An introduction to charitable fundraising - part 1

We know, we hear it all the time ... the world of charitable fundraising can be confusing and complicated!

Let's see if we can help shed some light in this two-part series.

This part, part one, introduces what the whole charitable fundraising thing is all about, whether you need a charitable fundraising authority and what could happen if you breach the law.

Part two gets into the detail and covers how to apply, why your application might be declined and what your fundraising obligations are likely to be.

Important note: this two-part series does not explore the requirements relating to raising charitable funds using other commercial businesses including:

• professional third party fundraisers;
• selling goods and/or services during the course of trade (eg for every item sold 10 cents will go to charity).

If this is what you are after, you can read more about using commercial fundraisers and traders by joining the NFPhq community, coming soon.

And now, on with the show!

If you ask for, or receive, money from the public to support a charitable cause, then it is very likely you will need to have an authority from the government to do so.

And when we say 'money' during this article, we also mean property, goods or other benefit.

There are some exceptions to this general rule. Exactly what they are will depend on the particular state or territory that you are fundraising in. We explore some of the more common exemptions below.

Charities, not-for-profits, commercial business and in some circumstances, even individuals need to be authorised to ask for, or receive, money from the public to support a charitable purpose or cause.

It is a little more clear-cut for charities because charities, by their very nature, exist to further a charitable cause. As such, whenever a charity asks the public for money, they will almost certainly be engaging in charitable fundraising activity.

Australian state and territory has its own laws and requirements. So, if you are engaging in charitable fundraising activity in two or more states (or Australia-wide) you will need to be aware of and comply with multiple requirements.

Being a registered charity, or being endorsed as a deductible gift recipient (DGR), does not mean that you automatically have an authority to undertake charitable fundraising.

Why do I need an authority?

Knowing the reason behind something can often help you appreciate why you are being asked to do or comply with something.

While knowing why we have charitable fundraising regulation won't change the requirements you need to satisfy, it might just make it that little bit easier to stomach!

The rationale, the policy driver, for the regulation of charitable fundraising activity is to ensure that if a person (or organisation) is drawing upon another's human compassion by asking them to support a charitable cause, then they should behave appropriately - basically, you should not be dodgy!

The objects of Charitable Fundraising laws are, in summary:

• to promote proper and efficient management and administration of fundraising activities for charitable purposes;
• to ensure proper keeping and auditing of accounts in connection with such charitable fundraising activities; and
• to prevent deception of members of the public who support worthy causes.

While the vast majority of charitable fundraising activity is genuine and completely above board and legitimate, let's be honest, there are also some very dodgy people out there taking advantage of people all in the name of supporting a charity, or a charitable cause.

Charitable fundraising laws and regulations are far from perfect, but we are stuck with what we have and must comply.

Whether specific charitable fundraising laws are required at all is a debate for another day. We don't mind saying however that if charitable fundraising laws are to remain, they are in desperate need of reform, there is no doubt about that. These laws can be rather onerous to comply with – particularly if you are carrying on fundraising activities across state borders and Australia wide campaigns can be a complete nightmare!

In addition, charitable fundraising laws are, for the most part, out of step with new technologies. Even raising funds using the Internet can cause unnecessary complications, confusion and potential contravention in certain circumstances.

While there are moves afoot to fix fundraising regulation across Australia, which we definitely support, at the moment there are variances. It is still unclear when, or even if, the laws will be updated or replaced.

So, whether we like it or not, we are currently stuck with what we have. You will therefore need to comply with the laws, regardless of how out of date or irrelevant they may be.

While the rules, laws and requirements for those engaging in charitable fundraising varies from state to state, the following general information should give you a good idea of when the laws apply and what they cover.

The various charitable fundraising laws follow a similar pattern. They:

• first define what is meant by charitable fundraising (often referred to as a fundraising appeal)
• then make it clear that you are not permitted to conduct a fundraising appeal without an authority. 

Conducting an appeal without the appropriate authority is an offence in every Australian state and territory with penalties ranging from a fine of $110,000 for a corporation in the ACT, to a $100 fine in Western Australia.

And there are of course also the exemptions that allow you to fundraise without an authority in certain circumstances.

The general rule

As stated at the beginning of this article, the general rule is ...

If you are asking for or receiving money from the public to support a charitable cause, you will likely need an authority from the government.

This general rule is far reaching and applies:

• both before and while you are asking;
• if only part of the reason behind why you are asking for the money is charitable;
• regardless of whether the money is asked for or received in person or other means (such as by email, post, telephone or fax);
• if the money is asked for or received through a lottery, art union or competition, or as a result of sponsorship in connection with an event or activity such as a walkathon or telethon;
• if the money is asked for or received in connection with the supply of food, entertainment or other goods or services; or
• if the money is asked for or received in connection with any other commercial undertaking.

What activities are not considered charitable fundraising?

The activities that are not considered charitable fundraising and can be performed without a charitable fundraising authority vary from state to state.

Sorry to go on about the variances across states and territories, but it is important. And we would hate for you to take this general information as being specific to your state or to your circumstances!

So, in general terms, you don't need a charitable fundraising authority if you are:

• requesting or receiving fees for membership of your organisation;
• specifically appealing to or receiving money from members of your organisation;
• requesting that money or property be left in a will;
• appealing among the staff of your organisation to support a fellow worker or that worker's family; or
• applying for (or receiving) government funds.

Which organisations could be exempt from the need to hold a charitable fundraising authority?

Yep, you know what we are about to say ... The organisations listed below as examples of those that could be exempt from the need to hold an authority are indicative only and will vary from state to state.

And to make things just that little more confusing (as if they weren't confusing enough!) is that some organisations are exempt from the law altogether while others are only exempt from the requirement to hold an authority.

Organisations exempt from the requirement to hold an authority may still need to comply with the requirements of the relevant laws such as having an annual audit, keeping financial records, and allowing public access to certain information.

Organisations that could be exempt include:

• Religious organisations;
• Local councils (including any council committee or council related trust);
• Some universities;
• Organisations, or individuals, that raise less than a specified amount annually (e.g. $15,000); or
• Organisations that have been established by an Act of Parliament and are subject to the control and direction of a government Minister.

What could happen if you fail to comply - what's the fall out?!

If you or your organisation participates in a fundraising appeal that you know, or could reasonably be expected to know is being conducted unlawfully, you are likely to be guilty of an offence. As such, your organisation, or even you and your team, could be penalised through fines and in some serious circumstances maybe even through a prison sentence.

While the regulators are unlikely to jump straight to imposing penalties, particularly if you have breach the law accidentally or unknowingly, you shouldn't depend on this and should take steps to inform yourself and your team about the charitable fundraising requirements in each state and territory within which you carry on charitable fundraising activities.

End of part one

Here ends our little foray into the context to charitable fundraising.

It is, as we are sure you appreciate, a rather complex world and very state and territory-specific. If nothing else, we hope that you now have a reasonably good idea about whether you should now dig a little deeper. If so, part two is for you.

Part two will go into more detail about how to apply for a charitable fundraising authority and the ongoing requirements and obligations.

Part two is also where you can download our free Regulator Contact List.

Have a thought? A comment? An observation or experience relating to charitable fundraising? Please let us know in the comments section at the end of part two.

Meanwhile, you can get access to state and territory-specific factsheets and guides, and lots more great content, awesome tools and our vibrant forums, by joining the NFPhq community, and making your way to Fundraising HeadQuarters.

For legal advice specifically tailored to your particular needs and circumstances, please feel free to contact us.