Charity Regulator Raises Concerns Over Fundraising Practices

The national charity regulator has partnered with peak bodies to try to help charities protect themselves, fundraisers and the public in the wake of recent reports into the alleged misbehaviour of some third-party fundraising agencies.

The Australian Charities and Not-for-profits Commission (ACNC) has produced a guide in conjunction with the Fundraising Institute of Australia (FIA) and the Public Fundraising Regulatory Association (PFRA), to help charities manage existing relationships with fundraisers, enter into new agreements and ensure they meet their obligations as a registered charity.

ACNC commissioner Susan Pascoe AM said the impetus for releasing the new guide was to highlight the risks to public trust and confidence in charities.

“While some charities manage their own fundraising, many contract professional agencies to conduct activities on their behalf. This is often the most efficient and cost-effective way for charities to raise funds,” Pascoe said.

“Recently we have seen media reports that allege that some of these agencies have been engaging in inappropriate workplace practices and may have also broken Australian employment laws.

“These allegations raise serious concerns, as they undoubtedly have a detrimental impact on the public’s trust and confidence in Australia’s charity sector.”

In October a group of former charity street fundraisers, “chuggers”, joined a class action against a third-party global fundraising company Appco claiming to have been ripped off in a “massive sham-contracting scam”.

More recently another fundraising company and its director were penalised a total of $124,000 for underpaying a backpacker working as a charity collector in Sydney.

Australian Sales and Promotions Pty Ltd (ASAP), which fundraises on behalf of charity and not-for-profit organisations, was penalised $100,000 in the Federal Circuit Court, following legal action by the Fair Work Ombudsman.

The company’s director was penalised a further $24,000.

ASAP and the director were found to have breached sham contracting laws by treating a 26-year-old British backpacker on a working holiday visa as an independent contractor, despite knowing the Fair Work Act required the company to classify and pay him as an employee.

Pascoe said that ultimately the charity’s board oversees its good governance and reputation, and needs to take prudent action in relation to the contractors it engages.

The guide comes with warnings for charities about their obligations.

“Outsourcing work to a fundraising agency does not absolve a charity of its responsibility to comply with relevant laws. If a fundraising agency working on behalf of a charity fails to comply with legal requirements, it is possible that the charity’s responsible persons may be held liable for the failure to comply,” the guide said.

“The ACNC expects a charity’s responsible persons to be familiar with relevant laws and to take reasonable steps to ensure the fundraising agency they work with is compliant.

“A charity may also be held accountable by donors, media and the public for any unethical practices or inappropriate behavior of a fundraising agency or others in the supply chain, even if they have been legally compliant. It is important that a charity’s responsible persons think not only about compliance with ‘black letter law’ but also the ethics and public expectations of fundraising practices, such as dealing with vulnerable persons.

“A charity cannot absolve itself of responsibility, unethical practices or inappropriate behaviour by blaming such instances solely on the agency or individuals involved.”

Pascoe reiterated that charity boards cannot outsource their responsibilities.

“The board should be satisfied that the fundraising agency they have contracted is aware of its legal obligations, has appropriate policies and processes to ensure compliance, and also shares the values of the charity,” she said.

“A charity must have appropriate oversight of all of the activities conducted by a fundraising agency in the name of the charity.

“Charities run the real risk of damaging public trust and confidence in both their brand, and the sector more widely, if they are being inappropriately represented by third-party fundraisers in the community.”

Paul Tavatgis, CEO of the PFRA – the self-regulatory body for face to face fundraising in Australia – welcomed the new guide and encouraged charities to consider the PFRA Standard.

“Engaging fundraising agencies can be tricky, particularly for new or inexperienced charity boards,” Tavatgis said.

“This guidance, which the PFRA was proud to contribute to, will help charities appropriately manage these relationships.

“We also recommend that charities using face to face fundraising sign up to the PFRA Standard, which is a set of rules that define how a face to face fundraiser should behave.

“All face to face fundraisers engaged by PFRA member charities and agencies must comply with the PFRA Standard.”

Rob Edwards, CEO of the FIA, welcomed the ACNC’s position on governance practices for charities using fundraising agencies.

“As the national peak body representing professional fundraising in Australia, FIA believes that the fundraising sector can only remain sustainable when there is strong public trust,” Edwards said.

“FIA’s Principles & Standards of Fundraising Practice are the professional fundraiser’s guide to ethical, accountable and transparent fundraising.

“They are critical to how the fundraising profession is viewed by donors, government and the community.”

The guidance document can be found on the ACNC website.