On 13 February 2019 the Select Committee (Committee) released its report on charity fundraising in the 21st century.
The Committee was established to enquire into a report on the current framework of fundraising regulations for charities and focussed on a number of key areas, the most important of which we think are:
- whether the current framework of fundraising regulation creates unnecessary problems for charities and organisations which rely on donations from Australian supporters;
- the loss of productivity for thousands of charities which to try to meet the requirements of the 7 different fundraising regimes; namely, the separate regimes of each State and Territory with the exception of the Northern Territory;
- how Federal, State and Territory governments could work together to provide charities with a nationally-consistent, contemporary and fit-for-purpose fundraising regime; and
- how the Australian Consumer Law should apply to not-for-profit fundraising activities.
Currently, each State and Territory, with the exception of the Northern Territory, has its own legislation and requirements applying to charitable fundraising – each with wildly different requirements for registration and ongoing reporting and compliance.
For charities which operate nationally, the current State-based regime represents a nightmare with ostensibly more effort going into obtaining and maintaining the various fundraising licences, rather than actually seeking funds from the public.
Additionally, as Professor Myles McGregor-Lowndes is known for pointing out, most if not all of the legislation is outdated and not fit-for-purpose in the 21st
Background to the Committee
Parliamentary inquiry into the regulatory framework governing fundraising activities has been ongoing since 2008 when the Senate Economic References Committee undertook an enquiry into disclosure regimes for charities and not-for-profit organisations, examining current governance and disclosure models for the sector and possible improvements to the regulatory framework.
Since then, the Productivity Commissioner commissioned a research report in 2010 in which he advocated for the harmonisation of fundraising legislation in Australia. In that report, the Commission suggested the governments proceed to a nationally-consistent approach to fundraising in a staged manner.
Then again in 2013, the ACNC undertook research to measure the red tape burden on charities in Australia and identified target areas for red tape reduction in furtherance of object 3 of the ACNC Act. That report concluded that there are a number of key inter-jurisdictional regulatory issues, including fundraising regulations, which remain a concern for charities.
In March 2017 the Consumer Affairs Australia & New Zealand delivered a report regarding the application of the Australian Consumer Law (ACL) to fundraising activity with a view to determining its suitability to apply to fundraising activities as an alternative to the inconsistent State and Territory-based legislation.
That report highlighted the legal complexities in the area, particularly to charitable and not-for-profit fundraising and identified the need for regulatory guidance on whether the ACL applies to fundraising. Regulatory guidance was subsequently developed which states that, generally, an organisation’s fundraising activities would likely come within the definition of “trade or commerce” and therefore attract certain obligations under the ACL.
In December 2017, the Australian government announced a review of the ACNC Act known as the “Strengthening for Purpose: Australian Charities & Not-for-profits Commission Legislation Review 2018” (ACNC Review). In that review the panel noted that whilst the ACNC does not itself currently regulate fundraising activities, fundraising was considered as part of the review due to its direct impact on the sector and consequent red tape and regulatory obligation placed on charities which seek to fundraise.
The panel considered that the most appropriate mechanism for reform is through the ACL framework.
The panel made 30 recommendations in the ACNC Review, with the following 4 being relevant to fundraising reform:
- Recommendation 25: The ACL be amended to clarify its application to charitable and not-for-profit fundraising and a mandatory code of conduct be developed’
- Recommendation 26: The use of the ACNC Charity Passport by Commonwealth departments and agencies be mandated;
- Recommendation 27: Responsibility for the incorporation and aspect of the regulation of companies which are registered entities be transferred from ASIC to ACNC, except for criminal offences; and
- Recommendation 28: A single national scheme for charities and not-for-profits be developed.
The Committee made 2 recommendations in the report; namely that:
- the Australian government urgently provide a public response to the recommendations made in the ACNC Review outlined above, and develop a policy position on fundraising regulation for the charity and not-for-profit sector which is long overdue; and
- the Australian government commit to working with State and Territory governments and the not-for-profit sector to develop a consistent national model for regulating not-for-profit and charitable fundraising activities within a time limit of 2 years.
Whilst the recommendations in the report are positive for the sector in the sense that they reflect the current majority position, it is frustrating that this is ostensibly the 4th report which has come to the same conclusions.
Equally, given the current political landscape, it seems unlikely that fundraising reform will remain a hot topic in light of the upcoming election and the other extreme issues present in the community at the current time.
Charities should, however, be buoyed by the outcome of the report, be hopeful for the implementation of its recommendations in the near future and continue to loudly voice the need for reform as it has always done.