Stack of documentsSummary – The Treasurer released a consultation paper on charitable fundraising reform in February 2012.

The Treasury recently released a discussion paper and draft regulation impact statement in relation to proposed charitable fundraising reform.  At the moment, all States and Territories in Australia (except the Northern Territory) have their own fundraising regulations and they have different requirements for registration and compliance. The discussion paper proposes to introduce standardised fundraising laws across Australia.

The kinds of “fundraising activity” subject to regulation, as proposed by the paper, would encompass any activity involving the solicitation or receipt of money or other property primarily for a “charitable purpose”.  “Charitable purpose” will be defined in accordance with the upcoming statutory definition of “charity”, currently contemplated by the Commonwealth Government.  The requirement for a “charitable purpose” suggests that fundraising activities for causes that do not fall within the definition of “charity” will not be caught by the proposed national fundraising laws.

The paper submits that a key objective of such fundraising reforms is to reduce the costs for the Not-For-Profit sector.  It is recognised that “small scale” fundraising is less likely to present a risk to the community and it is therefore proposed that annual fundraising of less than $50,000 by a single entity or related organisations will be exempt from the proposed national fundraising regulations.  This is positive news for small charities or Not-For-Profits that would otherwise need to use their limited resources towards compliance with State or Territory based fundraising regulations.

An interesting proposal in the paper suggests that charities registered with the upcoming Australian Charities and Not-For-Profits Commission (ACNC) should be authorised to engage in fundraising activities in Australia.  If this is an automated process, it would mean that charities that would otherwise have to register with the ACNC anyway will be also granted an authority to fundraise throughout Australia.  If enacted, this may mean fundraising could become much easier for registered charities and may encourage more charitable organisations to engage in fundraising activities if the option becomes so readily available.

The paper discusses at length the proposed regulations concerning the conduct of fundraisers and information disclosure. Due to the higher risks posed by internet and electronic fundraising, it is also proposed that fundraising over the internet for charitable purposes will be prohibited unless an entity is registered with the ACNC.  While this may increase costs for Not-For-Profits conducting fundraising activities online, registering and having an accessible profile on the ACNC website could help establish credibility, which in turn may encourage potential donors to donate.

A survey of the Not-For-Profit sector published this month revealed that the impact of the recent economic downturn has been felt by most organisations that rely upon fundraising as their main source of income.  The survey also indicated that the sector appears to be moving away from high cost methods of fundraising and is branching out into electronic communications to carry out fundraising activities.  The proposed reforms could help address both issues by reducing costly red-tape for the sector (particularly for compliance in each State or Territory, if fundraising on the internet) and acknowledging the increasing role of electronic communications in fundraising activities.

The proposed reform is generally a step in the right direction in standardising fundraising regulations in Australia.  Its focus on reducing cost for the sector and recognition of fundraising activities that increasingly take place all over Australia through the internet is relevant and timely in light of the difficulties in applying current fundraising laws that differ from one Australian jurisdiction to another.

Careful attention should be given to exemptions under current State or Territory legislation and how they may be affected in any new Federal regime. This may be particularly important for religious organisations in New South Wales most of which have the benefit of exemption under the Charitable Fundraising Act.

If you wish to make a submission in relation to the discussion paper, you may do so before the deadline of 5 April 2012 on the Treasury website.