Charities would be forced to disclose the percentage of donations spent on marketing and administrative costs in order to retain deductible gift recipient status under a plan by a Liberal MP.
In a speech to federal parliament last week, former Howard Government minister Mal Brough said he wanted to challenge the more than 26,000 Australian charities with deductible gift recipient (DGR) status to voluntarily provide the information in the first instance.
“Because nothing peeves an Australian more than when they have given some money to someone and they do not think it has gone to the cause for which it was intended,” he said.
Mr Brough said that in 2007 tax deductions from charitable donations amounted to about $2 billion.
He said by charities providing information about their marketing and administrative costs in “clear, unmistakable clarity” it would help strip away any lack of faith or trust in their work.
“I would encourage this government, in the event that charities do not take up this challenge, for those who are deductible gift recipient beneficiaries, that it becomes a condition of receiving DGR status that they make the public aware of this,” Mr Brough said.
He denied such a move would create additional red tape.
“All these organisations have to be externally audited, and all we are asking the auditors to do is to tell us what percentage of this money received is actually going to its intended user,” he said.
Mr Brough said parliament had already debated laws to bring greater transparency and accountability to registered organisations and that disclosure requirements for MPs had also increased.
Fundraising Institute of Australia chief executive Rob Edwards said the comments were surprising, particularly since the government had flagged its intentions to scrap the Australian Charities and Not-for-profits Commission (ACNC).
“On one hand we’ve got the government suggesting they want to unwind the ACNC, which is the very vehicle that can provide the transparency he’s talking about,” he said. “It doesn’t seem to quite make sense.”
“It seems to me to be a little ill-informed. It seems to assume that charities are spending too much on marketing and administration. That is really yet to be substantiated by anybody.”
Mr Edwards said such disclosure would require a standard reporting format, which was yet to be established, to accommodate different charities and ensure costs were not disguised.
“What we need to do is get a standard set of accounts that compares apples with apples,” he said.
