SUMMARY
It’s always good to get an insight into the
NFP sector, particularly when that insight compares New Zealand and Australia,
so the Grant Thornton report is worthwhile reading. Bear in mind that their findings are based
on a small sample size of only 416 organisations out of about 690,000
organisations in the Australasian NFP sector.
I have to admit I’m still not convinced
about the final conclusion that there are “few significant differences between
New Zealand and Australia”.
From the points highlighted in this blog,
it looks to me like Australia’s NFP sector is way ahead of New Zealand in the
use of social media, concerns about compliance and government regulations, the
level of board member awareness of their obligations, NFP support for a
national regulator, and NFP reliance on government funding.
So rather than the Australasian NFP sector being
homogenous, there are still enough differences for us to take lessons from our neighbour
across the ditch.
DETAILS
Here are eight observations in the survey that
caught my eye.
1. By and large, and once size and turnover are
taken into account, there are few significant differences between New Zealand
and Australia (p.4).
On the face of it, this observation isn’t unexpected
because New Zealand and Australia have so many similarities. However I wonder what a detailed analysis,
rather than a small survey, of the two sectors would uncover. For
example, are there significant differences in the NFP structures and vehicles
used? Do significantly more NFPs qualify
for donation tax credits / deductible gift recipient status in one country than
another? Which country has the most
effective tax policy for NFPs? Does the
proportion and profile of NFP volunteers significantly differ between the two
countries? The survey left me questioning
whether there actually are significant differences in the two NFP sectors but
the areas of difference just aren’t canvassed in the survey.
2.
The use of social media is one area in which Australian organisations seem to
be generally more sophisticated than their New Zealand counterparts (p.5). The survey reveals that 79% of New Zealand
respondent’s organisations have a website, whereas the corresponding figure is
99% in Australia (p.23).
They could well be right. Shame on New Zealand NFPs for being stuck in
the twentieth century.
3. Funding and fundraising were identified as
the major issues by around three quarters (76%) of New Zealand respondents and
around two thirds (68%) of Australian respondents (p.6).
No surprises here. I doubt this will ever
change - funding is always going to be a dominant issue for the sector.
4. Australian NFPs are particularly concerned
about government and compliance with government regulations, including new
governance standards by the Australian Charities and Not-for-profits Commission
(ACNC) and the introduction of the National Disability Insurance Scheme. By contrast, government and compliance were
not such significant issues in New Zealand (p.6).
Australia’s multiple layers of government,
particularly at the State/Territory and Commonwealth levels, make it no surprise
NFPs would be more concerned with compliance that side of the Tasman. That is why they are so focused on
initiatives to reduce red tape and administrative burdens on the sector. Perhaps the Australian concerns are heightened
because their legislation tends to have more administrative and other penalties
for non compliance, so the consequences of not complying with government regulations
can be harsh on NFPs. Australian law
also tends to be more prescriptive – for example they have regulated governance
standards for registered charities whereas New Zealand has not. Arguably, however, that gives the sector more
certainty about what is expected, so it raises the sector standards and
consequently the level of public trust and confidence in NFPs.
5.
Directors and Trustees of NFPs are expected to meet increasingly high standards
of performance and accountability. Less
than half (43%) of New Zealand respondents said that all board members
understand this, compared with 65% of Australians (p.10).
The paper notes that “there is still a need
for board member education within the sector”.
If 57% of New Zealand boards have at least one member who does not understand
their responsibilities, then you can’t argue with that conclusion.
6.
New Zealand has recently introduced a number of changes to financial
reporting. 77% of respondents said they
were aware of the changes and the compliance requirements are largely seen as
reasonable. However one in five were
unsure about their impact (p.14).
This was a surprisingly positive result in
respect of the upcoming New Zealand changes, especially given the very high
level of special purpose, unaudited and poor quality financial accounts
provided to the charities regulator at present.
Perhaps the NZ authorities should be congratulated for ensuring there is
public awareness of the changes. On the
other hand, perhaps the level of positivity would significantly reduce if the
sample was just taken for small charities.
7. In
Australia the ACNC commenced in December 2012, the charity governance standards
came into force from 1 July 2013 and the Statutory Definition of Charity Act
comes into force on 1 January 2014.
Australian respondents support the direction of the reforms with a clear
majority (83%) believing the sector needs a national regulator (p.16).
This is great news for the ACNC. Hopefully Grant Thornton’s findings have some
sway with the new Liberal Government, which is on record as saying it will abolish
the ACNC, replacing it with a centre for excellence focused on innovation,
education and best practice. The
findings might also be useful ammunition for the ACNC supporters who don’t see
any advantage in having an emasculated regulator.
8. In 2013, government grants and contracts
were the most significant funding source for 53% of New Zealand respondents,
whereas they are the most prominent source of funding for 79% of Australian
respondents (p.30). Those organisations
in the social services sector are most likely to rely on government grants and
contracts and generally deliver services for which government agencies are the
default funder.
The paper concludes that NZ NFPs are trying
to become less reliant on government funding.
Maybe so. Although perhaps
government funding in Australia is just more obvious, with its vast array of
Commonwealth Grant Guidelines and acquittal forms, whereas in NZ NFPs are less
likely to recognise funding from the likes of lotteries and councils as
government funding. In any case, the
difference between 79% reliance on government funding and 53% does appear to be
quite significant.
