Blueprint for NFP reform

The AICD’s flagship policy document, Governance of the Nation: A Blueprint for Growth sets out an agenda for NFP regulatory reform. AICD General Manager, Advocacy, Louise Petschler, explains the need for a partnership-based approach between government and the sector.

The AICD recently released its call for action on national reform priorities in Governance of the Nation: A Blueprint for Growth 2017 (the Blueprint).

The Blueprint calls on Australia’s political and business leaders to take action to end policy and governance paralysis. The comprehensive plan outlines recommendations in six key areas to help boost productivity and ensure Australia can face its current economic and social challenges.

Recognising the critical role that Australia’s not-for-profit (NFP) sector plays within the social and economic infrastructure of the nation, the Blueprint includes a call for a new partnership approach with the sector as one of its six pillars.

In the Blueprint the AICD argues that a streamlined, consistent and fit-for-purpose regulatory regime for NFPs should be a national priority.

Drawing on feedback from our members, including the findings of our annual NFP Governance and Performance Study, the Blueprint makes two key recommendations to help improve the regulatory challenges facing the sector:

1. Improve the funding environment for not-for-profits to support good governance and a more impactful sector

The way government funds and procures services from NFPs has a major influence on their governance, performance and sustainability. Short-term, ad hoc and outputs-driven funding prevents NFPs from focusing on the strategic and long-term challenges they seek to address. The AICD is concerned that many NFP directors are exposed to unreasonable risk as funding arrangements are changed, withdrawn or delayed, including the potential for insolvent trading.

We are calling for the adoption of a best practice model for government funding agreements, implemented on an ‘if not, why not’ basis, to establish:

• Five-year cycles for funding agreements, with 12 months’ notice of termination (where appropriate and feasible);
• Outcomes-focused reporting, with a focus on ‘report once, use often’ through the ACNC;
• Freedom of voice in public debate for government-funded NFPs and their boards; and
• Investment in internal governance and capacity building as part of all funding agreements.

2. Develop a fit-for-purpose regulatory regime

NFPs are subject to an out-of-date regulatory regime that stifles innovation, wastes resources and distracts NFPs from pursuing their missions efficiently and effectively. A modern and fit-for-purpose regulatory regime is required to support the demands of an increasingly complex environment.

The AICD is calling for:

• A simplified reporting framework for NFPs supported by a ‘report once, use often’ approach across all Australian Government agencies; and
• Greater access to aggregate government data to support NFPs to be more impactful.

These reforms will strengthen and improve the landscape for NFP organisations and support a high standard of governance, outcomes and efficiency.

The AICD will continue to lobby strongly for these policy goals on behalf of the NFP sector to government and we will continue to make the case that supporting good governance among NFPs will have positive flow-on effects to individuals, communities and the economy.

Download a copy of Governance of the Nation: A Blueprint for Growth 2017.