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Bushfires generosity will not be betrayed by charities

5 February 2020

ACNC Commissioner, the Hon Dr Gary Johns, addresses concerns raised about charities' use of funds for bushfire relief in a column published by The Australian. The column is reproduced here in full with permission.

If charities did not exist, we would need to invent them. That is how important they are to Australia.

Who else could organise resources around particular needs year in, year out, when the world is not looking, not momentarily taken with a particular crisis, and relieved to turn the page when something else turns up. Something else always turns up. Just ask Red Cross. Who will be there when the next emergency hits? Australian charities will.

The Australian Charities and Not-for-profits Commission does not run charities, it does not tell them what to do. But, if they stray from spending their money on the cause for which they were established, we can step in and put them on the right path or deregister them.

Most important, we do not need an excuse to demand to see the books; we can step in at any time and for any reason.

Now is not the time for such action. Let charities get on with the complicated business of delivering their services to those who suffered in the bushfires.

In six and 12 and 18 months we will audit some accounts, and ask questions as to how the money is being spent.

And, believe me, there will still be plenty for charities to do, in recovery mode, 18 months from now.

At the height of a crisis, such as with the bushfires, tempers fray, and people make statements and observations that are wild and wrong. The three most pungent criticisms of charities are that they are too slow to distribute, they spend too much on administration and they hold on to some funds for another day.

Some individuals have raised more than $1m for bushfire relief. The money is not held in a charitable trust. There are no rules for distribution, no records for accounting for money spent and no guarantee that any money will be spent on bushfire victims. The donor has no way of knowing what happened to the money.

One of the worst things that can happen in a post-emergency phase is that money, goods and services get to the wrong people. And, unfortunately, frauds prey on these circumstances.

Charities do not waste time in distribution but they do have to know who needs help and what sort of help. Typically, charities work together to cover the field of needs. They have established networks, they have knowledge and they have trained staff.

They are built of the same sturdy stuff as the firefighters who, by the way, have enormous administrative backup systems.

Complaints that fire victims are without water, electricity or telephones, while important, are not the work of charities. Utilities and state governments will attend to these. All are working with the National Bushfire Recovery Agency to co-ordinate responses.

The work of assessment and distribution costs money. Last year we were called in to investigate two small charities that had raised millions of dollars in drought aid. They were swamped, such is the generosity of Australians.

But money and goods without organisation is just money sitting in the bank. We advised the two charities to spend some of the donations on hiring competent staff and building systems to account for the money.

By law, charities require good record keeping. As a general rule, there will be less spent on administration with an established charity than in setting up a new one. The new charity has to start from scratch; the offices, the telephones, the computers, the accounting package, the skills to account for the money, and the people to know what to do. These costs should be minimised, but they cannot be avoided.

The distribution of funds is governed by the charitable trust, the words in the trust deed, or charity constitution, or other instrument. Once the money is in the fund, donors have no say in the uses of the money.

Without the trust rules, money would be spent on anything the charity desires — corruption awaits under those circumstances. The donor, however, can check the accounts published at acnc.gov.au or on the charity website. But give it time; accounts always lag the actual work of the charity.

The ACNC cannot tell the charity how to spend its money but it can check that the money is spent according to the trust documents and, more broadly, for the charitable purpose.

The words in the trust may be wide and allow for a deal of discretion in distribution, such as the Red Cross appeal. Others will be narrow, with little room to manoeuvre, such as the NSW Rural Fire Service.

Australia has a strong charitable sector and a powerful regulator, but good charity takes experience and time.

Reproduced with permission from the author, ACNC Commissioner, the Hon Dr Gary Johns. For further information on charities and the role of the ACNC please refer to: acnc.gov.au

The ACNC site contains plenty of information for the public that may dispel myths and counter misinformation. Their key recommendation is that people donate to registered charities as they are regulated and required to report to the ACNC.

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