Fundraising regulations are ‘stopping charities from doing their job’

Millions of dollars are being wasted each year as charities seek to meet “ridiculous” fundraising regulations that need to be scrapped, says advocate in light of new report

Fundraising rules are continuing to cause charities an unnecessary financial burden, despite over a decade of reports and advocacy saying regulations need to change.

A new report, released on Thursday by the Community Council for Australia (CCA), has found that one in five charities now believe current regulations have become a huge barrier to fundraising.

The report, based on an independent survey of more than 600 charities and not for profits, also found the majority of organisations across all states and territories agreed that the fundraising registration process was either very complex or somewhat complex.

The findings have prompted a warning from CCA that Australian charities are “drowning in red tape”. 

CEO David Crosbie said millions of dollars were being wasted as charities seek to meet “ridiculous regulations” that are not even enforced.

He said in many cases it was stopping charities from doing their job. 

“It is very troubling indeed. Right now, charities are being completely buried in red tape when the reality is they need to make the best use of every single dollar they can raise,” Crosbie said.

“The current dog’s breakfast of state and territory fundraising regulations need to be completely scrapped. This was one of the key recommendations from the latest Senate Enquiry and the Bushfire Royal Commission.”

The problems occur because each state and territory applies their own fundraising regulations, which are often inconsistent with each other, and written in the days before the internet. 

It has been compounded in light of COVID-19, which has forced many charities to fundraise online.

The report estimates that 39 per cent of charities are not aware that if they are running a fundraising initiative, they are legally bound to get approval from seven different regulation regimes.

Crosbie said it was a very big issue.

“We estimate – at the current time – a huge 40 per cent of online charity fundraising being carried out, simply does not comply with the actual regulations,” he said.

Looking at individual states and territories, the worst performing jurisdiction, in terms of imposing the highest costs, complexity and time delays on charities, was Queensland, followed by Victoria and Western Australia.

Nothing is changing

A report on the charity regulations by jurisdiction from 2010 reveals very little has changed in the past decade – Queensland and Victoria ranked at the bottom even then.

This is despite years of campaigning by the sector to see the government #fixfundraising and introduce a single national scheme. 

Crosbie told Pro Bono News that for all the public statements from governments saying they understand the issues for charities and are prepared to change, not much changes. 

“Ten years ago, Queensland and Victoria were the worst performing states in the country imposing the most costs on charities seeking to fundraise,” he said.  

“Today Queensland and Victoria are the worst performing states in terms of the time they take, the complexity of their regulations and the cost of compliance.”

He said it was time to scrap these state and territory fundraising regulations, which he described as “unnecessary, ineffective, inefficient and unenforceable”. 

“You can’t help but wonder what would happen if this was the situation for a business sector?” he said.

“I doubt we would still be having these discussions, more than a decade since the problems were highlighted.”

Crosbie said the solutions are clear. Either states and territories drop their fundraising regulations altogether and rely on the Australian Consumer Law (as the Northern Territory does), or their fundraising regulations need to draw on existing data held by the charities regulator and be entirely consistent across all jurisdictions.

The report shows there is strong sector wide support for this – with 97 per cent of respondents saying they support the #Fixfundraising Coalition simplified regulation model.

Almost all (91 per cent) charities and NFPs believed it was important for state and territory governments to create a single national regulation scheme for charitable fundraising (as recommended by the Royal Commission into Natural Disaster Arrangements).

It comes after the Morrison government announced at the end of 2020 that a deal had been signed to harmonise charitable fundraising laws across Australia. 

Under the deal, signed by the Council on Federal Financial Relations (CFFR), a cross-border recognition model is set to be established, providing a single registration point for charities.