A Not-For-Profit’s Guide to Charitable Fundraising Without Breaking the Law in New South Wales

Introduction

For any not-for-profit organisation or charity planning to fundraise in New South Wales (NSW), understanding and adhering to the relevant fundraising law is essential. Navigating charitable fundraising guidelines ensures compliance with regulations, primarily overseen by NSW Fair Trading under the Charitable Fundraising Act 1991 (NSW), promoting transparency and protecting both the organisation and its donors from potential issues.

This guide provides essential information for any fundraiser aiming to comply these obligations effectively within this Australian state or territory. It offers practical insights into the core requirements, such as the potential need for a licence or authority, and considers the interplay with other laws like the Australian Consumer Law (ACL), helping your organisation maintain compliance while focusing on its charitable purpose.

Understanding NSW Charitable Fundraising Law

What Counts as Charitable Fundraising in NSW

In New South Wales (NSW), a ‘fundraising appeal’ generally involves soliciting or receiving money, property, or other benefits when it is represented that the appeal is for a ‘charitable purpose’ or supports an organisation with charitable objects. This applies regardless of whether the solicitation or receipt happens in person, by post, telephone, electronic means, or otherwise.

The Charitable Fundraising Act 1991 (NSW) defines a ‘charitable purpose’ broadly to include any benevolent, philanthropic, or patriotic purpose.

It’s important for not-for-profit organisations to note that this definition may differ from the one used by the Australian Charities and Not-for-profits Commission (ACNC) for federal charity registration. Essentially, the intention must be to benefit the public or a section of it, rather than providing a private advantage.

Numerous activities fall under the umbrella of charitable fundraising in NSW. These regulated activities include:

• Requesting donations, whether in person, online, via telephone, or direct mail
• Seeking sponsorship for events like walkathons or telethons
• Conducting lotteries, art unions, raffles, bingo, or other forms of community gaming where proceeds support a charitable purpose
• The supply of goods and services, such as selling merchandise, food, or entertainment at events like golf days, trivia nights, or balls, where proceeds are for a charitable cause
• Operating collection bins for clothing or other goods
• Online appeals, including crowdfunding campaigns targeting the public for charitable causes
• Public appeals seeking support for specific clubs, associations, causes, or individuals
• Membership drives, if one of the organisation’s objects is charitable

Key NSW Legislation and Regulator

The primary legal framework governing charitable fundraising activities within New South Wales is set out in two key pieces of legislation:

• The Charitable Fundraising Act 1991 (NSW)
• The Charitable Fundraising Regulation 2021 (NSW)

These laws establish the rules and obligations for conducting fundraising appeals in the state.

Compliance with this fundraising law is overseen by NSW Fair Trading. This government body is responsible for regulating fundraisers, issuing authorities to fundraise, and ensuring organisations adhere to their legal obligations. Additionally, NSW Fair Trading provides charitable fundraising guidelines to assist organisations in understanding their responsibilities.

Requirement for a NSW Fundraising Authority Licence

The General Rule Needing Authority to Fundraise

In New South Wales (NSW), there is a fundamental requirement for organisations and individuals involved in charitable fundraising. Generally, if you intend to conduct a fundraising appeal for charitable purposes directed at the NSW public, you must hold an authority, often referred to as a licence, to do so legally. This requirement stems from the Charitable Fundraising Act 1991 (NSW).

Applications for a fundraising authority licence are made to NSW Fair Trading. Alternatively, an organisation or individual can enter into an arrangement to fundraise on behalf of an existing authority holder, provided certain conditions are met. It’s important to note that conducting or participating in an unauthorised fundraising appeal is an offence under NSW fundraising law.

Organisations Exempt from Needing an Authority

While the general rule requires an authority licence, NSW fundraising law provides exemptions for certain types of organisations. These organisations can conduct regulated charitable fundraising appeals without holding their own authority, although they must still comply with other relevant provisions of the Act.

Key exemptions include:

• Small fundraisers: Organisations or individuals whose gross annual fundraising income is $15,000 or less are exempt, provided they meet specific conditions. These conditions include:
  • Not receiving remuneration for fundraising beyond lawful and proper expenses
  • Using only volunteers for their appeals
• Religious bodies: Certain religious organisations are exempt, including:
  • Bodies recognised as denominations under the Marriage Act 1961 (Cth)
  • Specific organisations listed in the Charitable Fundraising Regulation 2021 (NSW)
  • Those officially affiliated with exempt religious bodies
• Universities: Universities established under NSW or Commonwealth law, along with entities they control (as defined by Australian Accounting Standards), do not require an authority.
• Local councils: NSW local councils, committees of councils, and trusts where a council or council representative acts as trustee are exempt.
• Parents and Citizens associations: Parents and Citizens (P&C) associations connected with NSW government schools under the Education Act 1990 (NSW) are exempt from needing an authority licence.

Activities Not Considered Regulated Fundraising Appeals

The Charitable Fundraising Act 1991 (NSW) also specifies certain activities that do not fall under the definition of a ‘fundraising appeal’. Consequently, organisations undertaking these specific activities do not require a fundraising authority licence for them.

These excluded activities encompass:

• Requests for membership renewal fees directed solely at existing members of an organisation
• Appeals made exclusively within an organisation to its own members
• Soliciting bequests or providing information that might lead to property being left in a will
• Appeals conducted primarily within a workplace to assist an employee or their immediate family
• Applications for grants from Commonwealth, State, or local government authorities
• Genuine fees or charges for the provision of specific services, such as:
  • Educational facilities or services
  • Child-minding services
  • Goods and services supplied through supported employment for people with disabilities
  • Nursing, medical, care, or welfare services

Key Compliance Obligations for NSW Fundraisers

Managing and Using Funds Appropriately

A fundamental obligation for any organisation conducting charitable fundraising in New South Wales (NSW) is to ensure that all funds raised are used strictly for the charitable purpose represented during the appeal. It is an offence under the Charitable Fundraising Act 1991 (NSW) not to apply funds in accordance with the stated objects or purpose. This ensures transparency and maintains donor trust.

Organisations must also manage expenses carefully. While costs associated with fundraising are permitted, they must be considered ‘lawful and proper’. An expense qualifies if it is:

• Not prohibited by law
• Supported by documentary evidence or otherwise verifiable
• Properly authorised by the organisation (if the authority holder is an organisation)

Specific rules apply to expenses, particularly regarding commissions and overall fundraising costs:

• Commissions must not exceed one-third of the total amount obtained by the person in the appeal
• For appeals relying solely on donations, fundraisers must take reasonable steps to ensure expenses do not exceed 50% of the gross income raised
• If other income sources exist, expenses must represent a fair and reasonable proportion of the gross income

Record Keeping and Financial Reporting for Your Charity

Maintaining accurate financial records is a crucial compliance obligation for fundraisers in NSW. Organisations must keep detailed books of account and records that correctly explain their transactions, financial position, and performance relating to charitable fundraising. These records must be kept for at least seven years after the appeal ends.

Key record-keeping requirements include:

• Detailed accounting records identifying income, expenditure, and the charitable purpose
• Registers of assets and receipts issued
• Records of participants involved in the appeal
• Minutes related to the fundraising appeal (kept for at least three years)
• Details of all persons associated with the appeal
• Maintaining a separate bank account exclusively for fundraising proceeds, operated by at least two people

Reporting obligations vary depending on registration status and income. Non-ACNC authority holders must submit an annual return, financial statement, and compliance statement to NSW Fair Trading. However, charities registered with the ACNC fulfil their NSW reporting obligations by lodging their AIS with the ACNC, including necessary NSW fundraising data and compliance statements.

Additionally, audit requirements may apply if gross fundraising income exceeds certain thresholds. For example, if your income exceeds $250,000, an auditor’s review is required.

Rules for Collectors and Specific Fundraising Activities

Organisations holding a NSW fundraising authority can authorise others, known as ‘collectors’ (members, employees, agents, volunteers), to fundraise on their behalf. The authority holder remains legally responsible for the conduct of these collectors.

Specific authorisation requirements apply:

• Face-to-face collectors: Must be given a uniquely numbered identification badge displaying the authority holder’s details, the collector’s name, expiry date, and whether they are a ‘paid collector’
• Other collectors: Must receive written authorisation detailing their name, the appeal, terms and conditions, signed by the authority holder

Various fundraising activities are subject to specific rules:

• Telephone appeals: Must comply with the Do Not Call Register Act 2006 (Cth) and related standards regarding calling times and disclosures
• Online appeals: If donations are sought from NSW residents, the organisation needs a NSW authority and must comply with state laws. This includes crowdfunding, where terms, fund distribution, and purpose must be clear
• Children participating: Minimum ages apply (8 for volunteering, 13 for paid work), with restrictions on hours and supervision requirements. Parental consent and appropriate insurance are necessary
• Collection devices (boxes, bins, bags): Must be secure, numbered, labelled with the fundraiser’s name, and properly supervised. Specific wording (‘charity operated’) is required for clothing collection devices
• Advertisements: Must include the authority number, be factual, and not misleading or deceptive, potentially engaging ACL obligations
• Community gaming: Activities like raffles must comply with both the Charitable Fundraising Act 1991 (NSW) and the Community Gaming Act 2018 (NSW), possibly requiring separate gaming permits

Navigating Other Relevant Australian Laws

Australian Consumer Law Obligations for Fundraisers

Beyond specific New South Wales fundraising law, charities and not-for-profit organisations must consider other Australian laws, notably the ACL. The ACL applies to charitable fundraising activities if they are conducted ‘in trade or commerce’.

Your organisation’s fundraising is likely considered ‘in trade or commerce’ when it:

• Involves the supply of goods and services
• Uses a for-profit professional fundraiser
• Is carried out in an organised, continuous, and repetitive manner

When activities fall under ‘in trade or commerce’ classification, specific obligations are triggered under the ACL. Key requirements include:

• Avoiding misleading or deceptive conduct in your fundraising communications and activities
• Ensuring your organisation does not engage in unconscionable conduct
• Refraining from making false or misleading representations, especially concerning any goods or services supplied as part of the fundraising appeal

It is crucial that representations made about how funds will be used are accurate and adhered to, maintaining transparency and trust with donors. Even if the ACL doesn’t strictly apply, avoiding such conduct protects your organisation’s reputation.

Compliance with Gaming and Local Council Rules

Compliance extends beyond the Charitable Fundraising Act 1991 (NSW) and the ACL. Depending on the nature of your fundraising activities, other regulations may come into play.

For instance, if your organisation plans activities involving community gaming, such as raffles, bingo, or lotteries, you must comply with the Community Gaming Act 2018 (NSW). These gaming activities often require separate permits or authorities from NSW Fair Trading, in addition to your general authority to fundraise.

Furthermore, local council regulations are important, particularly for public-facing events or collections. You may need specific permissions or permits from the relevant local council for activities such as:

• Conducting door-knock appeals within a council area
• Organising street collections
• Holding large events outdoors

In some cases, such as street collections or large events, permits from the NSW Police may also be necessary. Always check with the relevant local council and authorities well in advance of your planned fundraising activity.

Penalties for Non Compliance with NSW Fundraising Law

Common Breaches of Fundraising Law

Organisations involved in charitable fundraising in New South Wales (NSW) must adhere strictly to the fundraising law to avoid penalties. Common violations that can lead to action by NSW Fair Trading include:

• Conducting fundraising activities without holding the required authority or licence
• Providing misleading information to donors regarding how the funds raised will be used
• Failing to meet financial reporting obligations or maintain adequate financial records as mandated by the Charitable Fundraising Act 1991 (NSW)

Potential Fines and Consequences

Failure to comply with NSW fundraising law can lead to significant consequences imposed by NSW Fair Trading. These penalties underscore the importance of rigorous compliance for every charity and not-for-profit organisation.

Potential consequences include:

• Financial Penalties: Substantial fines can be levied against both individuals and organisations. For example, fundraising without the necessary authority can attract penalties up to 200 penalty units ($22,000 as of June 2024), potentially accompanied by imprisonment. Similar penalties apply for misusing funds raised or failing to comply with authority conditions or reporting requirements.
• Specific Fines: Fines for inadequate record-keeping can reach up to $5,500 for individuals and $11,000 for organisations. Additionally, misleading conduct during fundraising can result in fines exceeding $5,500. More severe offences involving gross negligence may attract even higher penalties.
• Suspension of Activities: NSW Fair Trading may suspend an organisation’s authority to fundraise, effectively preventing it from conducting further appeals.
• Legal Action: In serious cases of non-compliance, legal proceedings may be initiated against the organisation or individuals involved.

Conclusion

Successfully conducting charitable fundraising in New South Wales hinges on understanding and adhering to the Charitable Fundraising Act 1991 (NSW). Compliance extends to understanding other relevant regulations, including the ACL and local council rules, while being mindful of the significant penalties for non-compliance.

Ensuring your not-for-profit organisation meets these complex legal requirements is vital for operational integrity and maintaining public trust. For specialised guidance tailored to your not-for-profit charity’s needs in navigating NSW fundraising law, contact the expert team at Lawbridge today to ensure full compliance and secure peace of mind.

Frequently Asked Questions