Moves to fix NFP fundraising

Posted by on 07/11/2017

Several moves are underway to restore faith in the fundraising activities of Australian charities amid some scandals here and abroad.

Firstly, the Fundraising Institute Australia (FIA) has established an independent authority to oversee its new code. The seven-member code authority will be responsible for compliance monitoring, complaints administration and making recommendations for improvements to the FIA board.

Its independent chair is Dr Ursula Stephens, a former ALP senator who has held several senior positions within the Parliament and who led the government’s work in creating the Australian Charities and Not-For-Profits Commission (ACNC).

Other members of the authority include Bruce Cotton (Pareto Phone), Ben Cox (Legacy Queensland), Bill Dee (Compliance and Complaints Advisory Services), Jennifer Doubell (Peter MacCallum Cancer Foundation), Dr Sue-Anne Wallace (Humanitarian Quality Assurance Initiative) and Roewen Wishart (Xponential).

The FIA’s voluntary, self-regulatory code of conduct for fundraising was launched on 1 July and will be enforced from 1 January 2018. It aims to raise standards of conduct across the charity sector by going beyond the requirements of government regulation. Its content is informed by the International Statement of Ethical Principles in Fundraising.

In another move to improve fundraising in Australia, Consumer Affairs Australia and New Zealand (CAANZ) is reviewing comments it sought on a draft guidance on applying Australian Consumer Law (ACL) to the activities of charities, not-for-profit entities and fundraisers.

CAANZ provided its final report for the Review of ACL to government in April this year. However, it notes that during that review, various stakeholders asked for more information on how the ACL applied to not-for-profits.

Submissions to the review also indicated that the not-for-profit sector faces difficulties in determining whether its conduct is ‘in trade or commerce’ and captured by the ACL. As a result, CAANZ agreed to develop guidance on this as a priority project for 2017.

In light of the final report’s findings, #fixfundraising campaign partners, of which Governance Institute is one, have written to all the ministers responsible for the ACL, urging them to agree with the report’s recommendation that regulator guidance be developed to clarify the current application of the ACL to not-for-profit fundraising activities, and that this be completed in 2017.

#fixfundraising campaign partners said there was no need for any further research. The ineffectiveness of existing fundraising laws has been documented extensively by multiple government and independent inquiries dating back to 1995.

In a statement, #fixfundraising campaign partners note that not-for-profits are forced to waste significant amounts of time and money to meet outdated and fragmented fundraising laws that differ considerably across Australia. The fundraising regime wastes more than $15 million every year for charities alone.

Instead of yet another delay, they asked the ministers to establish a small, specialist working group by the end of 2017 to finalise minor changes to the ACL to clarify and broaden its coverage of fundraising activities.

Meanwhile, a judge has ordered Belle Gibson, the disgraced alternative health promoter behind The Whole Pantry to pay a fine of $410,000 for misleading and deceiving consumers with her false cancer and charitable donation claims.

In March 2017, Justice Mortimer of the Federal Court of Australia held that Gibson had engaged in misleading and deceptive conduct and unconscionable conduct in the course of the promotion of smart phone apps and her book ‘The Whole Pantry’. Her Honour also held that Gibson and her company falsely claimed that proceeds from sales of the book and apps were donated to various charities.

In September, the judge fined Gibson for five separate contraventions of the ACL. The fine includes:

  • $90,000 for failing to donate proceeds from the sale of The Whole Pantry app, as publicly advertised
  • $50,000 for failing to donate proceeds from the launch of The Whole Pantry app
  • $30,000 for failing to donate proceeds from a 2014 Mothers Day event
  • $90,000 for failing to donate other company profits
  • $150,000 for failing to donate 100 per cent of one week's app sales to the family of Joshua Schwarz, a boy who had an inoperable brain tumour.

According to Davies Collison Cave lawyers John Hannebery and Anna Harley, Justice Mortimer's decision highlights the importance of ensuring any promotion and advertising of products is truthful, including in respect of donations to charities or individuals. If not, businesses run the risk of being held liable under the ACL and suffering reputational damage.

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