It’s safe to assume that an organisation that raises money during a fundraiser will use the money raised for their stated purpose. However, sometimes this doesn’t always happen. If the organisation applies donated money to a different purpose, they may fall foul of the Australian Consumer Law (ACL). This article will explore when the ACL may apply to charitable fundraising and what your organisation can do to stay compliant.
How Can the ACL Apply to Charitable Fundraising?
If your organisation operates for profit, then the supply of your organisation’s goods and services would fall under the Australian Consumer Law. The ACL prescribes conduct standards for people providing goods and services to consumers, including cooling-off periods and offences for misleading conduct.
The supply of goods and services is not limited to businesses that operate for profit. Your activities will fall under the Australian Consumer Law if you are providing goods or services in connection with your fundraising activities. Generally, organisations that fall under this definition provide goods and services in receipt of donations.
What If You Are Not Providing Goods or Services to Those Who Are Donating?
Even if you don’t directly provide goods and services, your non-profit will still have to comply with the ACL as it provides goods or services to those who are in need, such as education and training. These activities fall under the ACL despite the fact that the charity does not aim to make a profit from providing goods and services.
The ACL is only concerned with the actual conduct of trading and not how the organisation will apply its finances. For this reason, even if the organisation supplies no goods or services, the ACL applies to not-for-profits that are fundraising.
Section 18 of the ACL prohibits misleading and deceptive conduct and may apply if your charity is fundraising and people donate money towards this particular project. This is because if you apply the money given to something else than what you represented, it may be considered misleading conduct. Charities that fall foul of this section have established fundraising campaigns where they have had no intention of using the money for what they said they were raising it for. It is important for charities to comply because the ACL applies severe penalties and it may also harm your charity’s reputation.
The ACL also governs cooling-off periods. They may apply to charities and not-for-profits when they engage in tactics like telemarketing, door-to-door selling or sales in public places and where there is a contract involved. In that case, they would have to provide a seven-day cooling-off period for the donator to exit the contract with no penalties.
The ACL applies to charitable fundraising. Charities need to take care to ensure that they are honest with consumers about where they will apply the donations and make sure that they do not engage in misleading and deceptive conduct. If you are a charity or not-for-profit and want to find out more about the requirements of the ACL for charities, see the ACNC factsheet.
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