Australia’s charities regulator has warned it will crack down on improper political advocacy in the sector and lobby to remove “frustrating” secrecy provisions that gag it from speaking about its work.

The Australian Charities and Not-for-profits Commission (ACNC) released its latest compliance report on Wednesday, outlining its activities over the past two years.

The commission used the report to outline four areas of focus for the next two years: terrorism financing, improper political advocacy, fraud and financial mismanagement, and preventing harm done by charities to their supposed beneficiaries.



The ACNC said it had received a growing number of complaints about charities – which benefit from significant tax concessions – engaging in political advocacy.

Twenty-seven complaints were made about 21 charities thought to have engaged in inappropriate advocacy for a party or candidate in the past two years.

Seven charities were investigated for their political activity, one had its status revoked, another made a voluntary undertaking to improve its practices, and two were provided “regulatory guidance”. Another two investigations remain open.

One of the groups given “regulatory guidance” was an unnamed charity that had promoted a political party and an individual candidate during the federal election campaign.



It had encouraged its members to vote for the candidate, and gave them how-to-vote cards.

The ACNC commissioner, Susan Pascoe, said the community had high expectations that charities would not inappropriately engage in political campaigning.

“One of the reasons that we’re focusing on it is that we had some complaints not long after we started about political advocacy, but we hadn’t put out guidance,” Pascoe told Guardian Australia.

“So last year we made sure we released guidance ahead of the federal election, and not surprisingly we got a spike in complaints,” she said. “It does seem this is an area where the charities really need to understand the ground rules.

“But it’s also an area where there is strong community expectation, because judging from the complaints that we get, it irritates large sections of the community when charities are involved in political activities.”

The rules around charities and political advocacy can be complex. Charities are allowed to participate in public debate, and oppose or support policies, laws, or government practices, as long as it’s relevant to their charitable purpose.

But they are not allowed to directly promote or oppose a political party or a candidate running for office.

Pascoe said the ACNC was subject to strict secrecy provisions that prevented it discussing its work in great detail. That meant the regulator was only able to publicly release aggregated data and de-identified case studies.

It can name groups who have had their charity status revoked but is unable to give any detailed description of their wrongdoing.

She said that was particularly frustrating when dealing with complaints about political activity.



“We find it frustrating as the regulator but also if you had listened in to Senate estimates recently; the political parties also find it very frustrating, particularly as it relates to political advocacy,” Pascoe said.

“They want us to investigate what they believe are breaches and they are very frustrated when we are unable to provide straight answers,” she said.



The legislation governing the ACNC is due for a five-year review later this year.

Pascoe said she was confident the secrecy restrictions would be raised during that process.

The secrecy of the regulator’s work not only frustrated the ACNC, she said, but also reduced its ability to deter charities from wrongdoing.

“If you look at the conduct of some other regulators, they do get a deterrent and educative effect when they explain their work to the community,” Pascoe said.



The regulator finished 69 investigations in 2015 and 2016, revoking the charity status of 28 groups, including the Camp Gallipoli Foundation, Shaolin Temple Foundation, Islamic Development Organisation Incorporated, Kids Cancer Relief NSW, Adult Stem Cell Foundation Australia Limited, and Newcastle Night Angels Homeless Care.



The ACNC regulates more than 54,000 charities in total, and handled compliance cases involving groups that controlled $7.5bn worth of charitable assets.

One of the de-identified case studies involved a homelessness charity whose former board member was pocketing money, and had awarded contracts to family members. The charity did not have its charitable status revoked but did agree to an enforceable undertaking.



The secrecy provisions prevent the ACNC from identifying the charity.