Raising the bar for raising funds – improvements to charitable fundraising rules boast tighter enforcement

Key Points:

  • Recent changes to charitable fundraising regulations will address unintentional breaches of fundraising laws, as well as outright scams
  • The new rules cut some of the red tape for fundraisers, however failure to comply with the rules will result in harsher penalties
  • The new rules are described by NSW Fair Trading Commissioner Rose Webb, as a "carrot and stick approach"[1]


From 1 July 2021, new rules apply to charities and appeals. Although there may be less red tape, the most significant changes relate to enforcement.
 
The latest Charitable Fundraising Guidelines are available here.[2]

The New Rules

The changes to NSW’s charitable fundraising framework, and specifically the Charitable Fundraising Act 1991 (the Act), are nothing short of an overhaul. The new set of rules has arrived by virtue of:

  • Charitable Fundraising Regulation 2021 (Regulation);

and the delayed commencement of the:

  • Charitable Fundraising Amendment Act 2018 (Amendment);

  • Better Regulation Legislation Amendment Act 2019 (Sch. 1.4);

  • Better Regulation Legislation Amendment Act 2020 (Sch. 2.1).

More clarity around compliance

Several changes to the framework have been implemented to ensure compliance. 
 
The Amendment provides for a more streamlined approach to applications and how they are processed. The concept of a five-year term for an authority is introduced, including a broad ability to suspend or cancel authorities.
 
The Regulation describes circumstances where a person is not considered fit and proper. 
 
Fundraisers will have accounting and notification obligations under Division 4 of the Act. The Regulation expands on the requirements in relation to funds and expenses, records, and annual returns.
 
Additionally, fundraisers must specify from the start where the money is going. The new rules provide more clarity over the importance of this step, which is an obvious response to the high-profile case of comedian Celeste Barber and her Black Summer bushfire appeal. In that case, a court ruled that the funds raised could only go to the Rural Fire Service and no other charities.[3]
 
Organisations registered with the Australian Charities and Not-for-profits Commission are not required to satisfy the Secretary that it is a fit and proper person but are still required to apply for an authority to fundraise.
 
The registered office of an applicant of an authority to conduct a fundraising appeal no longer needs to be an address in New South Wales.

Enforcement

NSW Fair Trading Commissioner, Rose Webb, warned of harsher penalties for non-compliance. The new Part 2A of the Act addresses enforcement. This part is divided into four main parts: investigation powers, civil enforcement powers, enforceable undertakings, and how offences may be dealt with by a court.
 
Notably, the maximum penalty for conducting unlawful appeals and raising money for personal benefit will be raised to $22,000. Individuals face two years in prison for misusing charitable funds.
 
Most of the existing offences have been updated and rewritten to some extent. There are also new offences, with penalties starting from 10 penalty units (one penalty unit is currently $110 in NSW).
 
A case-by-case approach was adopted in relation to changing the penalties framework. For example, the maximum penalty for conducting unlawful fundraising was raised from 50 penalty units to 200 penalty units. The maximum penalty for participating in unlawful fundraising remains the same (i.e. 50 penalty units).
 
Some of the penalties have been increased without any change to the description of the offence.
 
Besides the significant increase in financial liability, the Amendment also provides for search warrants (on reasonable grounds) and general civil enforcement powers such as compliance notices. Further, the Secretary may accept enforceable undertakings under section 25R of the Act.

Post by Hicksons Partner, John Kell, and Solicitor, Aidan Allen. 

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