Issues raised in evidence
This chapter examines the issues raised in evidence urging reform of Australia's
fragmented regulatory regimes for charity fundraising. Evidence before the
committee examined long-standing issues encountered by stakeholders engaged in
A significant number of submitters and witnesses commented on the complex
and fragmented regulatory environment within which charities and
not-for-profits have to operate. The complexity was attributed to the
inconsistent application of current fundraising laws arising from duplication,
different definitions for common terms, and laws not being fit-for-purpose or
failing to meet current needs (see Figure 4.1).
Figure 4.1: Inconsistent application of current fundraising
Source: Justice Connect,
Submission 49, p. 8.
The committee was informed that the law on charities has become increasingly
complex. For example, Ms Vera Visevic, Partner at Mills Oakley, stated that the
'law is confusing and complex' even for experienced lawyers with specialist
knowledge in the charity and not-for-profit sector. She reported that in recent
times the advice she has encountered has increased in complexity because 'people
are trying different ways and different methods to fundraise'.
Many witnesses and submitters expressed confusion about the law. For
example, Ms Alice Macdougall, Deputy Chair of Charities and Not for Profits
Committee, Law Council of Australia, viewed the current regulatory regime as
creating unnecessary confusion. She called for urgent reform to 'reduce the
confusion and the regulatory burden on charities arising from the current
situation of detailed, inconsistent, out of date and onerous fundraising laws'.
Ms Visevic explained that, apart from information that is available in acts
and regulations, the lack of publicly available information or guidance from
various departments and regulators regarding their expectations makes it
difficult for lawyers to advise clients. There is also limited judicial
interpretation available for reference in this area of law.
As previously outlined in Chapter 3, the committee heard from witnesses and
submitters the challenges caused by various definitions for common terms in different
Mr Alex Milner from the Law Institute of Victoria stated that much of
the complexity and inconsistencies in fundraising laws can be traced to the
inconsistent definition of charity across Australian jurisdictions.
Mr Milner highlighted NSW as one of the most detailed fundraising regimes with
a very broad definition of fundraising appeal, as discussed in Chapter 3.
Ms Katherine Raskob, Chief Executive Officer for Fundraising Institute
Australia, told the committee that:
The current laws are very inconsistent, even as to what is
regulated and what is exempted. Even the definition of charitable fundraising,
for example, differs across various state and territory legislation. So they
will increasingly have to staff and pay for the additional costs of the various
compliance regimes across the country.
Professor Myles McGregor-Lowndes from the Australian Centre for
Philanthropy and Nonprofit Studies (ACPNS), Queensland University of Technology
(QUT), and Dr Ted Flack made similar observations in relation to the lack of an
agreed definition for fundraising.
Donations across jurisdictions
The committee also heard differing opinions on whether a breach has
occurred if a donation was received interstate without authority from the donor's
state. For example, while there was one opinion that a local charity receiving
a one-off donation in another state was unlikely to attract the regulatory
interest of that state unless the charity was seeking donations from said state
or was engaged in a fundraising appeal, this was not a widely shared view.
However, Mr David Thomas, a Member of Chartered Accountants Australia and New
Zealand, thought in a similar situation he would be breaking the law if someone
donated from Queensland and the Sydney based Lifeline Australia in NSW did not
have a fundraising licence in Queensland.
Ms Macdougall from the Law Council of Australia argued that since the
establishment of the Australian Charities and Not-for-profits Commission (ACNC),
there has been no need for separate state and territory regulations, which
duplicate ACNC requirements and provisions already covered in the Australian Consumer
Ms Raskob agreed with this view, foreseeing a more challenging
environment for her members to comply with the various state and Commonwealth
regulations that govern their online fundraising activities.
Fragmentation and inconsistencies
Mr Milner from the Law Institute of Victoria provided an example of a
national fundraising campaign that encountered blockage in Queensland, due to
the requirement for commercial fundraising agreements. Mr Milner explained that:
These are, essentially, any agreements with a party who is
participating in the appeal and who is receiving commissions or reward as part
of that appeal. That agreement needs to be approved by the Queensland minister,
and, more than that, any public materials that are distributed as part of a
campaign that involves a commercial fundraiser need to be approved by the
Queensland Office of Fair Trading. So, I've certainly been aware of situations
where national campaigns, which often have their own deadlines and pressures,
will specifically exclude Queensland from fundraising exactly for that reason:
that there is just no way of being compliant in the time available.
This fragmentation of fundraising laws at the State and Commonwealth
levels is also replicated at the local government level. Mr Paul Tavatgis,
Director for Whipbird Consulting, noted the 'many different forms of rules'
that applied to face-to-face fundraising. The lack of consistency across local
...means that charities or third-party fundraising businesses
need to maintain significant teams of people, to essentially, liaise with local
authorities on a week-to-week basis to ensure that their fundraisers have the
correct permits in order to fundraise in each local authority area.
Mr Milner argued that these fragmented laws are not based on good policy
and do not have a sound commercial basis:
The thing I always say when I'm talking to lawyers about
fundraising regulation is: you have to read it and suspend disbelief, because
you can't read it and assume that it has a good policy or commercial
underpinning. Often it doesn't, and often you have to read it on its own terms
and then try and apply it... The level of ridiculousness in some of these pieces
of legislation is just incredible.
The committee heard that another source of confusion is the lack of
centralisation of the portfolio under one responsible minister. The committee
was informed responsibilities governing the relevant Commonwealth portfolio are
distributed across four departments under the remit of several ministers. The current
division of responsibilities are as follows:
Three Treasury ministers:
Minister for Treasury and Finance, the Hon Zed Seselja–ACNC
the Hon Josh Frydenberg–Australian
Competition and Consumer Commission (ACCC), Australian Taxation Office (ATO)
Treasurer, the Hon Stuart Robert MP–competition
and consumer policy, taxation legislation and administration.
Minister for Social Services—since
2013 responsibility for charity/not-for-profit (NFP) issues has been split
between Treasury and the Department of Social Services (DSS) with the former
responsible for the ACNC Act and DSS for the Charities Act.
Minister for Communications—Australian
Communications and Media Authority (telephone and online solicitation for
donations), Do Not Call Register (charity exemption).
the Privacy Act 1988 (charities and NFPs are specifically covered as
'entities' under the Australian Privacy Principles).
Outdated for current needs
Evidence before the committee commonly touched on the rapid adoption of
new technologies in the sector and how current fundraising legislation has not
reflected the changed landscape. Some witnesses pointed out the anachronistic
laws that still exist.
For example, Mr Derek Mortimer, Principal, DF Mortimer & Associates, and
Professor Myles McGregor-Lowndes, ACPNS, QUT, referred to the Street
Collections (Regulation) Act 1940 in Western Australia which makes it
illegal to collect money on the end of a long pole inherited from London's 1903
Metropolitan Streets Act.
The committee heard that despite the shift towards online fundraising,
only two fundraising laws 'explicitly address email or the internet and none of
them address online giving or the matter of jurisdiction'.
This issue is addressed further later in this chapter.
The committee heard that many charities failed to comply with the
relevant regulations and that non-compliance with the various Commonwealth and
state regulations could be attributed to both accidental and deliberate
Ms Lavanya Kala, Policy Manager, Volunteering Australia, told the
committee that given the complexity of the regulatory regime, it would not be
surprising if some non-compliance was deliberate, even if it was not committed
out of any 'ill intent'.
At the Senate Economics Legislation Committee's 2017 additional
estimates, Mr David Locke, then Assistant Commissioner, Charity Services
at the ACNC, suggested that there was a high level of noncompliance among
charities operating in Australia. This suggestion was based on a comparison of data
from Queensland with data from the ACNC, which showed only 2500 charities from
a total of 10 500 registered charities in Queensland held a fundraising
licence. Mr Locke assumed the discrepancy was due to 'a number of those 8,000
[charities]... operating without a licence'.
This assumption, however, was questioned by Mr Mortimer, who cautioned
against assuming that all charities should hold a fundraising licence by noting
that it was not mandatory for all ACNC-registered charities to have a
fundraising licence if their fundraising did not involve soliciting funds from
A large majority of witnesses and submitters believed that most charities
wanted to do the right thing and comply with the laws, and breaches of
fundraising laws occurred not because charities intend to circumvent them but due
to ignorance arising from the laws' complexity.
Submitters commented on considerable confusion caused by the 'legal
intricacy' of the current legal framework, particularly for small
organisations. Consequently, reported non-compliance can often be attributed to
The practical impact means that small organisations may risk breaking the law by
turning a 'blind eye' to non-compliance.
Ms Visevic suggested that based on her firm's experience, 'most
organisations that are fundraising are probably in breach of some law somewhere
in the country'.
This belief was based on Mills Oakley's experiences with clients. According to
Ms Visevic, clients seek the firm's advice twice in their lifetimes. The
first is when they first set up to fundraise and the second is when they only
have one licence but continue to fundraise in another jurisdiction until they
are found to be non-compliant. Ms Visevic suggested this would indicate many
more organisations that engage in fundraising are likely to inadvertently
breach fundraising laws.
Cost of compliance
Overwhelmingly, the evidence presented before the committee was that the
costs of compliance with each state and territory's fundraising laws place a
significant burden on charities, both large and small. Differences between
jurisdictions mainly exist across three key areas:
applying for fundraising registration or a licence, and retaining
eligibility to fundraise;
maintaining ongoing compliance; and
Applying and retaining fundraising
registration or a licence
As discussed in Chapter 3, the application of fundraising registration
and licensing is inconsistent across state, territory and Commonwealth
jurisdictions. As each state and territory has its own requirements for
fundraising licences, the regulatory burden associated with fundraising is
estimated to cost the charity sector $15.1 million each year,
and millions more when other not-for-profits are included.
The Smith Family observed that the 'requirement to register in each state and
territory plus the different definitions and compliance regimes which apply
across them create an undue administrative burden for all charities'.
Mr Norman O'Bryan, SC, stated that he considers the $15 million
figure estimated by Deloitte Access Economics to be 'a gross underestimate' and
does not account for the time and effort expended by people who would otherwise
be engaged in charitable activities. Mr Peter Hills-Jones, Chief Executive
Officer, Public Fundraising Regulatory Association, also noted that Deloitte's
estimated figure left out the costs associated with complying with local
For example, Mr John Scott, Company Secretary and Accountant for the
Brandenburg Orchestra, reported that the organisation had spent between $5,000
and $10,000 on legal advice to ensure the organisation complied with its
Mycause reported it had a compliance regime for four licences and three
entities and spent in excess of eight hours each month on compliance.
In addition to the 14 sets of regulation covering its two charities, the My
Cause Gift Fund (a Public Ancillary Fund) and Helping a Friend in Need (a
Public Benevolent Institution), the platform complies with the ACNC as well as with
the regulatory regime the company established with Consumer Affairs Victoria for
its personal cause fundraising activities.
Ms Tania Burstin from mycause told the committee:
We advise our charity partners... that
they must be registered in the state in which they are fundraising. We define
fundraising as a solicitation of donations both online and offline. We do not
regard a 'donate now' button as solicitation. If Tania Burstin of Victoria
wants to fundraise for Bruny Island art society in Tasmania, that organisation
must be registered in Victoria. As a charity, you may not know where your
fundraisers are located, so therefore you must be registered in each state.
Maintaining ongoing compliance
Deloitte Access Economics' report outlined the different types of
requirements with which charitable organisations are expected to comply on a
continuous basis to retain their fundraising registration or licence. These can
vary according to the type and method of fundraising, including:
the authority for street collectors to act on a charity's behalf;
receipting requirements; and
the requirement to have a physical address in the state in which
the relevant organisation fundraises.
The committee heard that for Musica Viva, which operates in all eight
states and territories, the impost of maintaining current fundraising
authorities across the entire country is significant in terms of administrative, financial and
reporting burdens. Mrs Sarah Falzarano, Director of Finance, Sydney Symphony
Orchestra, highlighted this burden with an example of a national campaign:
[W]e would run a competition in our subscription campaign
incentivising people to subscribe. Because we run subscriptions nationally,
then we have to take out those competition authorities in all eight
jurisdictions, so the flow-on impact of that is it diverts already-scarce
resources away from the purpose of the organisation. Similarly, the regulatory
framework around fundraising activities is often complex and sometimes open to
misinterpretation. A national approach with simple guidelines in plain English
would greatly reduce time lost in ensuring that compliance is all in place on a
To underscore the amount of regulation the company mycause has had to
comply with, Ms Burstin, Managing Director of the online fundraising platform,
reported the company is 'really up to our eyeballs in compliance'.
Ms Burstin explained that to comply with the 14 sets of regulations, one
part-time staff member is employed to keep up to date with the organisation's
compliance obligations. In addition to the regular regulatory compliance work,
there are other requirements:
Not only does each state have a different burden of
registration—for example in
Queensland having to advertise in the newspaper, or in New South Wales
having to have a postal address in New South Wales—but each state has a different burden of
compliance. For example, Victoria wants our data in May, just before the end of
the financial year, rather than waiting for our books to be complete at the end
of June. The New South Wales regulator recently knocked back our audit as it
did not reference their act; it only referenced the ACNC. This causes us
additional cost and burden with our expensive auditors.
Mr John Scott from the Brandenburg Orchestra recounted a similar example
of regulatory burden experienced by the Australian Brandenburg Orchestra:
[W]e opened up in Melbourne when the Melbourne Recital Centre
came on board 10 years ago, and we decided that we wanted to fundraise there.
Even though we were registered for fundraising in New South Wales, and it's a
requirement for that to be reported in our annual report, we had to go and
register in Victoria as well. The issue we had there was that our office is
based in Sydney and is very small. They required an office in Melbourne in
order for us to register.
In addition to ensuring each of the compliance requirements for each
state and territory is covered, Mr Bruce Moore, General Counsel, Australian Red
Cross Society, noted that compliance dealings with individual state and
territory regulators can delay fundraising campaigns:
It's more the detailed dealings with the individual
regulators that gives rise to specific obligations—for example, provision of copies of
contracts to the Queensland regulator for fundraising with the entities who we
are contracting with in order to raise funds. [...] So it's that kind of detail
that means sometimes there may be a time interval between wanting to run a
campaign and being able to commence it.
Other issues identified included the difficulty of obtaining criminal
record checks for all board members who may be scattered across the country and
the requirement for an audit report if the ticket price for an event is over a
certain threshold. This was despite accounts already being audited by one of
the major accounting firms.
Adding to the complication of fulfilling a 'significant number of
operational compliance requirements', Deloitte's research found that compliance
information can be difficult to access. Deloitte stated in its report:
As fundraising registration is typically an ancillary
component of the state or territory's responsibilities, some jurisdictions do
not have this information readily available on their website to use as a quick
reference guide. Consequently, time is spent searching for the different
requirements in each of the jurisdictions to ensure that requirements are being
Mr Moore from Australian Red Cross Society outlined that even for a
large organisation with a dedicated team to oversee fundraising, the work
required to comply with the range of regulatory requirements remains
substantial and is a continuous process. He outlined some of the internal
processes undertaken before his charity could fundraise nationally:
Maintaining fundraising licences—they need to be renewed every so often. There are
certificates around what is permitted fundraising activity and for what types
of purposes. That can vary. So, in our case, that has to be expressed, and is
expressed, in general terms because of the diversity of charitable activities the
organisation undertakes. It is making sure all those things are in place on a
continuous basis that provides some of the challenges.
The committee received evidence that in addition to compliance with
federal reporting requirements, charities which fundraise also have reporting
obligations to the relevant state and territory regulators on amounts they
collect. As noted by Deloitte, these reporting obligations can vary between
jurisdictions, as do the timeframes for submission and the need for audited
Mills Oakley's submission echoed Deloitte's findings, reporting that the
effort and work involved to meet the different, and sometimes conflicting,
audit and reporting requirements puts pressure on an organisation's resources (both
financial and human capital).
For example, Mrs Falzarano from Sydney Symphony Orchestra drew attention
to the large number of regulatory authorities that Australian Major Performing
Arts Group (AMPAG) members reported to over the course of a 12 month period.
[t]hose multilayered reporting requirements provide a high
administrative burden and can lead to complexity, and we find that many of them
are often asking for similar data, perhaps in slightly different presentation
Disadvantages small and medium
The committee heard that the regulatory burden was particularly
difficult for smaller charities to manage. Mr Moore from Australian Red Cross indicated
his sympathy for the regulatory burden experienced by smaller charities
operating on limited resources.
Ms Lavanya Kala from Volunteering Australia added that the vast majority of
charities were small organisations heavily dependent on giving and philanthropy
and work under severe funding constraints.
Mills Oakley's submission supported this view, and pointed out that the
limited budgets and resources of smaller organisations made it especially
difficult for charities to obtain 'exhaustive legal advice on issues requiring
extensive research to account for jurisdictional inconsistencies'.
Small charity organisations like the Australasian Leukaemia and Lymphoma
Group (ALLG), which recently moved into the fundraising space as a way to
diversify its revenue, advised the committee that when they looked at setting
up a fundraising plan they were surprised to learn there was not a nationally
consistent approach to fundraising regulations. Ms Delaine Smith, Chief
Executive Officer for ALLG, was also surprised that the standards and codes
were not set by the ACNC but by organisations that require additional annual
memberships, such as the Fundraising Institute Australia and the Public
Fundraising Regulatory Association.
Ms Smith reported that of the $41,000 ALLG received in donations, about a
quarter (less than $10,000) was spent on compliance. This did not include the
human resource time. She explained that once the initial application process
with the states was taken, the ongoing reporting was less onerous to maintain.
Mr David Thomas, Member of Chartered Accountants Australia and New
Zealand, described his workload as a member and Chief Executive Officer of a
small local not-for-profit branch of Lifeline Australia and observed that '[t]o
make this a lot simpler would free us up so much'.
The impact of regulatory compliance was emphasised by Ms Kala for
Volunteering Australia in her evidence before the committee. The committee
heard the volunteering sector, which contributes $290 billion annually to
Australia socially and economically, plays a critical role in the delivery of
government priorities and support for the charity sector. For organisations
which rely heavily on the efforts of volunteers, the regulatory burden places
them under enormous pressures. Ms Kala suggested that the formal decline in
volunteering numbers could be due to people being deterred by red-tape.
She told the committee:
...the reporting requirements are complex and confusing and
result in onerous administrative requirements for charities that don't have the
resources or human capital [such as in-house counsel] to navigate them.
To underscore the vital role of volunteers in the charity sector, Ms
Kala told the committee that volunteers make up 2.97 million members of the
sector's workforce compared to one million paid staff members.
The 2015 Giving Australia report on non-profits and volunteering found that
62.3 per cent of organisations in the not-for-profit sector recruited volunteers.
The committee heard there are additional costs involved for
volunteer-involving organisations in the charity sector compared to charities
run by paid staff. This is due to the high costs associated with the
management of volunteers, who might be considered 'free labour' but require
resources for training, equipment, management and compliance.
Mr John Mikelsons, Senior Policy and Advocacy Officer for the Australian
Council of Social Service (ACOSS), highlighted the impost placed upon small charities
that rely heavily on volunteers. He told the committee that a national charity involved
in fundraising for HIV prevention that relies solely on volunteers to run, of
which he is a board member, has had to relinquish its fundraising licence in
several states because it did not have the resources to 'keep it up'.
Ms Nicole Stanmore, Director of Business Development, Engagement and
Operations for Australian Council of Social Service, stated that, in relation
to reporting and registration, in a voluntary organisation:
...if there's no administrative
support, it would be absolutely impossible to coordinate different board
directors to do police checks, to sign different forms and to have everything
done on time. That process can actually take weeks.
Inefficient allocation of resources
The committee heard from witnesses that charity resources have often been
diverted from core business in order to comply with current regulatory
For example, the committee heard that in addition to the costs involved,
the time ALLG staff spent on compliance was not productive and could be better
directed towards ALLG's primary research objectives, with its Chief Executive
Officer saying that 'This is due to the repetition, the inconsistencies, the
various fees and the additional costs that one has to acquire, such as print
media, in various states'.
Similarly, Ms Katherine Raskob, the Chief Executive Officer of the
Fundraising Institute Australia, described the resources member organisations
have had to divert towards regulatory compliance that could have been more
productively employed on their charitable cause:
[O]ur members [are] all across Australia, and many of them
say that they have additional resources that cost them quite significant funds
to be able to adhere to the various legislation and regulatory regimes. Those
funds could more effectively be used for the ultimate cause of their
fundraising activity rather than for red tape. One of our members is an NGO and
works to eradicate poverty worldwide, and it has one full-time equivalent just
doing the work of red tape, working within the red tape burden. For example, if
that were a salary of over $100,000, you can imagine how far that would go in a
Several witnesses concurred and drew attention to the inefficient use of
their (member or client) organisations' resources.
Dr Lisa O'Brien, Chief Executive Officer for The Smith Family, told the
committee that a 'lack of harmonisation currently limits efficiency in The
Smith Family's efforts to fundraise, expand services and increase its positive
impact for Australian communities'.
For small organisations, the regulatory burden of compliance with
fundraising requirements often means they have had to make a cost-benefit
analysis of whether a fundraising activity should be pursued or restricted in
its scope. For example, Mr Peter Kempen, Chairman of ALLG, explained
that despite receiving DGR status in 2009 and being able to receive donations,
ALLG decided against going national with its fundraising activities because it
found the process daunting. Mr Kempen added:
Whilst that didn't stop us from receiving some donations,
particularly in Victoria, we didn't rush to go national even though we are a
national organisation conducting trials across the country. We didn't seek to
go down that path for some years...and we're still questioning the value of
Mr Kempen informed the committee that if the process had been less
complex, ALLG's decision to engage in fundraising would have been made much
easier. As it is, Ms Smith advised that after over 12 months of working through
the registration process with Western Australia, ALLG decided to suspend the
process following a cost-benefit analysis.
Dr Peter Thomas, Director of Policy and Operations, Association of
Australian Medical Research Institutes (AAMRI), provided an example of lost
opportunity attributed to regulatory burden. It involved a Victoria-based
member being told by the NSW Fair Trading that a NSW postal address was a
required part of their application if they wanted to undertake a national
fundraising campaign. Dr Thomas told the committee that:
...after much arguing and discussion they [NSW Fair Trading]
said, 'We'll ignore that and put your Victorian address down.' That is all well
and good but the directors have to sign a declaration saying that they are
compliant with the law—and they're unwilling to sign a declaration that they're
complying with the law when they're knowingly disregarding it. It's taken one
person in that office probably about three weeks of arguing over the last six
months to get to that stage.
Ms Alice Macdougall, the Deputy Chair of the Charities and Not for
Profits Committee at the Law Council of Australia, shared a similar observation
where regulatory burden has deterred the participation of otherwise interested
Where I probably see the most restriction occurring is
actually where corporates want to support some charitable cause. When they find
out that there's this fundraising regime and that it's very detailed in what
they can and can't do, they withdraw, particularly if it's something where they
want to sell a good and say some of the money is going to a charitable purpose.
With the varying provisions around labelling and advertising and all sorts of
requirements, they just go, 'No, we're not going to do that.'... It's too hard.
The committee heard evidence from a number of witnesses about the
stifling effect current fundraising laws have on innovation in the sector. This
impacts the ability of charities of all sizes to engage in new and novel ways
to fundraise beyond their own jurisdiction.
One such example of constraint placed on a potential fundraising
campaign involved a client wanting to fundraise using a mobile phone app.
Mr John Vaughan-Williams, Lawyer for Mills Oakley, explained that due to a
delay in obtaining licences in every state for a national campaign, the commencement
of the fundraising operation was delayed by six to 12 months.
Mills Oakley concluded that the risk of non-compliance and the current regime's
complexity discourages charities from expanding their fundraising programs.
Lack of regulation of online platforms
A recurring issue identified by witnesses and submitters concerned the
lack of regulation for online fundraising. The committee heard there was no
consistent approach to online fundraising between the states and territories.
The committee heard that online giving has become 'a very cost-effective way of
engaging with people and a very contemporary way of giving and receiving
Ms Geraldine Magarey, Leader Research and Thought Leadership, Chartered
Accountants Australia and New Zealand, reported that 96 per cent of large
organisations use websites to fundraise, 80 per cent use social media and
almost 70 per cent use third party fundraising platforms and crowdfunding campaigns.
The lack of a national approach to regulation in the online fundraising
space means that despite the digital transformation of fundraising activities,
current fundraising laws have failed to deal with this new form of fundraising,
resulting in a regulatory gap as well as inconsistent treatment of different
groups engaging in the same fundraising activities. The states and territories'
different approaches often result in 'inconsistent, ambiguous and not clearly
codified [guidelines] and require specific investigation'.
However, Mr Alex Milner, Member of Not for Profit and Charities Law
Committee, Law Institute of Victoria, stated current legislation has been slow
to reflect the diverse nature of fundraising in Australia:
There is not just online fundraising; there is also
fundraising to do with donations of cryptocurrency and all sorts of weird and
wonderful things that come through. It's apparent that the current legislation
has a whole lot of gaps in terms of how it addresses that. It also has, in many
cases, a questionable policy basis. It may have been the case that some of the
legislation did have a good policy basis, but it no longer has that.
Mr Moore echoed this view and stated:
[a] national approach would need to recognise that fundraising
these days is via a great variety of different channels, some face to face,
some online, some through mail and so on. In particular, digital fundraising
through online activities doesn't have any state or territory boundaries.
Ms Burstin likened online fundraising to the traditional method of
people asking family and friends for money to help each other for a range of
causes, the only difference now being the borderless nature of such online
The committee heard alongside the shift towards online fundraising there
is also a trend in the direction of third-party fundraising.
Generally, third-party fundraising refers to any non-charity groups, commercial
businesses or private individuals who wish to fundraise on behalf of charities or
a personal cause. The online platform used to host the fundraising event is
considered a commercial entity.
Ms Sarah Wickham, Philanthropy Australia, observed the high profile
Belle Gibson fraud case highlighted the need to 'really modernise,
streamline and update fundraising laws in Australia':
[B]ecause online digital fundraising platforms are not
regulated in Australia there were no rules around the ability of individuals to
create fake campaigns and go to the public with a compelling story to raise funds.
When you find a situation where a sector or an industry is significantly
developing through the pace of technological development, but regulation isn't
keeping up the pace with these issues, you see situations like this happen.
The committee notes that the state regulator was successful in obtaining
an order against Ms Gibson for contravention of the ACL.
Local online platforms
The committee heard that the current regulatory environment can result
in disadvantages for local online platforms. For example, in the absence of
consistent regulations governing the online fundraising space, particularly as
they relate to personal cause fundraising, Ms Burstin reported that her company
has had to create its own regulatory regime with Consumer Affairs Victoria
(CAV) in order to operate from Victoria. This includes complying with all
company regulations and notifying the regulator each month of every fundraising
page that is created.
However, by complying with these regulations, Ms Burstin argued that her
locally-based third party fundraising company is operating at a disadvantage
compared to her unregulated competitors based overseas.
Ms Burstin attributed the lack of consistent regulation across the
different jurisdictions to a confused approach to personal cause fundraising
regulation. Apart from mycause's regulatory solution with CAV, New South Wales
is the only state that regulates mycause's online fundraising platform as a
trader. Also, while some states treat personal cause fundraising as a
charitable purpose and therefore regulate it, some do not, or are confused
about how to regulate it. Ms Burstin suggested that the confusion arises when
regulators try to define online personal cause fundraising within the narrow
legislative frameworks that cover charity and charitable purpose. When
regulators fail to find a satisfactory solution, this leaves a regulatory gap that
may place an unfair burden on local fundraisers and fundraising platforms, and leaves
donors vulnerable to fraud.
The inconsistent treatment between locally-based and overseas-based fundraising
platforms is underscored by the numerous regulations Ms Burstin's company
has had to comply with compared to her unregulated competitors:
When I speak to the regulators, I might say to them—in fact,
I have said to them in Victoria—'Person A is fundraising on an overseas
platform, and they're located in Victoria. They've raised over $10,000, and
they haven't got a licence with you, which is your requirement.' They will say
to me, 'Oh, but that platform's overseas.' I will say to them, 'But the
fundraiser is located in Victoria.' It probably shouldn't matter where the
platform is located. It doesn't really matter anymore...
Ms Burstin highlighted some of the transparency and accountability measures
local companies like hers undertake that overseas platforms do not:
There is no level playing field with the overseas platforms,
who are non-compliant with any regulations. [...] We expose the bank account
name and the name of the beneficiary, so the donor can make an informed choice.
[...] Should that trust be broken, you have a remedy in consumer and fraud law.
Lack of accountability and transparency
Evidence before the committee emphasised the importance of trust underpinning
the relationship between donors and the beneficiaries of donations in the charity
and not-for-profit sector. The committee heard transparency and accountability
activities, which are critical to building trust, should be streamlined and
made more accessible to both charities and members of the public than is
presently the case.
Third party and online fundraising
In relation to online third party platforms, the committee heard that
the lack of interaction with donors on these platforms was incompatible with
transparency and accountability.
Several witnesses raised the issue of accountability and transparency
concerning third party online fundraising platforms that require regulation.
Ms Macdougall from the Law Council of Australia recommended that charity
regulations should be based on transparency and public accountability for all
activities. The conduct of activities should not be misleading, coercive or
unconscionable, and funds raised should be applied in a manner consistent with
Ms Smith from ALLG commented that it can be confusing to understand the
administrative costs of organisations using third party online platforms. She
explained that while the online platform might claim there is a small
percentage that would be taken for administrative costs, the donor might
interpret this to mean the cost to be the charity's administrative fee when
this is not the case. Rather, the percentage cost refers to the amount retained
by the online platform. Ms Smith was of the opinion that such fees and charges
should be clarified so people are informed exactly what proportion of their
donations goes toward the charitable cause of their choice.
Ms Smith also identified insufficient clarity about who has access to a
donor's credit card details, the fees associated with using third party
services, and any additional costs. She also raised the issue of when an online
third party fundraiser withholds funds from a beneficiary because the
beneficiary did not have a licence for fundraising interstate.
Administration and non-charity
A common complaint heard by the committee was the lack of transparency
and information concerning administration and non-charity related fees and
expenses. The committee heard that while donors may not like to learn their
funds go towards administration costs, administration costs are necessary in
order to undertake the work of charities or charitable causes. Mr Moore,
General Counsel for Australian Red Cross Society, suggested that it was a
matter of educating the public so they understand that some administration
costs are necessary in order to direct funds towards a charity's core purpose.
Dr Thomas concurred and added that costs can differ depending on a
particular stage of a fundraising campaign. He explained that often most of the
expenses for a fundraising campaign can be in the set and up-front costs
involving the staffing of a campaign. This immediate establishment cost will
decline over time as donations increase and the charity receives a steady
stream of funds from donors.
Ms Macdougall shared a similar view, contending that it is impossible to
regulate what percentage of money raised should be spent on administration:
I think there's been quite a lot
of research done out of QUT where they look at this issue of fundraising
ratios. Basically, they conclude every time that it's impossible to regulate,
because you can account so differently for different aspects of it. [...] There
are arguments that when you're just starting out you might be spending a lot
more money on administration than you are in producing whatever your charitable
purpose is. It could depend on the timeline. It could be very misleading in
itself, the actual ratio.
The issue of fees was particularly relevant to online third party
fundraisers. Mr Kempen was of the view that there is a transparency deficit
regarding online fundraising and believed strongly that donors should be
informed how much of their donations go to the charity of choice and how much
is charged by third party fundraisers for their service.
The committee heard from witnesses that enforcement of fundraising regulations
was a recurring issue, particularly in the context of under-resourced
regulators. For example, Mr David Crosbie from the Community Council for
Australia stated that:
Unfortunately this is an area of government activity that has
not been well resourced. Even if the legislation was good, I think there are
fewer than 20 people around Australia employed in this area, across all the
jurisdictions, so they just haven't resourced it.
The issue of under-resourced fundraising regulators was highlighted by
ACPNS, QUT's submission, which reported that the number of staff employed in
fundraising regulation administration across Australia was particularly inadequate,
with 16.95 full-time equivalent (FTE) staff responsible for the whole country.
Mr Vaughan-Williams, Lawyer for Mills Oakley, expressed a similar
sentiment. He partly attributed the regulator's reluctance to pursue breaches
of the law through the courts to the authority being 'a little bit
He noted that the regulators may want to 'pursue things' but they may be
restricted by limited resources.
Ms Visevic was of the view that regulators were '[not] proactive in terms
of trying to ferret out that sort of behaviour [breaches of the law] or trying
to review licensed organisations'.
Ms Visevic stated that her firm usually don’t get involved until something was
reported to them or they may be pressured to get involved because a case may have
garnered a lot of media attention. They may act 'bolshie' at the start but
would generally arrive at a solution that did not include going to court.
Ms Burstin stated that even where there is regulation requiring a
license in a jurisdiction, not all states may enforce this requirement. She provided
an example where in Queensland, although a person is required to have
permission for a one-off charitable appeal, the regulator may not follow up due
to lack of resources, especially when they believe no fraud has been committed.
Evidence received from the Public Fundraising Regulatory Association
(PFRA) and the Fundraising Institute Australia indicated that these two
self-regulatory groups devoted significant resources to compliance activities
with members. For instance, Mr Peter Hills-Jones, Chief Executive Officer, from
PFRA, informed the committee his organisation undertook checks of 400 to 500 of
its members each year.
Limited role of the Australian Competition and Consumer Commission
Some evidence outlined concerns about the limited role of the ACCC in
regulating the charities sector under the ACL. In particular, this evidence emphasised
that because the ACL is confined to trade or commercial activities, the ACCC may
overlook other types of charitable fundraising activities that do not fall
within this remit, unless they involve fundraising in an organised, continuous
and repetitive way.
Many witnesses and submitters supported expanding the ACL and the regulatory
role of the ACCC, whether as a single or co-regulator with the ACNC or another
The following chapter outlines some of these proposals, as well as other
options for reform that were suggested by witnesses and submitters as a means
of resolving many of the issues raised about the current regulatory frameworks
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