Crowdfunding and charities

Do your homework

Suitability

Before getting involved in a crowdfunding effort, your charity should firstly conduct due diligence to ensure that crowdfunding is suitable for your organisation.

Your charity’s Responsible People – board or committee members, or trustees – must be able to justify crowdfunding as a viable and beneficial fundraising stream that will also help fulfil the charitable purposes of your charity.

This includes the need to co-ordinate and support crowdfunding campaigns – for example, through promotion or even just responding to public queries.

Consider putting the issue on the agenda of a regular board or committee meeting so it can be the subject of appropriate due diligence and discussions before formal decisions are made.

Which crowdfunding platform is for you

Take the time to investigate which platform is best suited to your charity, its needs and its limitations.

Crowdfunding platforms vary, and each comes with its own set of terms and conditions. Some of those conditions may include fees, eligibility criteria and how quickly your charity receives any funds raised.

For example, some platforms may only allow registered charities to be listed as potential funding recipients. Other requirements may extend to rules about target amounts, time limits on crowdfunding efforts or even the nature of some campaigns.

Consider:

• The fees the platform will charge: Fees vary across platforms, but they are often charged as a percentage of the money raised towards a fundraising target. Some crowdfunding websites only charge fees for successful campaigns (the ones that reach their stated goal) and don’t charge for unsuccessful ones. It is crucial that a charity’s Responsible People are satisfied any fees charged are fair and not excessive.
• How funds raised will be distributed to your charity: Ensure funds raised are sent directly to your charity and not to the individual creating a crowdfunding campaign. Also ensure your charity receives the funds in a timely way.
• Checking if the platform is based in Australia or overseas.

You should also investigate how the crowdfunding platform manages the data of those who might support a crowdfunding effort linked to your charity to ensure it meets any standards the charity might have, as well as relevant laws.

The ACNC encourages the Responsible People of any charity considering crowdfunding to carefully read through crowdfunding platforms' websites, particularly their FAQ section or similar, or to contact the platform directly with any questions.

How money is raised, and where any money raised is going

Ultimately, a charity’s Responsible People oversee their organisation's fundraising activities, whether they are outsourced or not.

Responsible People must have a clear understanding of how money is raised, including any money raised through crowdfunding, and they must ensure there are appropriate and lawful processes in place to manage any money raised.

Money raised for a charity through a crowdfunding campaign, less reasonable expenses, must be used in line with a charity's charitable purpose.

In addition, Responsible People must ensure that their charity generates funds in a way that is in its best interests and consistent with its values and aims.

It is worth checking with any crowdfunding platform as to whether your charity will be notified if anyone begins a crowdfunding effort supporting your organisation or cause.

Your charity may not be comfortable if an individual nominates you as the recipient of funds raised from an activity you would not normally stage itself, your charity would not permit, or which runs counter to your stated values and goals.

Be aware of the law

Fundraising is regulated through Australia’s state and territory governments and these laws vary across every jurisdiction – what is a requirement to fundraise in one state or territory may not be a requirement in another.

This means that:

• each state and territory (except the Northern Territory) has its own laws and regulations with which charities (and sometimes those raising funds for charities) need to comply when fundraising there, and;
• a charity that wants to conduct fundraising at a national level – through crowdfunding or otherwise – may need to consider being registered to fundraise in each state and territory.

Your charity's Responsible People need to be aware of the laws that govern fundraising activities – including crowdfunding campaigns. Being aware of the legal requirements of conducting a crowdfunding campaign is necessary and should be an important part of your charity’s planning.

For more information about state and territory fundraising regulators and legislation, visit the ACNC’s Fundraising Hub. You can also learn more about the ACNC’s efforts to reduce red tape for charities.

Charities can’t outsource their responsibilities

One of the attractions of using a crowdfunding platform is that it allows charities to outsource elements of their fundraising activities.

However, it is vital that your charity’s Responsible People realise they can’t outsource the oversight for their charity’s fundraising.

Responsible People should be satisfied any crowdfunding platform they use is reputable, secure and complies with relevant Australian laws. They should also be satisfied that any platform they use meets their expectations – and the community’s expectations – of fair practice.

It is important that using a crowdfunding platform, or being linked to fundraising activities through that platform, does not jeopardise your charity’s reputation and standing in the community.

Similarly, if an individual is raising money for your charity via crowdfunding, your Responsible People should ensure the individual’s campaign is consistent with your charity’s values.

Not all crowdfunding campaigns come from registered charities

One of the features of crowdfunding is that it opens up fundraising to a cross-section of the public – including individuals, businesses and other organisations.
Those looking to specifically support a charity through crowdfunding should remember that not all causes listed on every crowdfunding platform come from registered charities. Some platforms do cater exclusively to registered charities; others might focus on charities and not-for-profits, but many will feature a variety of causes and campaigns.

The ACNC urges people to always check the ACNC Charity Register if they want to ensure they are supporting a registered charity’s crowdfunding campaign.

It is also important to note that even though a crowdfunding campaign may be run by a registered charity, it may not be one that can offer tax deductions to donors.

Only charities endorsed by the Australian Taxation Office (ATO) as Deductible Gift Recipients (DGR) can offer tax deductions for donations.

And even if a charity is endorsed as a DGR, tax deductible donations may be subject to certain conditions. If this is important to you as a donor, you should take the time to check these details.

Give wisely

Despite the best efforts of responsible crowdfunding platforms, crowdfunding is not immune from dubious fundraisers.

Crowdfunding platforms often have wide-ranging waivers in place to guard against scams, and many will also move to mediate if a member of the public lodges a complaint about a crowdfunding campaign.

But for the most part the onus remains on donors to check that a campaign is legitimate.

To ensure your donation is going to a well-governed, regulated charity, we recommend supporting crowdfunding campaigns that will directly benefit ACNC registered charities.

Checking the ACNC Charity Register should be the first step in researching a charity that is conducting a crowdfunding campaign.

If donors are uncertain, they can always donate directly to charities via their official websites, the details of which can be found on the charities’ ACNC Charity Register listings.

Many charities accept online donations, and donating in this way is a direct way to contribute funds. If the charity doesn’t accept donations online, prospective donors can also contact charities to ask how they can contribute.