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NOT-FOR-PROFIT LAW IS CONCERNED BY THIS PIECE-MEAL ATTEMPT TO REFORM FUNDRAISING LAWS IN VICTORIA
The Victorian government proposes a number of reforms to fundraising legislation in Victoria in the Consumer Legislation Amendment Bill 2019 (Vic) (Bill). If the Bill is passed, it will amend the Fundraising Act 1998 (Vic) (Fundraising Act).
While we are pleased that the Victorian government appears to be taking some steps to reduce red tape for fundraisers, we are concerned by aspects of the Bill. Also the piece-meal approach in the Bill does not address systemic problems with the state-based fundraising regime; the reforms do nothing to recognise that fundraising occurs in an internet and telecommunications world such that even small campaigns reach beyond state borders.
What changes are proposed?
The Bill proposes changes that effect four separate stages of the fundraising cycle - registering as a fundraiser, conducting fundraising appeals, annual reporting and using commercial fundraisers.
1. Registering as a fundraiser
The Bill streamlines the registration process for charitable fundraisers.
Organisations already registered with the Australian Charities and Not-for-profits Commission (ACNC) will no longer need to go through separate steps to register as a fundraiser with Consumer Affairs Victoria (CAV). Instead, they will only need to notify CAV of their intention to fundraise to be considered a registered fundraiser. They will be recognised as a registered fundraiser until they are deregistered as a charity with the ACNC, or deemed to no longer be a registered charity by CAV.
This change will see a reduction in red tape for ACNC-registered organisations who run fundraising appeals in Victoria. This is a positive step to simplify fundraising laws.
For non-ACNC charities (for example, not-for-profit sporting clubs) the existing registration process continues.
2. Conducting fundraising appeals
Under the Bill, an ACNC-registered charity will still be required to give a ‘notice of intention to conduct a fundraising appeal in Victoria’ to CAV. It’s not clear whether this imposes a new requirement to notify CAV (or the ACNC) every time an ACNC-registered charity creates a fundraising appeal.
At present, once an entity is registered as fundraiser, it can (broadly speaking) conduct any appeals it needs to, as long as each appeal complies with the Fundraising Act (section 25).
To clear up this issue, we prefer that the Bill have the alternative wording ‘notice to deem registration as a fundraiser’.
3. Reporting to CAV
At present, some ACNC-registered charities registered as fundraisers in Victoria report to both CAV and the ACNC on their fundraising activities. Charities that are Victorian incorporated associations no longer need to duplicate reporting to both CAV and ACNC.
The Bill (section 37) attempts to simplify the reporting process for ACNC-registered charities’ reporting requirements. Under this proposed change, the Director of CAV and the Commissioner of the ACNC ‘may enter into an agreement’ about how the an ACNC-registered charity will provide required information (under the Fundraising Act) to the ACNC and how the ACNC will provide this information to CAV. Required information would most likely include information such as annual statements.
While this is a positive step that appears to introduce a mechanism to reduce red tape for charities, unless CAV and the ACNC reach an agreement, charities could continue to be required to report to both CAV and the ACNC. Since charities that are Victorian incorporated associations already no longer need to do duplicate reporting to both CAV and ACNC, it seems burdensome and illogical to introduce a provision that may (or may not) change the position for other ACNC-registered charities.
This is a missed opportunity to guarantee a red tape reduction. If the Bill is passed in this form, the requirement for an agreement between CAV and the ACNC will create further delay and an agreement is not guaranteed.
South Australia has a more streamlined model (see Collections for Charitable Purposes Act 1939 (SA) section 6(3)). Charities are only required to report to the ACNC and comply with the ACNC’s regulatory requirements (‘report once and use often’). This ‘deemed registration scheme’ is preferable.
4. Using commercial fundraisers
The Bill (section 40) will give CAV the power to deregister ACNC-registered organisations as fundraisers if they have ‘paid an excessive commission or other remuneration to a collector or commercial fundraiser’. ‘Excessive commission’ is not defined.
While the intention behind this policy has merit, we have concerns about the wording of the provision. There is no guidance around how to determine whether commission or remuneration is ‘excessive’. Apart from lack of clarity about the meaning of ‘excessive’, the impact of this provision is significant including losing their fundraising registration.
Many charities effectively and efficiently engage third parties to help with their fundraising efforts. It’s often more economical to use a third party commercial fundraiser than to employ and train staff, especially if it’s for a short campaign. There is considerable research to show that - while the cost of third party engagements can sometimes equate to the donation value for the first year of engagement - when taken over the lifetime of the donor (typically several years), the cost is less than if the charity employed staff. There can be a good cost-benefit return for the charity. The enactment of this provision will raise concerns for charities using commercial fundraisers, which may add to costs for charities.
We recommend this section be removed. Alternatively, a definition of ‘excessive’ should be added.
Legislation on this subject In Tasmania (Collections for Charities Act 2001 (Tas) sections 13 and 14), provides that contractors may not receive a ‘manifestly excessive’ benefit from proceeds. The Tasmanian Act also sets out factors for a court to determine whether a benefit is ‘excessive’ and provides that proceeds may not be used to pay for purposes other than ‘reasonable expenses’ and ‘reasonable payments’ to agents or contractors. These kinds of qualifications would address our concerns about this aspect of the Bill.
The Bill was introduced to the Legislative Council on 17 October and its second reading was delivered on the same day. The Bill is sitting in the upper house of the Victorian Parliament, awaiting debate. It is unclear whether the Legislative Council will pass this Bill before the sitting days for 2019 end on 29 November.
Overall, this Bill presents a lost opportunity for more systemic reforms to be made to fundraising in Victoria. Fundraising laws need to be bought into the 21st century, so they are cognisant of the internet and modern crowdfunding practices.
The Australian Consumer Law (already enforced by CAV as part of the multi-regulator agreement) is the more appropriate tool, with ‘one stop’ registration and reporting handled by the specialist ACNC. It is now time to consider streamlining the Victorian Fundraising Act (Regulations) to a trimmer 7-10 pages, along the lines of the SA Code of Conduct. If you agree, join our campaign to #FixFundraising.