Avoiding Unfair Fundraising Practices in NFP: Your Guide to ACNC Compliance and Legal Risks

Introduction

For any not-for-profit (NFP) or charity in Australia, understanding the legal landscape of fundraising presents a significant challenge. The current system is a complex patchwork of state and territory laws, creating a confusing and costly compliance burden estimated to cost the sector over $15 million each year. This difficult environment puts organisations at risk of legal penalties and reputational damage, which can undermine the public trust essential for their work.

To maintain public confidence and ensure lawful operation, it is crucial for every NFP and charity to understand its obligations. This guide provides essential information on unfair fundraising practices, analysing the application of both state-based regulations and the national Australian Consumer Law (ACL). It offers insights into compliance strategies and the role of the Australian Charities and Not-for-profits Commission (ACNC) to help your organisation avoid breaches and uphold its mission.

The Complex Fundraising Regulatory Landscape for Your NFP

The Patchwork of State & Territory Fundraising Law

Fundraising in Australia presents a significant compliance challenge for any NFP or charity. The regulatory environment is highly fragmented, as each state and territory, with the exception of the Northern Territory, has its own distinct and often outdated fundraising legislation.

This patchwork of laws creates a confusing and costly administrative burden, particularly for:

• Organisations that operate nationally
• Those conducting online campaigns that reach donors across the country

A single NFP may need to navigate multiple sets of rules and obtain several licences to fundraise lawfully. Many of these state-based laws were created long before the rise of digital fundraising and are ill-equipped to handle the realities of modern campaigns.

The financial impact is substantial – a report by Deloitte Access Economics estimated that complying with this red tape costs Australian charities more than $15 million every year.

The Role of Australian Consumer Law in NFP Fundraising

How the Australian Consumer Law Applies to Your Charity’s Fundraising Activities

The ACL is a key piece of national legislation that can apply to the fundraising activities of a charity or NFP organisation. While some uncertainty exists, the ACL’s broad definitions mean its protections often extend to NFP fundraising, treating it as a ‘business or professional activity’, even if not carried on for profit.

The application of the ACL depends on the commercial nature of the fundraising activity itself, rather than the NFP’s overall charitable purpose. This means:

• Most organised fundraising campaigns fall under its scope
• The law is less likely to apply to purely unsolicited donations where there is no active fundraising campaign involved

Prohibitions on Misleading or Deceptive Conduct

Section 18 of the ACL prohibits anyone from engaging in conduct that is misleading or deceptive, or is likely to mislead or deceive, while conducting ‘trade or commerce’. This protection applies directly to fundraising campaigns run by any NFP or charity in Australia.

When determining if conduct is misleading, intent is not a relevant factor. The test is objective and asks whether the conduct, when viewed as a whole, has a tendency to lead a reasonable member of the public into error. The key question is whether a statement or action conveys a false meaning, regardless of whether the organisation intended to deceive.

Understanding Unconscionable Conduct in Fundraising

Under Section 21 of the ACL, a person must not engage in unconscionable conduct. In the context of fundraising, this refers to actions that are not done in good conscience and go against accepted community standards of fairness.

Courts may consider several factors to determine if conduct is unconscionable. These can include:

Factor	Description
Unfair Tactics	Using undue influence, pressure, or unfair tactics on potential donors.
Imbalance of Power	Exploiting a significant imbalance in bargaining power between the fundraiser and the donor.
Failure to Disclose	Failing to disclose important information, such as how funds will be used or any risks that would not be apparent to the donor.
Unnecessary Conditions	Requiring a donor to comply with conditions that are not reasonably necessary to protect the legitimate interests of the charity.

Case Study: The Belle Gibson Scandal & Its Lessons for Charities

False Claims & Deceptive Charitable Giving Representations

The case of Belle Gibson provides a significant real-world example of unfair fundraising practices. Ms Gibson and her company made false claims that she had terminal brain cancer, which she alleged to have cured through natural remedies. These claims were used to promote and sell “The Whole Pantry” apps and a book.

A central part of this promotion involved misleading representations about charitable giving. Ms Gibson and her company publicly stated that a large portion of the profits would be donated to various charities. However, the reality was quite different:

• Of the approximately $420,000 in earnings from book and app sales
• Only a small fraction—around $10,000—was ever actually donated to any charity

This substantial discrepancy between promised and actual charitable contributions formed a key element of the legal case against her.

The Federal Court’s Ruling on Australian Consumer Law Breaches

The Federal Court found that Ms Gibson’s company had engaged in multiple violations of Australian law:

• Misleading and deceptive conduct, breaching Section 18 of the ACL
• Unconscionable conduct, contravening Section 21 of the ACL

These rulings were directly related to the false promises made about donating proceeds to charitable causes. The court determined that these representations were deliberately used to:

• Boost the company’s public image
• Increase product sales and revenue

This case serves as a clear illustration of how the ACL can be applied to hold individuals and companies accountable for deceptive practices related to charitable giving claims.

Managing State & Territory Fundraising Compliance

Determining Where Your NFP Needs a Fundraising Licence

For any NFP or charity in Australia, determining where a fundraising licence is required presents a significant compliance challenge, especially with online campaigns. Fundraising laws can apply in every state and territory where your organisation solicits or receives donations.

This means a single online appeal accessible nationwide could trigger compliance obligations in multiple jurisdictions. The legal test often considers where the fundraising appeal is made and where the donation is received, creating complexity for any NFP with a national reach.

However, registration with the ACNC can simplify this process. Several states have streamlined their requirements for ACNC-registered charities:

Jurisdiction(s)	Streamlined Process for ACNC-Registered Charities
Victoria, South Australia, the ACT, & Queensland	Being registered with the ACNC and notifying the relevant state regulator is generally sufficient to authorise fundraising.
New South Wales	ACNC registration makes a charity automatically eligible to apply for a licence through a simplified process.

Despite these arrangements, it is crucial for every charity and NFP to verify the specific notification and compliance rules in each state and territory where it operates.

Key Ongoing Obligations for Lawful Fundraising

Once authorised to fundraise, your charity must adhere to ongoing conduct rules that vary between states and territories. These obligations are designed to ensure transparency and protect public trust.

Common requirements often relate to face-to-face collections, permitted hours, and the use of collection devices. Key obligations frequently include:

Obligation	Description
Identification Badges	Collectors must typically wear clearly visible identification. Badges often need to show the collector’s name or a unique ID number, the name of the charity, and whether the collector is a paid employee or a volunteer.
Collection Tins	When using collection tins or boxes, they must usually be secure, sealed, and consecutively numbered to ensure all funds are properly accounted for.
Permitted Hours	Many jurisdictions restrict the times for door-knocking and telephone appeals. For example, in South Australia, residential collections are generally permitted between 9 am and 6 pm on weekdays, with shorter hours on weekends.
Involvement of Children	Specific rules govern the participation of children in fundraising, which is a key part of safeguarding the vulnerable in your charity.

Financial & Reporting Requirements for Your Charity

Maintaining financial integrity is a critical aspect of fundraising compliance for any NFP or charity. Most states and territories mandate strict financial and reporting practices to ensure that donated funds are managed responsibly.

A primary requirement in most jurisdictions is the need to keep all money raised in a separate and dedicated bank account. In addition to financial management, annual reporting is a standard obligation.

Each jurisdiction has its own set of reporting and, in some cases, auditing requirements. However, for a charity registered with the ACNC, this burden is often reduced. Lodging the ACNC Annual Information Statement can satisfy the reporting obligations in many states, streamlining the compliance process for your NFP.

The Australian Charities and NFPs Commission’s Role & Your Charity’s Reporting Obligations

How the Australian Charities and Not-for-profits Commission Investigates Fundraising Concerns

The ACNC is responsible for investigating serious concerns about a charity’s compliance with the ACNC Act. The regulator may initiate an inquiry based on:

• Information reported by the charity itself
• A complaint from the public
• Intelligence from other government agencies

When the ACNC intervenes, it undertakes specific compliance activities to address the issue. The type of action depends on the complexity and risk of the case. These activities include:

Activity	Description
Self-audits	This approach proactively helps a charity or NFP identify and resolve governance problems internally.
Compliance reviews	The ACNC conducts these to assess a charity’s overall adherence to the ACNC Act and address any identified risks.
Investigations	In higher-risk or more complex situations involving serious mismanagement or misappropriation, the ACNC will conduct a formal investigation, and it is crucial to understand how your charity should handle ACNC compliance review & investigations.

The ACNC aims to work with any charity to resolve compliance issues where appropriate. However, the regulator will act quickly and firmly if there is evidence of a serious breach, or if vulnerable people or significant charitable assets are at risk.

Your not-for-profit’s Duty to Notify the Regulator of Breaches

Every registered charity in Australia has a legal duty to notify the ACNC of certain compliance failures. This reporting obligation is a key part of maintaining transparency and public trust in the NFP sector.

A charity must inform the ACNC if it discovers specific types of breaches. These situations include when the NFP:

• Is not meeting its obligations in a significant way, potentially affecting its entitlement to registration, such as failing to comply with the ACNC Governance Standards.
• Has made a material error in its Annual Information Statement or other financial reporting.
• Finds that it has previously made a false or misleading statement to the ACNC.

Conclusion

Operating within Australia’s fundraising landscape requires any NFP or charity to manage a complex web of state-based regulations and the national ACL. A proactive approach to compliance, from state licensing and reporting to meeting ACNC obligations, is essential for any NFP to mitigate legal risks and maintain public trust.

To ensure your organisation’s fundraising activities are fully compliant, contact the expert not-for-profit lawyers at LawBridge for specialised legal guidance. Our tailored advice for the NFP sector provides the clarity and support your charity needs to operate confidently and uphold its mission.

Frequently Asked Questions