Red Cross Moves to Wage-Based Fundraising Model

Humanitarian aid agency, Australian Red Cross has moved all of its third party fundraising to an employment model.

The charity said the move would ensure all face-to-face and door-to-door fundraisers working on their behalf “receive at least the minimum wage and other legal entitlements – rather than working on a solely commission basis”.

Red Cross said that since July, it had only worked with agencies that allowed it to engage their fundraising staff as employees.

“We wanted to make doubly sure that people who raise funds for our life-changing work get a fair day’s pay for a fair day’s work,” Kerren Morris, head of income growth and innovation, said.

“In addition to guaranteeing workers’ legal entitlements, we’re also asking third party agencies to ensure the health, safety and welfare of employees and the highest standards of behaviour in all their dealings.

“We are always reviewing what we do and how we do it, we believe this is a step in the right direction.”

In 2016 a 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 sole director and part owner, Paul Ainsworth, was penalised a further $24,000.

ASAP and Ainsworth 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.

The collector was told he had to operate his own business and obtain an ABN to receive payment, despite ASAP exercising a high degree of control over his duties.

He was paid on a commission, earning a daily rate as low as $50, rather than the minimum hourly rate he was entitled to. Over four months of work in 2013 he was underpaid $7,853.

After lodging a complaint, the Fair Work Ombudsman investigated and ASAP back paid the worker in full.

However, the ombudsman took legal action because the company had previously breached sham contracting laws.

At the time of the court decision, the regulatory body for face-to-face fundraising, the Public Fundraising Regulatory Association (PFRA), said charities should exercise proper due diligence before entering into a relationship with third-party agencies.

“With any arrangement where a charity outsources part of their work to a third party, there’s always a certain level of risk that the charity takes in entrusting their reputation to another organisation,” PFRA CEO Paul Tavatgis told Pro Bono News.

“What they should be aware of, and carrying out very effectively these days, is proper due diligence on these processes.

“Third-party agencies are incredibly valuable, they can do things for a charity that the charity doesn’t have the capacity to do themselves, but the charity really needs to make sure they’re taking all measures they need to take to ensure they’ve done their due diligence before they enter into that sort of relationship.”

He said the “absolute bottom line” was for charities to ensure third-party agencies were compliant with the law.

“That’s an absolute given,” he said.

“But above and beyond that they should really be making sure that anyone who’s representing them is capable of representing them in a way that they would represent themselves.”

The Australian Red Cross’ annual report for 2016-17 showed fundraising costs for its humanitarian services division comprised 9 per cent of the total expenditure (8 per cent in 2016). This included all expenditure associated with fundraising for its services, administration of emergency appeals and managing pro bono work and non-cash gifts.

The report showed the “cost of fundraising” was 26 per cent (comparable with 2016) which it said reflected “the investment required to produce reliable and sustainable ongoing income streams to enable our work”.