#fixfundraising FAQs

11 October 2016
Your questions about the #fixfundraising campaign; answered

The #fixfundraising coalition has an achievable plan for reform - using the existing Australian Consumer Law and repealing the complicated and duplicative state and territory-based laws that hamper Australia's charities and other not-for-profits doing what they exist to do; help their communities.

But what does the alternative mean? Here are some of the major questions, answered - including special expert in Australian Consumer Law and guest question answerer, Norman O'Bryan AM SC! (The following answers are based on pro bono advice provided by Norman O’Bryan AM SC, an experienced barrister who has worked with the Australian Consumer Law since it started, and its predecessor, the trade practices regime.)

Index of Questions

What is the reform plan all about?

1.    Why propose the Australian Consumer Law to regulate fundraising?

2.    Will repealing state fundraising laws leave donors vulnerable to exploitation?

3.    Why doesn’t the reform plan suggest the Australian Charities and Not-for-profits Commission as the regulator for fundraising?

4.    Is the proposal consistent with government policy?

5.    Will extra resources be needed to deal with fundraising misconduct under the Australian Consumer Law?

6.    Is there a role for self-regulation or voluntary codes?

7.    Will states have to refer any of their powers to the Australian Government under the reform plan?

8.    Isn’t this something the Council of Australian Governments (COAG) should look at?

9.    What reporting will there be under the reform plan?

10.  What role will state and territory regulators have if this reform plan goes ahead?

11.  If you fundraise using the internet or a crowdfunding platform, do you have to register as a fundraiser?

12.  Does the reform plan mean more of my donation will go on the charity’s real work rather than administration?

How does the Australian Consumer Law apply to fundraising?

13.  Does the Australian Consumer Law already apply to fundraising?

14.  How does the Australia Consumer Law fit with fundraising by charities?

15.  Isn’t enforcement of the Australian Consumer Law a bit heavy handed for small not-for-profits?

16.  Do all the states and territories have to agree before the Australian Consumer Law can be updated?

17.  Does a cooling-off period apply when seeking donations? Would a cooling-off period apply under the reform plan?

18.  Could expressly extending the Australian Consumer Law to fundraising activities in any way affect a charity’s entitlement to tax deductible status?

What about particular types of fundraising?

19.  What about street collectors and door knockers?

20.  What about telephone calls asking for donations?

21.  What happens for not-for-profits raising money by gaming activities, such as raffles, lotteries and calcuttas?

What is the reform plan all about?

1.    Why propose the Australian Consumer Law to regulate fundraising?  

The Australian Consumer Law (ACL) provides a nationally-consistent set of laws that can be used to support ethical fundraising behaviour. The ACL is a cooperative scheme of laws administered jointly by Commonwealth, state and territory governments.

The ACL already provides protection for donors against misbehaviors associated with fundraising. This means that if duplicative state and territory laws are repealed, it will create a nationally-consistent regulatory regime for fundraising.

The policy intent of the ACL is a good fit with the policy objectives of existing fundraising laws. It is well understood that commercial advertising can’t be misleading or deceptive, and the same should apply for fundraising. Charities and other not-for-profits rely on public trust and confidence so it is important that this ACL standard also (continues) to apply to donations.

A small extension of the ACL tailored to fundraising would be easy to explain to donors and fundraisers, provide access to more appropriate enforcement powers and create a solid foundation for a huge reduction in regulatory burden for NFPs.

For more, please watch this video explanation from Norman O'Bryan AM SC (1min 14sec).

2.    Will repealing state fundraising laws leave donors vulnerable to exploitation?

No. Donors already receive protection from misbehaviours associated with fundraising under the Australian Consumer Law (ACL) and these protections would be clarified and broadened under our proposal. 

There is currently significant duplication between state-based fundraising laws and the ACL (e.g., section 7, Fundraising Act 1998 (Vic)). Repealing state fundraising laws would reduce the duplication, but the protections would remain under the ACL.

State and territory governments already use the ACL to address misbehaviours associated with fundraising, and can also use the criminal law in certain circumstances. Where misconduct is by a registered charity, action can also be taken by the Australian Charities and Not-for-profits Commission.

For more information see the opinion of Norman O'Bryan AM SC (13 September) here. Or watch this short video (46 secs) where he explain this question.

3.    Why doesn’t the reform plan suggest the Australian Charities and Not-for-profits Commission as the regulator for fundraising?

Despite its name, the Australian Charities and Not-for-profits Commission (ACNC) has no power when it comes to not-for-profits that are not charities – only 10 per cent of not-for-profits meet the legal definition of charity. As a result, the ACNC does not have the power to regulate many of the not-for-profit organisations involved with fundraising.

Some organisations involved with fundraising are commercially-run businesses that charities use to raise funds on their behalf. The ACNC does not have any power over these organisations either.

Even for registered charities, the ACNC’s powers with regard to fundraising are limited. Bad practices in fundraising by registered charities are relevant to ACNC’s governance standards for charities and therefore to a charity’s entitlement to registration, but the ACNC does not have any direct enforcement power over fundraising activities.

By comparison, the Australian Consumer Law applies to not-for-profits, charities and commercial businesses undertaking fundraising. 

4.    Is the proposal consistent with government policy?

Yes, we think so.   The Government has said “it has a clear approach to regulation: we will reduce the regulatory burden for individuals, businesses and community organisations” (Australian Government Guide to Regulation, March 2014, page 4)

In relation to the not-for-profit sector it has also said “We remain very committed to reducing red tape and regulation therefore we will work with the Treasurer and the Commission [Australian Charities and Not-for-profits Commission], the States and Territories and the sector to identify areas where we can reduce administrative burden for charities and Not for Profit organisations so they can focus on outcomes that go to support the most vulnerable in our society.”(The Hon Scott Morrison MP, Minister for Social Services, September 2015)

Also, the state and territory fair trading and consumer affairs commissioners agreed in February 2016 to establish a working party of senior officers to review regulation of fundraising, in recognition of concerns over inconsistencies between their existing regimes.


5.    Will extra resources be needed to deal with fundraising misconduct under the Australian Consumer Law?

No. The Australian Competition and Consumer Commission (ACCC) and state-based regulators already enforce the Australian Consumer Law (ACL), and the ACL already covers most fundraising activities.

Any existing state-based resources used for compliance with existing state fundraising legislation can be re-directed to ensure fundraisers comply with the ACL. Where there is alleged misconduct action can then be taken by the state-based regulator under the ACL as has recently occurred in Victoria with the Director of Consumer Affairs Victoria taking action in the ‘Belle Gibson’ case.

It is up to these regulators to determine their priority areas within their budget, including whether to direct more resources toward any particular sector or type of activities

6.    Is there a role for self-regulation or voluntary codes?

The Australian Consumer Law contemplates the development of voluntary industry codes. Many codes already exist for particular sectors and activities (e.g., for franchising and horticulture, see accc.gov.au/business/industry-codes). A code of conduct for fundraising could work well as part of the ACL and there are existing voluntary fundraising codes which could be further developed for this purpose. 

7.    Will states have to refer any of their powers to the Australian Government under the reform plan?

No. The Australian Consumer Law is modern legislation that works through a cooperative regulatory framework applied uniformly in all jurisdictions across Australia. There is no need for states to refer their powers, or introduce new legislation of their own, to achieve our proposal for reform.

8.    Isn’t this something the Council of Australian Governments (COAG) should look at?

The Council of Australian Governments (COAG) has already agreed to the Australian Consumer Law and, under that framework, there is a working group for fundraising reform already in place which is expected to meet again in 2016.

Note, an alternative approach – trying to harmonise the existing laws – has been on the COAG agenda at various times (e.g., April 2010, April 2012), but no reform has been achieved this way. The seven different laws are significantly different and there is no simple way to harmonise them.

9.    What reporting will there be under the reform plan?

There will be no fundraising-specific government reporting requirements under our proposal for reform. We believe this layer of reporting does not justify the associated compliance burden because:

  • most fundraisers already report annually on their finances and activities to their incorporating government regulator (e.g. as an incorporated association or company limited by guarantee)
  • registered charities already report to the Australian Charities and Not-for-profits Commission (and these reports are freely-available online), and
  • fundraising-specific reporting does not add value to fundraisers, governments or the community.

In those jurisdictions where the fundraising legislation requires reports, state and territory regulators do little with them. Many don’t see it as a priority or allocate resources to follow up late or non-submission of reports. Where reports are filed, they are not readily available to the public (only some states allow public access, often there is a fee copies).

Under our proposal for reform, there are many avenues to seek further information from fundraisers if there are concerns about their activities, such as through substantiation notices issued under the Australia Consumer Law.   

10.    What role will state and territory regulators have if this reform plan goes ahead?

State and territory regulators will continue to play the same role they already have in the regulation of the Australian Consumer Law.

Regulation will continue to be shared between the Australian Competition and Consumer Commission (ACCC) and state-based regulators. In this way, the same law applies Australia-wide. See the Australian Consumer Law website.

Our proposal for reform means regulators responsible for current fundraising laws will continue to regulate the area (in cooperation with the ACCC), ensuring existing experience regulating not-for-profits is retained.

For more, watch this short video "Who is the regulator of the Australian Consumer Law?" with Norman O'Bryan AM SC (1min 29sec)

11.    If you fundraise using the internet or a crowdfunding platform, do you have to register as a fundraiser?

This is not an easy question to answer. Whether a fundraiser is required to register when undertaking fundraising activity online depends on several factors: the purposes of group, the type of fundraising activity, and the interpretation of the law under seven different regimes.

Because the internet doesn’t stop at state or territory borders, all seven different laws need to be complied with. There is no recognition of compliance with one fundraising regime by any other state or territory. This is one of the core problems with the way that fundraising is currently regulated.

As well as inconsistent provisions, there is also duplication. Some states have provisions about misleading and deceptive statements just like what is contained in the Australian Consumer Law (which already applies to most fundraising activities).

Based on advice from Norman O’Bryan AM SC, we believe the Australian Consumer Law also applies. (See “Does the Australian Consumer Law already apply to fundraising?’ and a short video here featuring Norman O'Bryan AM SC - 36 sec).

12.    Does the reform plan mean more of my donation will go on the charity’s real work rather than administration?

Yes. Eliminating the time spent trying to work out and then comply with the complex and inconsistent fundraising laws will save both paid and volunteer time. Time and money that can be better directed to the real work of the charity!

It is estimated that $15.08 million in revenue for charities (which represent only about 10 per cent of all not-for-profits) is lost every year in meeting these requirements.

What and how of the Australian Consumer Law

13.    Does the Australian Consumer Law already apply to fundraising?

Yes. In many cases, the Australian Consumer Law (ACL) already applies to fundraising.

However, how the ACL applies to fundraising is not well understood. For this reason, the campaign partners (and supporters) believe that the ACL should be clarified to ensure its application to fundraising is clear and broad. The extent of current uncertainty, and recommendations to remedy this are set out in our proposal for reform and in Not-for-profit Law’s submission to the ACL Review.

The interim report of the ACL Review confirms the Australian Consumer Law already applies to many activities of charities and not-for-profits, including fundraising activities. Feedback is being sought (until 9 December 2016) on the interim report, including on whether the ACL offers a solution for harmonising fundraising laws. You can read the report (pdf) and make a contribution. Not-for-profit Law and its fundraising partners will be making a submission. If you would like to receive a copy and endorse the submission, please contact us.

For more information watch the video with Norman O'Bryan AM SC or read his written advice on this question (21 September).

For more information on the key provisions of the ACL, see the opinion of Norman O'Bryan AM SC (13 September) on this question. Or watch this short video (46 secs) where he explain this question.

14.    How does the Australia Consumer Law fit with fundraising by charities?

The policy intent of the Australian Consumer Law is a good fit with the policy objectives of fundraising regulation because they are both primarily about fairness including: the prevention of practices that are unfair or contrary to good faith; that are unconscionable or deceptive; to help people make informed decisions and to protect them when have been treated unfairly; and to penalise those who have acted unfairly.

For more, watch this video with Norman O'Bryan AM SC (40sec).

15.    Isn’t enforcement of the Australian Consumer Law a bit heavy handed for small not-for-profits?

No. The Australian Consumer Law (ACL) already applies to most fundraising activities and has not been enforced in a heavy handed or onerous way. There is no reason to think this will change as the same regulators will enforce the law under our proposal for reform.

The ACL works through the cooperation of regulators. In the states and territories, these are the same regulators who are already enforcing the fundraising laws (and ACL). The current regulatory approach is a risk-based, proportionate approach that is appropriate for not-for-profits and fundraising.

In most instances, if not all, the state regulator (and not the Australian Competition and Consumer Commission) would deal with any breach of the ACL by a small not-for-profit group whose conduct is misleading or deceptive. This already happens now. For more, watch this short video explanation.

16.    Do all the states and territories have to agree before the Australian Consumer Law can be updated?

No. One of the advantages of using the Australian Consumer Law (ACL) is that it has a process for being updated that has already been agreed to by all Australian governments. Once the ACL has been amended, it applies automatically in all states and territories.

There is currently a review of the ACL (see Not-for-profit Law’s submission to the ACL Review). This presents a timely opportunity to make the clarifications and minor amendments suggested in our proposal for reform.

17.    Does a cooling-off period apply when seeking donations? Would a cooling-off period apply under the reform plan?

No. Cooling-off periods do not apply to fundraising where donations are sought. This will not change under our proposal for reform.

The cooling-off period provisions in the Australian Consumer Law (ACL) only apply to a particular type of contract known as an 'unsolicited consumer agreement'. These agreements are entered into through unsolicited selling practices (e.g. when someone knocks at your home door without an appointment).

The Australian Competition and Consumer Commission has provided guidance confirming that cooling-off provisions do not apply when seeking donations, including where commercial fundraisers are used. This is because seeking and receiving a donation (even seeking and receiving a regular giving pledge) is not soliciting or entering into a contract, and does not meet the definition of 'unsolicited consumer agreement'. See 'knock! knock! who's there? Door to door sales - a guide for consumers', page 5. 

Our proposal for reform would not change the current position that cooling off periods do not apply when seeking donations or regular giving pledges..

18.    Could expressly extending the Australian Consumer Law to fundraising activities in any way affect a charity’s entitlement to tax deductible status?

No. How a not-for-profit or charity is regulated (or which regulator is responsible for them) has no impact on its eligibility to access deductible gift recipient status (DGR) endorsement under the Income Tax Assessment Act 1997 (Cth).

The Australian Consumer Law (ACL) currently regulates the conduct of fundraisers (the people or the organisation that is undertaking fundraising activities). Under our proposal for reform, the ACL will continue to (and will more clearly) regulate the conduct of fundraisers. The ACL does not currently regulate the conduct of a people or organisations making a donation or gift, which is a voluntary action. Our proposal does not change this.

In summary, our proposals only affect the organisations undertaking fundraising, and not the individuals or organisations making donations or gifts, and their ability to claim deductions for these.

For more information watch this quick video explanation from Norman O'Bryan AM SC (34 sec), or read his written advice on this topic.

What about particular types of fundraising?

19.    What about street collectors and door knockers?

Under our proposal for reform, all fundraising will be regulated by the Australian Consumer Law and it will be clear that any representations made by fundraisers (including those who call) must not be false or misleading. This will include fundraising activity conducted by telephone.

However, it is generally the responsibility of local government authorities to regulate where and how face-to-face fundraising can occur. This is because local governments (or territory governments) manage and regulate the use of public places.  Our proposal would not change this.

20.    What about telephone calls asking for donations?

Under our proposal for reform, all fundraising will be regulated by the Australian Consumer Law and it will be clear that any representations made by fundraisers must not be false or misleading. This will include fundraising activity conducted by telephone.

The terms of the Do Not Call Register also apply to organisations undertaking fundraising activity. However, charities undertaking fundraising activity are able to access an exemption which enables them to make fundraising calls to individuals even if they are on the register. Our proposal does not change this.

Even though there is an exemption for telephone calls for charities, these calls must comply with certain restrictions, in particular, the Telemarketing Code (under the Telemarketing and Research Calls Industry Standard 2007) which has rules about when and how telemarketers can contact people. Our proposal does not change this.

21.    What happens for not-for-profits raising money by gaming activities, such as raffles, lotteries and calcuttas?

They will continue to be regulated under state and territory-based laws and regulators, for example, Lottery and Gaming Act 1936 (SA). These activities are specialised and covered by gaming laws (just like liquor licence laws apply to not-to-profits that hold a liquor licence) – our proposal does not propose changes to this.

Note: Not-for-profit Law believes the laws governing charitable gaming activities could be simplified. See here for Not-for-profit Law submission to NSW Lotteries and Gaming Discussion Paper.

 

Written Legal Advice - Australian Consumer Law

The following written advices from Norman O'Bryan AM SC look at fundraising activities and the ACL in detail.

Advice on ACL fundraising activities for charities and other NFPs (13 Sept 2016)

Advice on How the ACL Currently Applies to Charities and NFPs (21 Sept 2016).pdf