Are you a charity or a not-for profit? Here are important issues to consider when fundraising.
Fundraising is an important source of income for many charities and not-for-profits, but fundraising laws can be difficult to navigate, and it is important to have legal expert assistance to properly navigate them.
How can charities raise funds?
An important aspect of good charity governance involves doing sufficient research on any partners a charity plans to work with – even if it is simply Charities can raise funds in a variety of ways, including:
- Membership fees
- Corporate sponsorships
- Grants from grant-making bodies and funders such as government agencies
- Telephone and doorknock appeals
- Sale of goods where it is represented that part of the sale price is to be donated to a charitable organisation or cause
Newer approaches to raise funds, can include social investment (social or environmental impact) or social impact bonds, community funding and micro financing, and campaigns through social media and digital tools.
Identifying the jurisdictions’ fundraising laws
Charities must comply with any relevant fundraising laws in the state or territory they raise funds in, not just where they operate. This means organisations will often need to be privy to multiple jurisdictions’ fundraising laws. In Victoria, Consumer Affairs Victoria regulates majority of fundraising activity and oversees the laws that govern fundraising across the state – Fundraising Act 1998 (Vic) and Fundraising Regulations 2009 (Vic).
Who is responsible for a charity’s fundraising?
Ultimately, a charity’s board has responsibility for fundraising activity, whether it is outsourced or not. No matter how charity funds are raised, the board must ensure that the money is put towards pursuing the charity’s charitable purpose. Some boards choose to adopt fundraising policies, or codes of conduct, that guide them in their pursuit of fundraising. Board members must have a clear understanding of how money is raised, including any fundraising operations, and they must ensure there are appropriate and lawful processes in place to manage any money raised.
False or misleading statements about charity fundraising
Charities must be transparent in relation to their fundraising arrangements, ensuring they are not misleading the public.
Statements which often get caught as false or misleading statements:
- Statements regarding the use or destination of contributions for donations.
- Statements regarding the need for donations.
- Statements referring to studies or statistics to support the need for donations.
- Statements regarding fundraising arrangements, particularly where contributions end up.
TIf charities act in a way that creates a false or misleading impression that may contravene the Australian Consumer Law. This, in turn, may be a breach of the ACNC governance standards.
When will the ACNC intervene?
If the ACNC detects fundraising issues, such as abnormally high fundraising costs, they may investigate the matter.
Fundraising issues that may trigger ACNC intervention are:
- failure to protect and account for all funds raised.
- weak governance oversight of the charity’s activities or resources.
- damage to public trust and confidence caused by fundraising activity.
- serious failures in the conduct of fundraising which puts the charity at risk.
The ACNC sees the oversight of fundraising as an important aspect of good charity governance. The information above will help responsible person consider what issues they should look out for when managing their fundraising activities.
Warlows Legal in Melbourne can help you navigate the complex regulations on fundraising. We provide a complimentary initial consultation to help understand your needs.