Calls for Mandatory Fundraising Code Under ACL

Fixing fundraising needs to be a priority before it becomes scandal-led reform, according to Not-for-profit Law, which is calling for a mandatory fundraising code to be contained within Australian Consumer Law.

In a supplementary submission to the ACNC Review, Justice Connect’s specialist service for community organisations and charities made the case for the creation of a code which would address fundraising via face-to-face, online and telephone/text.

The suggestion is a variation on the original #fixfundraising reform plan, which Not-for-profit Law said it offered “in the spirit of progressing the debate and recognising that state ministers are likely to need additional comfort before agreeing to repeal existing laws, especially in the light of the NSW RSL Inquiry”.

“In our view this suggestion represents a practical, low cost (or even no cost), implementable policy solution which provides a significantly improved regulatory basis for fundraising activity for and on behalf of charities and other NFPs; a modern, predominately principles based and nationally consistent regime that would not compromise donor protections,” it said.

The submission was made in response to an invitation from the review panel to provide further input on fundraising, after it surfaced as a key issue in the review process, with concerns about ineffective laws and the consequent risk to public trust and confidence, as well as the red tape burden.

Not-for-profit Law director of national projects Sue Woodward told Pro Bono News the overall objective, which “has remained boringly consistent over many years”, was to achieve a fit for purpose nationally consistent framework to support fundraising for charities and not for profits.

“We continue to try and work constructively and positively around how that can be achieved sooner rather than later,” Woodward said.

“The fix fundraising coalition had a three point plan, which still stands, which was to make some small amendments to the Australian Consumer Law, to support continued improvement in self-regulation, and to repeal the out of date state and ACT based laws.

“What we are saying in the supplementary submission is really in recognition of how do we get this to actually happen, maybe there needs to be a further compromise. And trying to be positive and constructive we’ve put forward the suggestion that there could be a minimum core mandatory code that would come under the Australian Consumer Law framework.”

The latest submission also addressed the Australian Competition and Consumer Commission (ACCC) position, that it did not support using the ACL as a replacement for state and territory fundraising legislation.

“The ACL and state and territory fundraising legislation are fundamentally different,” the ACCC said in its submission to the ACNC Review.

“The ACL is a law of general application intended to impose minimum standards of conduct across all sectors of the economy. On the other hand, state and territory fundraising legislation focusing on licensing and registration and related ongoing obligations such as financial reporting.

“Unlike the ACL, state and territory fundraising legislation is designed to promote transparency, accountability and good governance for the sector. The ACL is not designed to address the public’s ongoing demand for greater accountability in the charities, not-for-profits and fundraising sector.”

However Not-for-profit Law said it “respectfully disagreed” with several points made by the ACCC.

In particular, Not-for-profit Law argued that the core policy objectives of the ACL and the fundraising legislation were not fundamentally different, and that the ACL was already being, and would continue to be, used whether or not there was a specialist fundraising regime.

It also said the ACL has many strengths over the existing “specialist regime”, including breadth and national consistency, and a “bigger tool kit” including substantial penalties where serious breaches occur.

“In a nutshell, minimum standards of good conduct upon which the ACL is based are exactly what is needed and are vastly superior to inconsistent ‘specialist’ laws which are no longer fit for purpose and, worse still, are operating as a restraint on trade,” the submission said.

Woodward said they understood the ACCC’s point that their law was “principles-based and broad brush” and where you have a highly specialised regime you cannot replace one with the other.

“Our argument is we’re not trying to replace one with the other. We’re saying that there is no uniform specialist regime to be replaced. It’s just a mess. And actually it’s ineffective,” she said.

“Even if we came up with a brand new specialist regime that dotted all the i’s and crossed all the t’s, it’s not what is actually appropriate now. What is appropriate is a nationally consistent and principles-based approach which is the Australian Consumer Law.”

The submission said the issue was about “how do we get there?”.

“It needs leadership. It needs the right people at the table to work through the finer details. It needs to be a priority before becomes scandal led reform,” it said.

Woodward said it was clear from recent events such as the fallout surrounding the New South Wales RSL that some of the issues were “not going away” and were some of the “most likely” to erode public trust and confidence.

She said there were many examples in Australia and overseas where scandal-led reform resulted in “a regulatory overreaction”.

“There’s a big scandal and the reforms come in. Sometimes the reforms that come are not the best policy solutions and go on to create new problems without overcoming the issues that allowed the scandal to flourish,” she said.

“There can be a tendency to impose a whole lot of new obligations, licensing and fees. All sorts of stuff that very often don’t get to the behaviour behind the scandal. The scandal may well be because of really bad behaviour that was already covered by the law, but the law wasn’t being enforced properly.”

She said they sympathised with the state-based regulators who had an “impossible task”.

“They’re ill equipped with both their legislation and regulations, and the limited resources they have,” she said.

“What would be a better solution in our mind is if the same regulators were also working with ACCC as part of a multi-regulator framework, enforcing a nationally consistent and principles-based regime which, at its heart, we think has the same core objectives as the fundraising law.

“If nothing else, if we had a single nationally consistent law saying you can’t mislead, deceive, coerce or harass people about a donation that would be something everyone would understand – donors, regulators, charities, not for profits, third party fundraisers, individuals. It would be so simple and so clear, and if we enforced that, with tough penalties for those who do really badly things, then we’d have a better balance than we have at the moment.”

Not-for-profit Law’s latest submission has attracted formal endorsement from the Governance Institute of Australia, Philanthropy Australia, Community Council of Australia and the Public Fundraising Regulatory Association.