profits Commission (ACNC) with an increased ability to disclose information about charities.
Here is an excerpt from a recent speech by The Hon Dr Andrew Leigh MP, Assistant Minister for Competition, Charities and Treasury, Assistant Minister for Employment:
The ACNC takes potential misconduct in the charity sector very seriously, and investigates where necessary. In 2021‑22 the ACNC finalised 96 investigations, which resulted in a range of outcomes, including the revocation of 15 charities’ registration for serious and ongoing non‑compliance.
However, secrecy provisions currently prevent the ACNC from disclosing whether it is investigating alleged misconduct by a charity, the outcomes of investigations, and/or the reasons for revoking the registration of a charity.
This limits the ability of the public and charities to learn from ACNC regulatory activities, and adversely impacts public trust and confidence in the sector and in the ACNC as an effective regulator.
Recently the ACNC was able to publicly disclose an investigation into allegations around misconduct by the Hillsong Church, which was crucial to sustaining public confidence in the ACNC as an effective regulator. However, the ACNC was only able to make this disclosure because of Hillsong’s consent. In most cases, the ACNC is unable to communicate its actions, which impacts trust and confidence.
The 2018 ACNC Legislation Review identified the ACNC secrecy provisions as overly restrictive and have recommended reforms to enable increased disclosures from the ACNC.
A 2021 consultation with the charity sector also revealed support for increased disclosures given the educational benefits and the potential to lift public trust and confidence in a sector that relies heavily on donors and philanthropists to support its activities.
As part of the Budget measure, we will amend the ACNC Act to promote greater transparency and accountability within the sector, whilst balancing potential reputation risks to charities and the need to ensure personal and confidential information is handled appropriately.
The ACNC Act will be amended to expand the ACNC Commissioner’s ability to publicly disclose information about the ACNC’s regulatory activities in three areas. The Commissioner will be able to disclose:
- information about the existence of an ongoing investigation into a charity where disclosure is necessary to prevent public harm;
- finalised compliance investigations that did not result in formal compliance action, where disclosure is in the public interest; and
- summary reasons for revocation of a charity’s registration.
The ACNC will also begin to publish de‑identified reasons for decisions to accept or refuse applications for registration of charities where these are of educational benefit to the charity sector.
A few points to note. First, there is support from umbrella organizations in Australia. I am still waiting for umbrella organizations in Canada to push for loosening the confidentiality rules to allow CRA to disclose the existence of an ongoing investigation into a charity where disclosure is necessary to prevent public harm. If some groups have supported that please do let me know.
Second, the cost of lack of transparency can be staggering – perhaps tens of billions of dollars in Canada. We have $334 billion dollar sector. We now have very low public trust in the charity sector. Imagine how much more people would donate if they had trust in charities! Imagine how much time and energy would be saved by the public, grantmakers, journalists and others if charities provided uniform information on their operations. Think of people wanting to misuse charitable resources – better transparency will not eliminate it – but it will make it harder to get away with it. It is not surprising that the minister was formerly an economics professor! Here is my recent submission on transparency in the Canadian context.
Here are some articles written about the changes in Australia:
Minister steps up moves to remove secrecy muzzle from ACNC
Charities minister Andrew Leigh reveals details of transparency push