Many organisations consider receiving help with fundraising from external businesses or individuals. In New South Wales (NSW), Fair Trading regulates fundraising under the Charitable Fundraising Act 1991 (NSW) (the Act). The Act sets out the requirements for external parties (or “traders”, as they are referred to in the Act) when they become involved in fundraising activities. This article explains important considerations and the obligations for both an organisation obtaining help with fundraising and traders providing the assistance.
Authority for Fundraising
To fundraise in NSW, organisations require a charitable fundraising licence. However, an organisation will not need a licence where the organisation:
- has an annual fundraising amount of up to $15,000;
- is religious;
- collects membership fees or appeals to its members for the receipt of money or financial benefits;
- faces an appeal from any Commonwealth, state or local government authority; or
- is a university or controlled entity.
External Help with Fundraising
Once an organisation successfully obtains a fundraising licence, they can then authorise traders to fundraise on their behalf. Gaining help with fundraising from traders is especially beneficial when the trader specialises in fundraising or is an expert on a particular issue or community group.
Further, outsourcing fundraising activities to traders may also ease the burden and pressure on an organisation with limited resources to raise funds. Before engaging a trader, the organisation must notify NSW Fair Trading of their intention to use a trader when fundraising.
Liability of Traders
Traders are not required to have their own fundraising licence, and so the organisation is responsible for their fundraising activities. Therefore, the organisation must not only trust the trader’s abilities, but also trust that they are aware of, and adhere to, applicable laws and regulations. Both the organisation and trader must comply with the following requirements:
- Marketing: ensure that any marketing activities are not misleading or deceptive;
- Information: the trader should provide details about where they obtained a person’s contact details and remove those details upon their request;
- Sale of information: an organisation must ensure that the trader does not have the capability to, or will not engage in conduct allowing them to, sell information;
- Maintenance of accounts and records: the trader should detail their fundraising work and efforts (transactions, register of workers and volunteers, balance sheet, copies of receipts); and
- Conflicts and complaints: the organisation should inform the trader of any processes used to handle complaints and conflicts of interest.
If the trader fails to comply with any obligations under the organisation’s fundraising licence, the organisation’s licence may be revoked.
It is best practice to have a legal agreement or contract setting out the rights and obligations of both the trader and organisation. The terms of the agreement will vary for each organisation depending on the organisation’s:
- fundraising activities; and
- frequency at which they engage traders.
The legal agreement can cover areas such as:
- the commercial benefit of using a trader;
- the fundraising activity and any limitations or thresholds (e.g. a budget);
- collecting donations;
- how to collect and store information;
- how to collect the details of any volunteers or employees that have assisted with the fundraising activity;
- reporting and accounting of the fundraising activity;
- representation of the charity (e.g. by use of name or logo);
- any insurance requirements that may be relevant;
- termination of the engagement between the parties; and
- a promise that the trader will comply with any relevant fundraising laws.
The decision to engage a trader is not one that should be taken lightly, as the trader ultimately represents the organisation. Having a legal agreement in place ensures that both you and the trader are aware of your rights and obligations, making it easier to adhere to any required regulations. Further, by entering a legal agreement, your organisation can minimise the risks associated with engaging a trader.
If you have any further questions about engaging traders to help with fundraising, check the Australian Charities and Not-for-profits Commission website.
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