Fundraising and ACL issues
If you run a business or charity and carry out fundraising activities, does the Australian Consumer Law apply to you?
It depends on whether the fundraising in question is considered to be “in trade or commerce”…
How to tell if your fundraising will be defined by the ACL to be in trade or commerce:
If your fundraising:
- involves a supply of goods or services; or
- you are a for-profit professional fundraiser; or
- you are fundraising in an organised, continuous and repetitive way;
then your fundraising activity will most likely be in trade or commerce and attract consumer law obligations
About the above 3 points…? More information please!
As fundraising can be carried out in so many different ways and for different purposes, understanding whether your fundraising activity is ‘in trade and commerce’ is not a simple question. Even though you may be a small charity comprised of volunteers just trying to raise money for a good cause, this doesn’t mean you don’t have to comply with the Australian Consumer Law.
The facts of each individual case are relevant – such as the characteristics of the fundraising activity, your organisational structure and whether you are operating for profit or not.
There can often be uncertainty whether you are fundraising in an organised, continuous and repetitive way. Think about whether your fundraising is business-like; is there a business plan involved? Are there fundraising strategies, procedures and measurement? If so, it is probably in trade or commerce. If you need further guidance, consider the following…
- Does your fundraising use company assets and employees?
- Are your fundraising activities marketed or promoted?
- Are there financial records relating to fundraising?
- Will the fundraising continue or was it a one-off event?
This is not an exhaustive list – and the answer will always depend on the circumstances of the particular fundraising campaign. If you aren’t sure, call Sinclair + May for further advice.
Unsolicited consumer agreements – donations to charities, fundraisers or not-for-profits. What are the rules then?
If you are selling a good or service to fundraise, either door-to-door, on the telephone, or approaching people in public, then the Australian Consumer Law will apply. However, if donations are made under these circumstances (i.e. a good or service is not purchased or received in return for money) then the Australian Consumer Law will not apply even if the donation is received by a professional fundraiser.
I have considered my fundraising activities in light of the information above and think the Australian Consumer Law does apply. What does this mean?
The Australian Consumer Law requires you to be open, honest, transparent, truthful and fair when fundraising.
You must not engage in misleading or deceptive conduct regarding:
- where the money will go;
- the proportion of funds used to achieve the stated purpose;
- whether you are a volunteer or work on commission; or
- pretending someone is making a one-off payment when it is actually an ongoing donation.
Unconscionable conduct is also prohibited by the Australian Consumer Law. Your fundraising activities must not use harsh or oppressive trade practices that go against good conscience, or knowingly exploit special disadvantages in others.
If your fundraising also involves the supply of goods or services, you are subject to the above conditions and also must not make false representations regarding:
- the quality or characteristics of the goods or services;
- whether the goods are new;
- where the goods were made;
- testimonials relating to the goods or services; or
- price, guarantees or warranties.
You must not use harassment or coercion, unnecessary or excessive solicitation, or use actual or threatened force in attempting to sell goods or services for purposes of fundraising.
The Australian Consumer Law imposes consumer guarantees to the supply of goods and services, and this applies when fundraising. Goods must be repaired, replaced, or refunded if faulty, and services must be provided with due care and skill, otherwise remedied within a reasonable time, or compensated for.
Who is legally responsible for compliance with the Australian Consumer Law?
The board, committee, management or trustees (the governing body) has responsibility for fundraising activity whether outsourced or not. This means you need to ensure that you have appropriate and lawful processes in place to manage money raised.
What are the penalties?
If your fundraising activity breaches the Australian Consumer Law you may be served with an infringement notice, have Court action taken against you – resulting in possible civil or (very expensive!) monetary penalties, and/or be ordered to undertake corrective advertising.
If you have read this and would like some legal advice relating to fundraising, give Sinclair + May a call. We would love to help!
This is general advice only. Liability limited by a scheme approved under Professional Standards Legislation.
Published Feb 8, 2019
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