On July 1, 2021, the Charitable Fundraising Amendment Act 2018 came into effect, simplifying and modernising charitable fundraising laws in NSW. For charities and not-for-profit organisations, this means reducing red tape and promoting a stronger compliance culture.
The objective of these amendments was to give effect to certain recommendations contained in the Report of the Inquiry under the Charitable Fundraising Act 1991 undertaken by Justice Patricia Bergin and published in January 2018.
Fundraising authority and reporting alignments
Notably, the amendments include the following changes:
- Registration with the ACNC is now sufficient for a charity to be granted an authority to fundraise in NSW.
- ACNC registered charities who are also incorporated in NSW as an association will only have to report to the ACNC, with this information being shared with NSW Fair Trading.
- Aligning reporting requirements with those of the ACNC with the effect that written statements formerly provided to NSW Fair Trading can now be included in the annual information statements lodged with the ACNC.
- Large charities who previously had to report to both the ACNC and NSW Fair Trading will now only be required to report to the ACNC.
Penalties for non-compliance
However, the amendments also significantly increase the penalties for non-compliance. It is important to remain vigilant of the below:
- Non-compliance, including conducting unlawful fundraising (without authority), fundraising for personal benefit or advertising unlawful fundraising appeals, to a maximum of AU$22,000.
- False representations in conducting a fundraising appeal to a maximum of AU$22,000 or 12 months imprisonment or both.
In addition, the amending Act also addresses other issues, namely:
- Requirements for traders (within the meaning of the Charitable Fundraising Act) and authority holders to enter into written agreements which clearly sets out the responsibilities of the parties, especially around how collected funds will be used, distributed and monitored to promote transparency; (for example, this may mean that traders cannot make any general statements about the use of some or all of the funds raised but rather the traders should enter into written agreements with the authority holders setting out the above details).
- Significant increase to enforcement powers of the relevant regulators to quickly investigate contraventions by charities or other persons.
The reforms concerning aligned reporting and fundraising authority requirements are long overdue and should be welcomed by the NFP sector. The reforms will significantly reduce the duplication of compliance requirements that was formerly demanded.
However, given the significant increased penalties and investigatory powers, charities and persons conducting fundraising appeals should remain vigilant about continuing to comply with NSW fundraising laws while fundraising in NSW, in particular, any issues concerning false representations when conducting fundraising appeals.
We strongly recommend you get in contact with the Dentons NFP team if you require any assistance in mitigating these new risks.
ACNC - Charity Risk Review Program
Readers may be aware that following on from an increase in Federal funding in October 2020, the ACNC has instigated a three year field based compliance review program.
The Federal Government announced that the ACNC would receive AU$2.9 million in funding to conduct risk reviews of charities.
The ACNC has stated that the aim of the compliance program is to:
- assess risk across the charity sector;
- intervene with charities before significant compliance issues arise; and
- maintain public confidence in the charities sector.
This initiative and the fundraising changes which came into effect on July 1, 2021 in NSW, displays an eagerness by governments to ensure stricter compliance within the sector. This is unsurprising as the ACNC currently regulates nearly 60,000 charities with registrations rising 4% every year.
For charities, this means you will need to be aware of any compliance risks in your organisation. Legal advice sought be promptly sought before responding to any regulator review so that you are well placed to respond in a timely and professional manner, and in a manner that is not prejudicial to your position. For example, it would be prudent to obtain legal advice before making any admissions of regulatory non-compliance.