Commonwealth, state and territory treasurers have agreed to a set of nationally consistent fundraising principles.
The principles streamline state and territory requirements on charitable fundraiser conduct and will give charities and donors a clear understanding of appropriate conduct.
The principles will apply to charitable organisations’ employees, volunteers, contractors and anyone else who they engage or arrange to raise funds on their behalf.
Each state and territory will release plans, outlining how they will give effect to the principles and when the principles will commence. For an update on the progress in your state or territory, contact your fundraising regulator.
Ensuring fundraising practices are fair, transparent and well governed is a crucial aspect of managing a charity.
As such, the ACNC sees good fundraising practice as a core governance responsibility of a charity’s Responsible People (board or committee members, or trustees).
The way a charity conducts fundraising can have a significant effect on its work and reputation, so it is important to consider public perception of the processes used to raise funds. The erosion of public trust through a lack of transparency or attention to good governance has the potential to be highly detrimental to a charity – and to the sector as a whole.
While some charities conduct their own fundraising activities, many choose to use professional fundraising agencies to conduct activities on their behalf.
Working with a fundraising agency can be an efficient way for a charity to raise funds while allowing it to focus its own energy and expertise on its charitable purpose.
Where a charity decides to work with a professional fundraising agency, its Responsible People carry the ultimate responsibility for any actions taken in the charity’s name.
Outsourcing fundraising activities does not absolve any charity of its governance responsibilities. Responsible People must ensure they are sufficiently informed about the policies, processes and practices of a fundraising agency before entering into an agreement.
As such, the oversight of fundraising – particularly when it involves the services of a professional fundraising agency – is an aspect of charity governance that the ACNC takes very seriously.
Public trust and confidence in charities is critical, and failures within the sector to acknowledge and responsibly manage the risks when working with fundraising agencies is an area of concern for the ACNC.
This guide outlines the important considerations that charities should keep in mind when deciding to work with a fundraising agency, and the practical steps charities can take to ensure good governance.
Fundraising and charity governance
Responsible People bear the ultimate responsibility for their charity's fundraising, even if the charity is working with a third-party fundraising agency.
It is essential that charities are diligent when looking to work with a fundraising agency. Responsible People should carefully consider the policies and practices of a prospective fundraising agency, and should examine if their charity has appropriate oversight of all activities the agency conducts in its name.
The ACNC expects Responsible People to properly manage the governance of fundraising.
Charities need to ensure they are meeting all governance requirements, including the duties of Responsible People under Governance Standard 5. This includes:
- acting with reasonable care and diligence
- acting honestly and fairly in the best interests of the charity and for its charitable purposes
- ensuring that the financial affairs of the charity are managed responsibly.
Although the ACNC does not directly regulate fundraising activities, our regulation of charity governance and our responsibility for promoting trust and confidence in Australia’s charities mean the way charities conduct fundraising is an area of interest and concern.
For information about specific regulations for fundraising activities, visit our Fundraising Hub.
Working with fundraising agencies
Charities may choose to work with third-party fundraising agencies for activities such as face-to-face fundraising (for example, street collections or door-knocking appeals), direct mail marketing and telephone fundraising.
While outsourcing fundraising activities to an agency can increase the charity’s reach, and allow staff and volunteers to focus on charity activities, it is important that Responsible People carefully consider the decision to work with a fundraising agency.
Engaging an agency to conduct fundraising activities does not absolve the charity of its governance responsibilities.
Charities should consider how they will ensure all activities align with their ethics.
The public is unlikely to understand or make a distinction between the actions of a third-party fundraising agency and the charity itself, and it is important that charities protect their reputation.
The ACNC expects charities to take steps to ensure that any fundraising agency it works with complies with all relevant legal obligations, such as obligations under employment or consumer law.
If a fundraising agency working on behalf of a charity fails to comply with legal requirements, it is possible that the charity’s Responsible People may be held liable for this failure to comply.
The ACNC expects a charity’s Responsible People to be familiar with relevant laws and to take reasonable steps to ensure the fundraising agency they work with is compliant.
Note: Australian Consumer Law guidance states that for profit professional fundraising agencies are likely to have certain obligations under Australian Consumer Law when raising funds on behalf of a charity.
The guidance states that if "you are a professional fundraiser, or if you engage a professional fundraiser to carry out fundraising activities on your behalf, then you need to be confident that the conduct of the fundraising activities does not breach the Australian Consumer Law".
Importantly, there may be instances where an agreement with a fundraising agency extends to other organisations and individuals – a fundraising 'supply chain'.
For example, a charity may sign a contract to outsource its fundraising activities to a fundraising agency. That agency then may outsource or sub-contract some of the activities outlined in the contract to other organisations or individuals.
Maintaining oversight of this supply chain and managing its outcomes is a critical governance responsibility for a charity – it cannot outsource management of its reputation or responsibility for charity governance.
A charity may also be held accountable by donors, media and the public for any unethical practices or inappropriate behaviour of a fundraising agency or others in the supply chain, even if they have been legally compliant.
It is important that Responsible People think not only about compliance with the law, but also the ethics and public expectations of fundraising practices.
A charity cannot absolve itself of responsibility unethical practices or inappropriate behaviour by blaming such instances solely on the agency or individuals involved.
Considerations for working with fundraising agencies
When deciding to work with a fundraising agency, a charity should consider a variety of aspects – not just the costs involved.
It may be tempting for a charity to select a fundraising agency based solely on the cost of the service, particularly if its fundraising needs are urgent.
However, there are a number of other factors which a charity should consider when choosing an agency to work with, including the agency’s:
- values and how they align to those of the charity
- operational transparency
- reputation
- financial situation
- experience and areas of expertise
- performance
- structure and use of subcontractors
A charity should also have a thorough understanding of the operations of any fundraising agency it is thinking about working with. Before entering into an agreement with an agency, a charity should be confident it has carefully examined and considered the agency’s:
- employment policies and practices (including for any sub-contractors)
- training and monitoring of its staff
- methods, including how it deals with vulnerable people
- workplace health and safety policies and records
- policies and processes to address complaints
- compliance with all relevant legislation at federal, state and local government levels
- senior management and their suitability
- financial management and business stability
- processes for quality assurance
- policies for data protection (including financial information security).
A charity should be satisfied that the fundraising agency is aware of its legal obligations, has appropriate policies and processes to ensure compliance, and shares its values, before deciding to work together.
Transparency about donations when working with fundraising agencies
A charity that uses a fundraising agency should be transparent about where donations end up.
If a portion of fundraising income will go to a third-party fundraiser rather than to beneficiaries, a charity should disclose this arrangement.
For example, a charity should not solicit donations with a statement like: "100% of contributions will benefit those in need" if, in fact, a portion of donations will go towards paying a third-party fundraising agency.
If a charity makes a false or misleading statement – or acts in a way that creates a false or misleading impression – it may contravene the Australian Consumer Law. This, in turn, may be a breach of the ACNC Governance Standards.
In addition, any false or misleading statements can have a severe negative impact on a charity’s reputation and public standing.
Steps towards good governance
There are a series of actions a charity can take to ensure good governance when working with a fundraising agency.
Before entering into an agreement with a fundraising agency
A charity must conduct due diligence before entering into an agreement with a fundraising agency. This due diligence should include:
- assessing the risks of working with a fundraising agency
- knowing the agency’s operations, processes and culture
- considering the supply chains involved
- seeking expert advice.
While these steps are not representative of all that a charity can do, they provide a broad outline which can guide a charity’s particular approach.
A charity should review the risks involved in working with fundraising agencies. This includes legal and financial risks, as well as risks to its reputation.
Before entering into an agreement, a charity should examine the operations of the agency and develop a risk assessment.
It is important to remember that different agencies will present different risks. For example, an agency with many employees or subcontractors may present a high risk when it comes to compliance with workplace laws, while an agency that does not usually handle any sensitive data may present a higher risk related to complying with privacy laws if it starts doing so.
A charity’s assessments should be included in its risk register.
A charity should have a detailed understanding of the operations of the fundraising agency, including knowledge of how it complies with relevant laws.
Detailed questions should be asked of the fundraising agency in order for a charity to develop a clear understanding of, and highlight any gaps in, the agency’s processes.
For example, it is not enough for a charity to ask if the agency has a grievance process – the specific details of the agency’s processes should be known. A fundraising agency should be prepared to answer questions about its operations and legal compliance.
A charity should also consider whether the agency’s values are consistent with those it holds. Because if it is prepared to work with a fundraising agency, it must be prepared to justify the practices of the agency to its donors and to the public.
To help them deliver their services, fundraising agencies may sub-contract activities and other elements of an agreement to other organisations or individuals.
Charities need to be aware of the full extent of such arrangements and understand how each link in the supply chain conducts itself and meets its obligations.
Ultimately, a charity may be held accountable for the actions of all organisations and individuals involved in its fundraising – including both the hired fundraising agency, and anyone in its supply chain.
Charities should consider their own capacity to properly conduct an assessment of a fundraising agency and be prepared to seek expert advice if required.
Particularly in areas of high risk, a charity may benefit from seeking independent advice from a professional, such as a lawyer, to help it. This is part of responsible charity governance.
Charities should also familiarise themselves with Australian fundraising bodies such as the Public Fundraising Regulatory Association and the Fundraising Institute of Australia.
These organisations provide information about fundraising practices in Australia, codes that ensure good practices, and legislation that governs fundraising.
Managing an existing agreement with a fundraising agency
There are important steps that a charity can take to ensure it is confidently managing its agreement with a fundraising agency. Again, while these steps are not representative of all that a charity can do, they provide a broad outline which can guide a charity’s particular approach.
The key steps to managing an existing agreement are:
- being familiar with relevant legislation and regulatory bodies
- keeping detailed records
- conducting periodic reviews
- establishing a process to address non-compliance.
The ACNC is not directly responsible for regulating or overseeing fundraising. We regulate registered charities and are responsible for overseeing charity governance.
While fundraising is a part of charity governance, fundraising is actually regulated at the state and territory level. For more information about fundraising regulation, see our Fundraising Hub.
All charities should be aware of the government authorities responsible for regulating the various aspects of fundraising, and ensure they, and any fundraising agencies and organisations within its supply chain, understand and meet the requirements to fundraise.
Registered charities must keep financial and operational records.
A charity should have detailed records of any agreements it has with fundraising agencies. These records should be clear, readily accessible, and cover both the financial and operational aspects of any agreement.
In addition to providing a layer of accountability, keeping records will help charities meet the ACNC Governance Standards.
A charity should regularly review any ongoing relationship with a third-party fundraising agency.
The performance of the fundraising agency should be examined to determine if it is still compliant with its legal obligations and is meeting charity expectations. As compliance requirements and agency business practices change over time, it is critical to have a strong process in place for thorough reviews.
A charity’s contract or service agreement with a fundraising agency should explicitly outline all compliance requirements, but a charity should not rely solely on this. It should also request evidence of the agency’s performance or compliance from the agency itself and any sub-contractor in the supply chain.
It is not sufficient to accept unsubstantiated assurances – a charity should obtain satisfactory evidence of compliance.
Charities should have a process to address a fundraising agency’s failure to comply with its stated requirements – in terms of both its legal obligations and its performance expectations.
This should involve a comprehensive review of an agency’s performance and the steps to practically address any problems.
There may even be provision for a charity to reconsider its engagement with a fundraising agency or even terminate the agreement. In many cases, such a process may involve seeking the independent expertise and advice of a professional adviser.