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What controls exist over charitable fundraising?

By possessing an authority to fundraise, an organisation is entitled to appeal to the public for funds, but in return that organisation incurs a number of obligations which are set out in the Act, the Regulations and in greater detail in the conditions attached to the authority to fundraise.

Authority to fundraise

The authority may be granted for an indefinite period for an indefinite number of appeals. In practice authorities will be issued for a specific period such as five years. Conditions will be attached to authorities.

Authority conditions

The conditions imposed will be of two types, standard and special. Standard conditions apply to all authorities issued. Special conditions are imposed on certain authority holders, or a class of authority holders, in response to special or exceptional circumstances. In some instances an authority condition may be modified or replaced with another condition.

Authority conditions fact sheet (PDF 64kb).

Best practice guidelines

The best practice guidelines have been devised with the two-fold objective of providing a source of general reference to authority holders, and to function as a manual of model prudent policies and procedures which should be complied with by authority holders. They should also assist authority holders to comply with the Act, the Regulations and the authority conditions.

The guidelines cover all areas of financial, fundraising and organisational accountability including the keeping of records, preparation of the annual financial statements, receipting requirements, internal controls, conduct of appeals, and audit requirements.

Obviously, some practices may not be relevant or appropriate to your situation. In those circumstances compliance will not be necessary. Any alternative practice or procedure must provide appropriate standards of accountability.

The guidelines are available for purchase from our office.

Disclosure

One of the major objectives of the Act is to promote proper and efficient management and administration of fundraising appeals. Proper disclosure is a keystone of that objective. Proper disclosure ensures that the public is fully advised of the circumstances of an appeal so that they can make an informed decision.

Authorisation of appeals

A person or organisation conducting or participating in an appeal must be authorised in writing by the authorised fundraiser.

Where the appeal is conducted face to face this authority must be in the form of a consecutively numbered identification badge or card which includes the name and contact phone number of the authorised fundraiser, the name of the bearer, and its issue and expiry date.

The badge must be worn by all volunteers or persons in receipt of a wage, fee or commission. Where the collector is in receipt of remuneration the badge must also include the words “Paid Collector”.

Where the appeal is not conducted face to face, the authority must be in writing and include details of the name of the authorised person, the terms and conditions under which the authorisation is granted, a description of the appeal, the specific period of the authority. It must also be signed and dated by the authority fundraiser or a person delegated to do so.

Involvement of traders (professional / commercial fundraisers)

Appeals may be conducted by commercial fundraisers or promoters. The Act refers to these persons as traders. These are persons who undertake a fundraising appeal on behalf of the authorised fundraiser, and where the appeal undertaken is in connection with the supply or goods or services in the course of any trade or business carried on by that person, or otherwise partly for the person’s benefit.

Where a trader is to conduct an appeal, it must be conducted jointly with the authorised fundraiser under a written agreement.

Advertising undertaken by the trader must comply with a number of requirements.

Traders fact sheet (PDF 196kb).

Telemarketing

Where an appeal is conducted through means of a telephone, the authorised fundraiser must ensure that it is conducted in accordance with Part C of the ADMA Code of Practice published by the Australian Direct Marketing Association.

The code specifies that a caller must:

identify himself or herself
tell the person being called, if asked, how the person’s name or number was obtained. If the caller does not know, they must find someone who does
only call between 8am and 9pm and not at all on Christmas Day, Good Friday or Easter Sunday
provide a clear opportunity to accept or reject the offer
accept a refusal courteously and hang up
appreciate that the person being called may have been contacted at an inconvenient time and offer to call back
not make calls pretending to do research or a survey when they are really trying to sell something.

Participation of children in an appeal

The minimum age for children participating in an appeal as a volunteer or receiving payment is eight years, and 13 years respectively. In both cases there must be observance of a code of practice. This Code specifies the conditions under which children may be used as collectors, including the degree of supervision required, conditions of employment and other obligations to protect their welfare and safety.

Banking of fundraising proceeds

The gross income from any fundraising appeal must be banked intact to an account maintained exclusively for that purpose in a bank, building society or credit union.

Fundraising expenses

Persons or organisations conducting appeals for donations only, must take all reasonable steps to ensure that total expenses payable do not amount to more than 40% of the gross proceeds. In all other forms of fundraising, such as the sale of goods and services, the return must be fair and reasonable.

Keeping of records

An authority holder is required to maintain certain books and records.

Financial reporting and audit

An annual financial report must be prepared and include certain disclosures as attached notes.

Financial reporting fact sheet (PDF 198kb).

The financial report must be audited by a registered company auditor or by a person approved by the office.

Lodgement of returns to the office

Incorporated organisations are not required to lodge returns unless requested to do so.

Unincorporated organisations are required to lodge an annual return if their income from fundraising appeals exceeds $20,000.

Disputes, conflicts of interest, etc.

Authorised fundraisers are required to establish mechanisms to resolve internal disputes which occur within its membership, and complaints from the public.

Authorised fundraisers must also establish a mechanism for dealing with conflicts of interest including the maintenance of a pecuniary interests register where applicable.

Public access to information

An authorised fundraiser must furnish certain documentation and information to the public at a maximum fee of $13.00 for the first page, and $1.00 cents for each subsequent page. Includes GST—when supplied by the office a tax invoice will be issued in respect of the supply /transaction.

The information that may be accessed includes copies of annual financial accounts for the past seven years, a copy or extracts from the constitution, and the names, qualifications and occupations of members of the governing body of the organisation.

Where a person or organisation conducting an appeal is questioned on details of the purpose of the appeal such as the appeal target, objectives, distribution of proceeds, etc., they should use their best endeavours to provide answers.

A public register of charitable fundraising organisations in NSW is available at www.licence.nsw.gov.au. The register lists authorised fundraising organisations, an organisation′s primary address, and its licence number and duration.