Top 4 legal tips for fundraising
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If your charity or not-for-profit (NFP) is running a fundraising campaign or event, it’s essential you manage your legal obligations.
While the laws around fundraising in Australia can seem puzzling, we’ve outlined four essential areas to keep an eye on – to make legal compliance easier for you.
1. Knowledge of state/ territory laws is essential
Every state and territory (except for the Northern Territory) has its own fundraising laws, with each state’s laws differing greatly from the next. Every charity and not-for-profit has an obligation to be aware of, understand and comply with the fundraising laws in each state or territory where your fundraisers occur.
The best approach? Start with the legislation. Determine which state or territory you are running your campaign in and find the Act which governs that particular jurisdiction.
Not keen on reading the state-and-territory-specific laws? We’ve boiled down the acts & regulations for each state and territory into an easy-to-read state-by-state fundraising regulation guide on our firm’s website.
The federal Australian Charities and Not-for-profit Commission website also provides useful step-by-step documents which can tell you what your obligations are in each particular state or territory. If you are still unsure, seek legal advice.
2. Make sure you’re appropriately licensed if you’re fundraising across borders
Is any part of your fundraiser taking part in more than one state or territory? You may be required to comply with the laws of two (or more) jurisdictions. Sometimes this involves obtaining a licence or obtaining permission from a minister in each state/territory.
How do you know if your fundraiser is taking place in more than one place? Our practical suggestions are:
- If you have people “on the ground” in a State or Territory (participating in the fundraising appeal), a licence should be sought in that State or Territory; or
- If your charity/not for profit has a “back office” or its “collecting bank” branch in a State or Territory, a licence should be sought in that state or territory.
3. If you’re fundraising online, be aware of jurisdictional implications
There is an argument that online fundraising (including crowd-funding) constitutes fundraising in more than one state or territory. As such, if you are running an online appeal, it might be necessary to obtain a licence in more than one jurisdiction.
The state or territory in which the website is hosted may be important, too, and while this is not a settled area of law, we make a number of practical suggestions:
- If your charity/not for profit does not consider that it has a connection with a particular state or territory, consider the laws of that particular jurisdiction;
- The next step is to the call the regulator’s office of that state or territory and have the conversation about intentionally not applying for a licence in that jurisdiction. The governing body of the charity/not for profit should then consider the next steps;
- Consider taking advice on saying in the online fundraising appeal that donations are not being sought from that jurisdiction (and then ensure that this practice is followed);
- Lastly, if still in doubt, apply for a licence in that jurisdiction as safe practice.
4. Be Aware of the Australian Consumer Law
The Australian Consumer Law Review – Interim Report released by Consumer Affairs Australia and New Zealand in October 2016 concludes that the Australian Consumer Law (ACL) applies to most fundraising activities.
This means that laws surrounding misleading or deceptive conduct, unconscionable conduct, and false or misleading representations about goods or services will apply to NFPs when advertising, marketing and carrying out fundraising. A recent case by the Victorian Commissioner (outlined in the next paragraph) demonstrates this.
In an action brought against Melbourne woman Belle Gibson, it was found that false representations about the percentage of profits raised from Gibson’s book sales breached the ACL. In this case, only a fraction of profits Gibson made were passed to the charities that Gibson advertised would receive them. The court held that Gibson’s customers were misled into purchasing the book on the belief all profits would be passed on.
The case raises a warning to NFPs to be aware that misleading marketing or representations made by employees or agents during campaigns will be subject to the ACL. It is important to not exaggerate or misrepresent what percentage of proceeds will make it to the advertised object. The case highlights the importance of being up to date with the ACL if you are a not for profit.
This article was authored by Andrew Lind and Lornagh Howarth of Corney & Lind Lawyers.
