Considerations to make before fundraising
24 Apr 19
Fundraising is the main source of revenue for many Australian not-for-profits and can be a powerful tool especially for those charities equipped with Deductible Gift Recipient status. Not only does fundraising generate much needed money for them carry out their mission, it also helps charities get their brand and values out in the community in prolific and interesting ways. To ensure good governance, it is important that the organisations plan and prepare for the fundraising activities so they can be sure they are complying with local fundraising laws.
Fundraising laws differ in each State and Territory of Australia, so it is very important you consider your charity’s compliance locally and if you operate nationally, in each State and Territory you operate in. Some specific examples of fundraising laws are as follows:
- QLD – Collections Act 1966
- NSW – Charitable Fundraising Act 1991
- VIC – Fundraising Act 1998
This article gives some general considerations for charities but is not intended to be legal advice. Every organisation is different, and it is recommended that you seek specific legal advice if you encounter fundraising issues.
Commonly asked questions:
- What approvals do you need to fundraise in Australia?
- Can you be exempted from having to apply for a fundraising approval?
- Are there any ongoing obligations once you hold a fundraising approval?
- Can you use donated funds for a similar but different purpose?
1. What approvals do you need to fundraise in Australia?
Generally, you need to seek fundraising approval in each State and Territory jurisdiction you are fundraising in and once obtained, comply with each jurisdiction’ fundraising laws. There is no uniform Australian law on fundraising and there are even discrepancies between the obligations under each State’s laws, so this may mean you may be regulated in one way in one State but differently in another.
Even when you do not need a formal approval, there are broader obligations that apply to all fundraising organisations (even the ones exempted from holding an approval). For example, in Victoria, there is a general obligation that donation containers must be secured, labelled and numbered and when emptied, those doing it must be supervised to the maximum extent practicable. It is recommended that you map each of your fundraising activities in Australia and determine which jurisdiction’s laws you trigger.
The best starting point after you know which jurisdiction’s fundraising law you trigger, is to check if your organisation falls within one of the exemptions.
2. Can you be exempted from having to apply for a fundraising approval?
Each Australian State and Territory requires different approval for fundraising activities and the process of obtaining them varies. We recommend you check whether you are eligible to be exempted.
Some entities that are exempted under the various fundraising laws include but are not limited to:
- Certain religious organisations;
- State government schools;
- Registered non-government schools;
- Some educational institutions;
- Registered trade unions and associations;
- Fundraising for small fundraisers;
- When collecting membership fees.
Uniquely, there is no fundraising legislation in the Northern Territory. Though you may still need approval if your fundraising activity involves a gaming aspect such as raffles.
3. Are there any on-going obligations once you hold a fundraising approval?
It is important that you renew your fundraising approvals on time to avoid it lapsing, which would mean your organisation ends up raising money in contravention of fundraising laws. This would be both a breach of law and a breach of public trust. The relevant authorities maintain a public register of registered fundraisers so the public can verify who they are donating to and it also allows your organisation to verify your approval is up-to-date.
Generally, fundraising laws in Australia give the relevant authorities powers to conduct audits. These are sweeping powers and in extreme cases, where it is deemed necessary, the relevant authorities can even issue search warrants and enter premises to seize items.
4. Can you use donated funds for a similar but different purpose?
When you represent to donors that you are fundraising for a specific purpose, it is their expectation that the funds will be applied to that exact purpose. It may be a significant breach of trust for the public to learn that their donations have been applied to a similar but different purpose. Often fundraising uses a specific event (e.g. a humanitarian or natural disaster) to draw in their appeal, it is the public’s expectation that the aggrieved victims from that event will be directly benefitting from their money.
This rule is protected by legislation though it does not prevent organisations from applying part of the donated funds for proper expenses (i.e. administration).
Where the original purpose of the funds can now no longer be met, or the original need has been fully met (e.g. a building project is complete), it is an option for the organisation to seek guidance or a ruling from the relevant authority on an appropriate alternate use of funds. If you encounter this issue, we recommend that you seek legal advice.
The uneven landscape of fundraising laws in Australia can be challenging to navigate. It is recommended not-for-profits and charities chart exactly where they fundraise and then consider their obligation to register for a fundraising approval to ensure they are meeting their on-going duties.
This article is brought to you by Jack Ding and Rachel Au of Salvos Legal. For further information, please contact (02) 8202 1555 or email firstname.lastname@example.org. Salvos Legal is an award-winning social enterprise that is experienced in not-for-profit, all areas of commercial, property and migration law. All of its earnings from its services are going to fund the Salvos Legal (Humanitarian) which provides pro bono services to the community.