Navigating Cross-Border Charity Fundraising Regulations for Australian NFPs

Introduction

Australian Not-for-Profit (NFP) organisations undertaking charitable fundraising across multiple states and territories currently navigate a complex array of differing regulations. This patchwork of fundraising laws presents a considerable administrative challenge, potentially impacting a charity’s ability to effectively reach Australian donors and secure the necessary support for their valuable work.

This guide is designed to assist your NFP in understanding the existing framework for cross-border charitable fundraising, clarifying the distinct roles of the Australian Charities and Not-for-profits Commission (ACNC) and various state regulators. Moreover, it delves into the significant proposed changes aimed at harmonising these fundraising laws, which promises to simplify operations for many Australian charities.

Understanding Current Cross-Border Charitable Fundraising Challenges for Your NFP

The Burden of Inconsistent State & Territory Fundraising Laws

Not-for-profit organisations (NFPs) conducting charitable fundraising across Australia encounter significant challenges due to the varied fundraising laws in each state and territory. A 2016 report commissioned by the Australian Charities and Not-for-profits Commission (ACNC) and undertaken by Deloitte Access Economics found that these differing regulatory approaches impose a “significant regulatory burden” on any charity engaged in fundraising.

This inconsistency escalates administrative costs for an NFP, with the report estimating the annual regulatory burden associated with fundraising regulations at approximately $13.3 million per year across the sector.

Furthermore, the report highlighted that existing fundraising regulation has not kept pace with modern fundraising techniques. The rise of online fundraising, through an NFP’s website or social media, means campaigns can readily reach Australian donors in various states and even overseas. However, these activities are often treated by each regulator as if they are isolated to a single state or territory, complicating compliance for national appeals.

Key Compliance Areas for Multi-State Charitable Fundraising

When a charity or NFP plans to fundraise in more than one Australian state or territory, it must follow a complex array of fundraising laws. For instance, an online fundraising appeal that is accessible nationwide may mean the NFP is deemed to be fundraising in every jurisdiction, potentially requiring the charity to obtain multiple registrations from each state or territory regulator.

This multi-jurisdictional complexity places a considerable regulatory burden on the NFP, particularly concerning several key compliance areas. These typically include:

• Obtaining authority to fundraise: NFPs generally need to secure formal permission or a licence from each relevant state or territory regulator before soliciting donations. This often involves distinct application processes and criteria for each jurisdiction where the charity intends to operate.
• Maintaining ongoing eligibility: To continue fundraising legally, a charity must consistently meet the specific eligibility requirements stipulated by each state and territory regulator. These requirements can differ, adding layers of complexity for an NFP operating nationally.
• Adhering to compliance measures: Each jurisdiction enforces its own set of rules and compliance measures governing how charitable fundraising activities must be conducted. This can include specific requirements for disclosures to donors, the content of fundraising appeals, and record-keeping practices.

Fulfilling reporting requirements: NFPs are usually obligated to submit regular reports to each regulator in whose jurisdiction they are authorised to fundraise. The content, format, and frequency of these reports can vary significantly, demanding substantial administrative effort from the charity to ensure compliance with all applicable fundraising laws.

The Role of the ACNC & State Regulators in Charitable Fundraising for Your NFP

How the ACNC Supports Charities with Fundraising Oversight

The Australian Charities and Not-for-profits Commission (ACNC) does not directly regulate the fundraising activities of your NFP. Instead, they view robust oversight of fundraising as a vital aspect of good charity governance.

The ACNC’s efforts are primarily focused on:

• Reducing red tape for charities
• Streamlining processes for organisational efficiency
• Collecting information about charity fundraising licenses

This approach highlights the ACNC’s supportive role in helping charities meet their obligations efficiently, rather than imposing direct fundraising rules.

State & Territory Responsibilities for Regulating Fundraising Laws

The direct regulation of charitable fundraising falls under the responsibility of individual Australian states and territories. Each state and territory government establishes and enforces specific rules that your NFP must follow when fundraising within their borders.

These regulations encompass:

• Specific definitions of what constitutes fundraising
• Licensing requirements for fundraising activities
• Compliance standards for fundraising laws

Due to the complexities arising from these varied regulations across different jurisdictions, the Charitable Fundraising National Working Group was established. This collaborative group, which includes representation from the ACNC, examines potential approaches to harmonise charitable fundraising arrangements throughout Australia.

Proposed Changes: A National Harmonisation Approach to Charitable Fundraising for Australian Charities

Overview of the Proposed Cross-Border Recognition Model for Charitable Fundraising

A national harmonisation approach to charitable fundraising has been proposed to simplify the regulatory landscape for Australian charities. This initiative emerged in August 2020 when the Charitable Fundraising National Working Group released a detailed discussion paper on these proposed changes.

The working group includes representation from:

• Each state and territory
• The Australian Charities and Not-for-profits Commission (ACNC)

At the core of this proposal is a cross-border recognition model designed to reduce bureaucratic regulations faced by ACNC-registered organisations. Under this proposed model, an ACNC-registered charity could be deemed to hold a local fundraising authority in each participating state and territory.

This streamlined approach aims to make it significantly easier for Australian registered NFPs to fundraise nationally by simplifying compliance with varying fundraising laws, particularly beneficial for organisations operating across multiple jurisdictions.

What Deemed Authority Means for ACNC-Registered Charities & Their Fundraising

The concept of “deemed authority” is central to the proposed changes for charitable fundraising. If implemented, this would create an automatic authorisation system where charities registered with the ACNC would be considered to have the necessary permissions to fundraise in all participating states and territories.

This approach offers several benefits to NFPs:

• Potential elimination of separate application processes for fundraising licenses in each jurisdiction
• Reduced administrative burden
• More time to focus on actual fundraising activities and serving Australian donors

The deemed authority would be directly linked to an organisation’s ACNC status. To maintain eligibility, entities must meet the conditions outlined in the Australian Charities and Not-for-profits Commission Act 2012 (Cth). Should an NFP’s ACNC registration be revoked, its deemed fundraising authority would also cease across participating jurisdictions. However, the charity could still apply to individual state regulators for permission to continue fundraising activities.

Key Features of the Proposed Harmonised Charitable Fundraising Framework for Your NFP

Streamlined Notification & Auditing Requirements Under the Proposed Changes

Under the proposed changes to fundraising laws, ACNC-registered charities would likely still need to notify relevant state or territory regulators of their intention to conduct charitable fundraising appeals, even with a deemed local fundraising authority. The discussion paper, Proposed Cross-border recognition model for charitable fundraisers, suggests an online notification process would be optimal, though individual jurisdictions could establish their own methods.

Importantly, your NFP would still be required to comply with any relevant local regulatory requirements in each location where it operates.

The proposed harmonised framework also addresses auditing requirements, which currently vary significantly between jurisdictions and the Australian Charities and Not-for-profits Commission (ACNC), often creating considerable costs for charities. The ACNC mandates:

• A full audit for charities with annual revenue over $1 million
• An audit or review for those with revenue between $250,000 and $1 million

The proposed model offers jurisdictions two main options:

• Require registered charities to comply with local auditing requirements
• Obtain copies of financial information directly from the ACNC as an alternative to satisfy local requirements

Opting for the second approach is anticipated to deliver a more substantial reduction in red tape and administrative costs for Australian charities.

Encouragingly, many jurisdictions have already taken steps to harmonise their audit and reporting requirements with those of the ACNC, or are in the process of exempting ACNC-registered entities from local audit and reporting obligations. 

Information Sharing Agreements & Their Role in the Proposed Fundraising Laws

To effectively support the proposed cross-border recognition model for charitable fundraising, information sharing agreements between participating jurisdictions and the ACNC are envisaged. These agreements would serve several key functions in the new fundraising laws:

• Facilitate the establishment of a shared register of deemed authority holders, providing clarity and transparency for both regulators and the NFP sector
• Cover other purposes related to fundraising authorities issued in different jurisdictions

For instance, a local regulator could use these agreements to notify the ACNC and other participating states or territories of any disciplinary action, enforcement action, or prohibition taken against an organisation concerning its deemed local authority.

It would then be at the discretion of each participating jurisdiction to decide what action, if any, to take based on this shared information. Furthermore, a regulator could maintain its own register of disciplinary or enforcement actions taken in another jurisdiction against a charity that also operates within its own borders, ensuring comprehensive oversight.

Benefits for Your NFP & The Current Status of Proposed Charitable Fundraising Reforms

Potential Advantages of Harmonised Fundraising Laws for Your NFP

The proposed harmonisation of fundraising laws offers several significant advantages for your NFP. A key benefit highlighted in the discussion paper, Proposed Cross-border recognition model for charitable fundraisers, is the potential for administrative cost savings for both fundraisers and regulators. 

This streamlined approach aims to reduce the red tape that Australian charities currently face. As there are no application fees for charitable fundraising authorities in any jurisdiction, the proposed model is not expected to result in any loss of revenue for individual jurisdictions.

For an NFP, this means:

• Reduced administrative burden: Simplifying compliance across states and territories can free up valuable resources.
• Cost savings: Lower administrative overheads allow more funds to be directed towards your charity’s mission and supporting Australian donors.
• Easier national fundraising: The model could effectively create a single registration point for national operators through the Australian Charities and Not-for-profits Commission (ACNC).

This simplification of the process would make it easier to obtain authorisations from state and territory regulators and conduct online charitable fundraising appeals.

At a time when many NFPs are managing significant demands, any reduction in bureaucratic processes is a welcome development. This allows your organisation to concentrate on delivering essential community services.

Current Status & What NFPs Can Expect Next from These Proposed Changes

The proposed changes to harmonise fundraising laws represent a significant step forward, although legislative action is still pending. The proposal for a cross-border recognition model, detailed in the discussion paper by the Charitable Fundraising National Working Group, has garnered support from key bodies, including the federal government and The Council on Federal Financial Relations.

While submissions to the discussion paper have closed, the federal government has indicated its support for enabling Australian charities registered with the ACNC to fundraise across most state and territory borders without navigating multiple sets of regulations. This initiative is seen as a crucial move towards reducing the regulatory burden on the NFP sector.

Currently, your NFP should continue to:

• Review existing fundraising licence requirements, particularly if your campaigns reach donors in multiple states or territories, including online fundraising.
• Stay informed about legislative developments concerning these proposed changes.

Although the reforms are still in the proposal stage, the ongoing support from various regulators and government bodies suggests a commitment to simplifying the fundraising landscape for every charity and NFP in Australia.

Conclusion

Understanding the intricate web of current cross-border charitable fundraising regulations presents significant hurdles for many Australian charities, with inconsistent state and territory fundraising laws creating a substantial administrative load. The proposed national harmonisation model, centered on a cross-border recognition system for Australian Charities and Not-for-profits Commission (ACNC) registered Not-for-Profit (NFP) organisations, offers a promising path to simplify these processes, reduce red tape, and enable any charity to more effectively reach Australian donors and focus on their core mission.

As these proposed changes to fundraising laws progress, staying informed and prepared is vital for your NFP. For trusted expertise in understanding these evolving regulations and ensuring your charity is well-positioned, contact LawBridge today to explore how our specialised not-for-profit legal services can help your organisation navigate the complexities and continue its valuable work with confidence, ensuring compliance with each regulator and effectively engaging with every donor.

Frequently Asked Questions for NFPs on Cross-Border Fundraising