Commercial fundraisers – Have you considered your obligations?

November, 2017

By John Vaughan-Williams, Lawyer

With the recent surge in social enterprises, many not-for-profits are using the services of commercial fundraisers. The world of charitable fundraising regulation in Australia is complex in itself, but the regulation of commercial fundraisers adds another layer of complexity. Like all charitable fundraising law, commercial fundraisers are regulated differently across State and Territory jurisdictions, and there has often been only limited judicial consideration of the various laws.

There are legal obligations in place on both commercial fundraisers themselves, and also the charities which hold fundraising licences and use commercial fundraisers. Licensed charities should revisit whether they are satisfying all of their obligations surrounding the commercial fundraisers that they use.

What is a Commercial Fundraiser?

The most traditional example of a commercial fundraiser is street-collectors, who attempt to sign up individuals to pledge donations to a charity. Often, these collectors are not employed by the charity itself, but by a sub-contracted fundraising company.

It is fairly clear that companies which organise street-collecting are commercial fundraisers, but there also are other more subtle types. For instance, when a company markets a product on the basis that a certain percentage of sales will be donated to a charity, the company will, in some jurisdictions, will be considered a commercial fundraiser, and sometimes even require a fundraising licence.

Recent examples of this are Coca-Cola Amatil, which has marketed on its Mount Franklin bottles that a percentage of sales will be donated to the McGrath Foundation, and Coles Group Limited, which has marketed on some of its home-brand products that a percentage of sales will be donated to Red Kite.

Further, fundraising apps, as well as crowd-funding websites, are becoming more common in the current climate. These apps and websites generally provide a platform for donors to make pledges, generally in small amounts, to charities, with the owner of the app or the website charging a small fee to the charity for the service. The companies which provide these services are often also considered commercial fundraisers by law, and sometimes will themselves require fundraising licences.

However, while these are some examples, the difficulty lies in that each State and Territory regulator has different interpretations of the meaning of a commercial fundraiser. A company may be deemed to be a commercial fundraiser in one jurisdiction and not another, despite a nearly identical statutory definition.

Definitions in each Jurisdiction

The New South Wales, Victorian, ACT and South Australian jurisdictions all specifically define commercial fundraisers or traders in statute.

Other jurisdictions include some requirements surrounding fundraisers who derive a commercial benefit, but do not include specific definitions.

A brief summary of the definitions and some related considerations is set out in table format below.

Obligations on Commercial Fundraisers

In most jurisdictions, a commercial fundraiser is required to have a written agreement in place with the licensed charity in order to fundraise on its behalf. Sometimes, this agreement needs to be lodged with the regulator, and approved.

However, in Victoria (and in no other jurisdiction) a commercial fundraiser is required to be separately licensed, even if the charity on behalf of which it fundraises is licensed. This needs to be considered when for-profit organisations and charities collaborate on projects, which include fundraising. It is quite likely in such arrangements
that both the for-profit and the charity would require a licence in Victoria.

Similarly, as part of the current boom in social enterprise, it is becoming more common for there to be for-profit organisations and charities within the same corporate group. Even though there is separation between the different parts of the corporate group, it is possible that both the for-profit and the charity would need to be licensed in Victoria. Advice should be sought when uncertain.

Even in the other jurisdictions, there are legal requirements in place regarding the agreements between licensees and commercial fundraisers, and these requirements require detailed consideration. Sometimes these agreements must be lodged with the regulator, and the licensee is required to keep the regulator informed of certain details regarding the arrangement.

 
 Jurisdiction Legislative Reference Definition Practical Considerations
 

NSW

 

Charitable Fundraising
Act 1991 (NSW); s 11(1)

 

A person fundraising:
(a) in connection with the supply of
goods or services in the course of any trade or business carried on by the person;
or
(b) otherwise partly for the person’s benefit.

 

  • If the fundraising occurs in connection with trade or business, but no commission fee is charged, is (a) satisfied?
  • What exactly is required in order for the fundraising to be considered “partly for the person’s benefit”?

 

VIC Fundraising Act 1998 (Vic); s 3 A person who is retained on a commercial basis by another person to administer all or part of a fundraising appeal for the other person.
  • What exactly is a “commercial basis”?
  • For example would the payment of an administration fee, or the reimbursement of expenses be considered a “commercial basis”?

 

ACT Charitable Collections
Act 2003 (ACT); s 12
A person who is engaged on a commercial basis by a person conducting the collection to conduct all or part of the collection for the other person.
  • As in the Victorian jurisdiction, how exactly is the term “commercial basis” defined?

 

SA Collections For
Charitable Purposes

Act 1939 (SA); s 4
A person who receives valuable consideration to act as a collector.
  • In contract law, the bar for “valuable consideration” is low; does this principle apply to the Collections For Charitable Purposes Act 1939 (SA)?

 

Summary

As this brief summary of the law shows, commercial fundraisers, or charities which are considering using the services of commercial fundraisers, need to give detailed consideration to the various laws which apply before completing fundraising activities on a national basis. There are obligations which are placed on both the commercial fundraisers, and the charities on behalf of which they fundraise.

Charitable fundraising is a particularly complex area of law, primarily due to the differing requirements across the different jurisdictions.

If a charity or a commercial fundraiser is uncertain whether the commercial fundraiser is required to be licensed, or whether the agreements in place between them are compliant, then they should seek the guidance of the relevant regulator, or seek legal advice.

Contact Mills Oakley

To find out more please do not hesitate to contact Vera Visevic.

For further information, please do not hesitate to contact:

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Vera Visevic | Partner
T: +61 2 8289 5812
E: vvisevic@millsoakley.com.au

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