Australian government inquiry into controversial bill provides clarity for nonprofits, but few solutions

The Australian flag at the Parliament House in Canberra. Photo by: Steve Bittinger / CC BY

CANBERRA — A government inquiry released this week confirms that Australian charities and not-for-profits will likely face large administrative and financial burdens under proposed legislation to curtail foreign political influence.

The advisory report, released by the Joint Standing Committee on Electoral Matters on April 9, provides recommendations to Prime Minister Malcolm Turnbull and his government on challenges that exist to legislation introduced late last year and how they should be addressed — including to better support charities.

“These recommendations provide greater clarity for charities and align definitions as closely as possible with the intent and principles of the Bill, while ensuring regulatory and compliance burdens are minimized,” Senator Linda Reynolds, chair of the committee, wrote in the foreword of the report.

Despite extreme concerns that charities could be silenced from public debate or even close shop for fear of facing new administrative burden under the proposed legislation, the recommendations from the committee are not to throw out the bill, seek greater consultation, or exclude charities from the changes. The final recommendations make it clear that the government still perceived charities as political campaigners and potential avenues for foreign influence.

Responding to concerns of administrative burden

Large administrative burdens are expected under proposed legislation, which requires charities that are involved in forms of political advocacy to identify whether donations are from residents of Australia or foreign countries. This is for all individuals whose cumulative donations during a single financial year exceeds 250 Australian dollars.

The report proposes changing legislation to allow charities to assume donations are from allowable donors unless noted otherwise.

“The Committee is of the view that the Government should consider a definition that contains the presumption that all donors are allowable donors unless they fall into a non-allowable donor category,” the report reads. “Non-allowable donors would be those individuals that are not Australian citizens or residents, and entities that are not incorporated or have their principal place of business in Australia. The Minister should retain the right to determine non‐allowable donors by legislative instrument.”

Statutory declarations required by donors should only be required if charities have doubts as to the donors’ identity, according to the report. “Otherwise, the onus should be on the donor to self-declare they are an allowable donor,” it reads. This would simplify the process requiring charities to determine whether a donor is non-allowable.

The report proposes penalties for anyone making a false declaration as to their country of residence.

The committee also recommended that the government “consider removing the aggregation of donations received under the allowable amount, provided that appropriate anti-avoidance measures are implemented.”

Clarifying political expenditure

An area of major concern, and confusion, for NGOs is the definition of political expenditure in the proposed legislation. Under existing definitions, charities need to report on spending for political advocacy during an election period. But the loose definition in the proposed legislation means that charities would have to pre-empt what will be a political issue — and report it under the new law, just in case.

The report acknowledged that this language needed to be tightened.

“Under a more precise definition of ‘political expenditure’, non-partisan issue advocacy of the type commonly engaged in by many charities and not-for-profits would not be considered,” the report reads. “Further, the definition of ‘political expenditure’ needs to more explicitly define the type of expenditure that is undertaken to influence voting intentions. This will also assist applications for public funding under the proposed new arrangements. This definition should balance the need for objective rules, removing subjectivity from decision-making, with ensuring the regulatory framework can be responsive to changing campaign methodology.”

Altering and clarifying the definition of political expenditure, the committee believes, would “provide surety to the charities sector that their general advocacy work — provided that it does not aim to influence voter intentions — will not be impacted by the Bill.”

The report recommends including a definition of “political purpose” in final legislation to reduce any confusion.

Underplaying the concern of charities

While the report did address some concern of charities, it said the changes were aimed at addressing “confusion.”

“It is apparent from a number of submissions received by the Committee that there is a degree of confusion amongst the charities sector about the impact of the proposed Bill on their activities, specifically whether a charity will be able to continue to receive foreign monies for its charitable purpose other than for political expenditure,” the report reads. “This is not the case, the Bill specifically excludes charities from the prohibition on soliciting foreign funds, as long as these funds are not used for domestic political purposes.

“The Bill’s proposals will not impact the majority of the some 55,000 charities operating in Australia. Those charities that currently have no requirement to provide third party returns under existing provisions of the Electoral Act will not be affected by the proposed amendments.”

The report’s recommendations in relation to concerns of charities, according to the committee, were therefore to provide clarity rather than resolve issues in how it was drafted.

Attacks on charities continue

Just as the report downplays concerns of charities, it also continues attacks on charities witnessed at the public hearings held for the inquiry. Large portions of the report are dedicated to painting a picture of a charity sector that is highly political in their advocacy.

“We were trying to influence voters through the campaign all the time during an election period,” the report quotes Marc Purcell, CEO of the Australian Council for International Development, as saying.

Comments by Krystian Seibert, insight and advocacy manager with Philanthropy Australia, suggested a number of charities have breached existing legislative reporting requirements.

“When looking at the list of organizations that have submitted returns, there are many organizations on that list — and I won’t name them, because I don’t want to do them in — who I know undertake public expression of views on an issue in an election and have not submitted a return,” he is reported as saying.

The report notes that the Australian Charities and Not-for-profits Commission and Australian Electoral Commission raised concerns about both comments; it recommends that the government consider introducing administrative action to support consistent compliance with the provisions of the Electoral Act.

The response to the report

The Human Rights Law Centre welcomed the report, which they said recognized “major problems” in the donations bill — particularly as it applied to individuals and organizations that were not standing for election.

"The bill in its current form is incoherent, unworkable, and a threat to our democracy,” Aruna Sathanapally, director of legal advocacy at the Human Rights Law Centre, told media. “The Committee’s report makes key bipartisan recommendations that any foreign funding restrictions on civil society be limited to electioneering — not non-partisan issue advocacy and public comment at large as is the case in the current bill. It also recommends that the compliance regime be vastly simplified. These changes are absolutely necessary.”

But there were still many more issues the bill needed to overcome, she said, saying it will still impose a foreign funding ban on organizations outside of government year-round and threaten democracy.

ACFID were less complimentary, calling the report a “dud” and asking for the bill to be withdrawn and redrafted after a proper consultation has taken place.

“The Committee has tried to patch-up this broken bill, but it’s beyond repair and needs to be replaced,” ACFID CEO Marc Purcell told media. “We strongly believe in greater transparency in our electoral system and the sources of funding for political activity, but we remain concerned that the Committee does not clearly defend civil society's right to use international philanthropy for advocacy for human rights protection, poverty alleviation, or wildlife conservation. This will shut the door on key sources of funding and Australian communities will consequently bear the brunt of the withdrawal of charities’ services, support, and advocacy.”

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About the author

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    Lisa Cornish

    Lisa Cornish is a Devex Reporter based in Canberra, where she focuses on the Australian aid community. Lisa formerly worked with News Corp Australia as a data journalist for the national network and was published throughout Australia in major metropolitan and regional newspapers, including the Daily Telegraph in Melbourne, Herald Sun in Melbourne, Courier-Mail in Brisbane, and online through news.com.au. Lisa additionally consults with Australian government providing data analytics, reporting and visualization services. Lisa was awarded the 2014 Journalist of the Year by the New South Wales Institute of Surveyors.