The Australian Charities and Not-for-profits Commission (ACNC)’s Annual Information Statement (AIS) provides for charities to disclose whether they intend to fundraise in the next reporting year and if so, in which jurisdiction. Many charities are still unaware of the scope and impact of Australian fundraising laws, which differ in every Australian jurisdiction. Below we have set out some considerations for charities carrying out fundraising activities.
Fundraising regulation is badly in need of reform in Australia. The current patchwork of laws creates an unnecessary compliance burden for fundraising organisations. A coalition of not-for-profits and charities behind the #fixfundraising campaign has called on the federal, state, and territory governments to implement a nationally-consistent, contemporary and fit-for-purpose charitable fundraising regime. However, it appears that any reform is unlikely to occur in the near future. Charities are still required to comply with the current, fragmented system.
Online fundraising is borderless
There is widespread non-compliance across the not-for-profit sector in relation to fundraising outside of a charity’s home State or Territory. This is particularly the case in respect of online fundraising. Although a charity may only intend to fundraise from donors within its home State, its website is visible across Australia and potentially subject to seven different fundraising regimes. Technically, this means that the charity is “fundraising” across Australia and required to separately obtain and comply with a fundraising approval in each State. In practice, compliance may be extremely difficult for a charity whose operations are based entirely within one State. For example, the NSW legislation requires a fundraiser to have a NSW postal address to which correspondence can be sent.
Charities need to weigh the benefits of online fundraising against the burden of and practical impediments to compliance across Australian jurisdictions.
Australian Consumer Law (ACL)
Charities are not only required to comply with State and Territory fundraising regulations – fundraising activities carried out in “trade or commerce” are also subject to the ACL. Importantly, fundraising that is organised, continuous and repetitive is likely to be in trade or commerce. Among other things, the ACL prohibits misleading and deceptive conduct and applies to representations made when seeking a donation, including representations about where the money collected will go, how it will be used and the proportion of a donation directed towards the particular cause. More information about ACL requirements is set out in this guide.
Some fundraisers are exempt
In most jurisdictions fundraising exemptions apply to churches and religious organisations, kindergartens, schools, TAFEs, and tertiary education providers. The detail and scope of these exemptions varies between jurisdictions and should be carefully reviewed by fundraising charities.
Fundraisers may need to be audited
Western Australia, Queensland, South Australia and New South Wales all require certain fundraisers to have their financial statements audited. Charities should ensure that their auditor is aware of their fundraising activities and understands the regulatory requirements of the jurisdictions in which they are fundraising.
Failure to comply with fundraising obligations
Fundraising in breach of the relevant legislation may be an offence – both for the charity and individuals involved. Depending on the jurisdiction, penalties of up to $160,000 or a two year term of imprisonment may apply. Although fundraising prosecutions are extremely rare, regulators will use their enforcement powers in response to significant breaches, as demonstrated by the high profile inquiry into the Returned Services League in New South Wales. Failure to comply may also result in ACNC compliance action.
Our Not-for-profit team regularly works with charities to assist them to make an assessment of their fundraising obligations and to comply with those obligations, as well as register and obtain the necessary registrations, licences, permits and approvals.
If you have any questions, please do not hesitate to contact us.