Electoral Disclosure and Funding Reform: An Explainer

“Foreign donations ban”, “advocacy gag” and “catastrophic crackdown” have headlined many recent news and opinion pieces about the proposed reforms to the Commonwealth Electoral Act 1918 (the Act) under the Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill (the Bill).

In this piece, we outline why any charity (whether or not registered with the ACNC) or not-for-profit organisation who engages in advocacy should indeed be concerned about the proposed reforms.

It is established law that charities can engage in political activities. The High Court in the Aid/Watch case (Aid/Watch Inc v Federal Commissioner of Taxation 2010) held that in Australia there is no broad general rule excluding “political objects” from charitable purposes, and further that the generation by lawful means of public debate concerning, in Aid/Watch’s case, the efficiency of foreign aid directed to the relief of poverty is itself a purpose beneficial to the community.

This position was confirmed in the Charities Act 2013 which explicitly recognises advocacy (promoting or opposing a change to any matter established by law, policy or practice in Australia or another country) as a charitable purpose.

This legislation imposes only a limited restriction on charities: the charity must not have the disqualifying purpose of promoting or opposing a political party or a candidate for political office.  This is well accepted by charities; they focus on issues-based, non-partisan activities and know that if they engage in party political activities, they risk engaging in a disqualifying purpose thus jeopardising their charity status.

Additionally, the Not-for-Profit Sector Freedom to Advocate Act 2016 prohibits (and renders void) any requirement in agreements with Commonwealth agencies that restricts or prevents a not-for-profit entity from commenting on, advocating support for or opposing a change to any matter established by law, policy or practice of the Commonwealth.

The act in its current form applies to charities and NFPs who engage in advocacy and campaigning in certain situations.

In general terms, the act imposes requirements for reporting of electoral expenditure and political expenditure to the Electoral Commission (under part XX of the act) and for disclosure of the person who has authorised electoral advertisements (part XXI of the act).  In most cases, the issues-based and non-partisan approaches of charities have meant that they are not caught by these requirements.

The reforms proposed under the bill (which has been referred to the Joint Standing Committee on Electoral Matters) will have the effect of making the act applicable to many more charities (more frequently) and through onerous requirements, discouraging charities and NFPs from advocacy.

To view the full Pro Bono article, click here.

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