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The proposed cross-border recognition model would reduce the burden on the charitable sector which is currently facing reduced donations and greater reliance on online fundraising due to the COVID-19 pandemic,” Assistant Minister for Finance, Charities and Electoral Matters, Senator the Hon Zed Seselja

While the Australian Charites and Not-for-profits Commission (ACNC) provides a national registration process for charities and not-for-profits (NFP) and requires compliance with the ACNC corporate governance principles, it has no jurisdiction over the fundraising activities of the entities on the ACNC register. The Australian Taxation Office (ATO) is responsible, at a national level, for deciding eligibility for charity tax concessions and other Commonwealth exemptions and benefits.

The move towards national regulation has been accepted and embraced by charities and NFPs but the one area that is not regulated nationally is fundraising. This is a cause of great concern, especially with the COVID-19 restrictions causing many charitable organisations to cancel in-person fundraising events and rely instead on generating public funds exclusively through online means. Accordingly, the challenges with ensuring compliance with multiple fundraising laws are felt now more than ever by charitable organisations that are forced to comply with laws in multiple jurisdictions, putting further strain on finances and limited resources.

Reporting requirements for charities and NFP and the related legal responsibilities can vary in each state or territory in relation to:

  • Fundraising
  • State taxes
  • Local government permits and permissions

It has been a common refrain for the NFP sector that the current fundraising laws are overly complex and out of touch with the digital and tech world where there is increasingly a desire, and a need, to use online fundraising, crowdfunding or websites to raise funds. This complexity arises because of the state based boundaries and also the lack of consistency across Australia. Northern Territory is an exception as it only regulates minor gaming activities.

Not surprisingly the NFP community has been pushing for reform of fundraising laws for a long time now and has been frustrated by the slow progress in this area.

Australian Government response

Inconsistent regulations across jurisdictions are creating a degree of complexity and uncertainty for charities and as a result contributing to a significant source of regulatory burden  

The Morrison Government’s Charitable Fundraising National Working Group has now released a discussion paper, entitled “Proposed Cross-border recognition model for charitable fundraisers”, which uses the ACNC’s Charity Passport to deem ACNC registered charities as automatically holding a fundraising authority in each of the participating states and territories. If adopted this would significantly reduce the requirement of charities to report to multiple regulators.

It appears that the model will continue to allow each jurisdiction that regulates fundraising activities to impose obligations under local regimes, including local auditing requirements. Accordingly, whilst the proposed model will significantly reduce red tape for ACNC-registered charities, these organisations will still need to be vigilant in ensuring any local requirements are complied with. It is also important to note that the proposed model only applies to ACNC-registered charities, and not organisations that may be charitable in nature but have not received charity registration through the ACNC.

NSW Fair Trading is currently seeking feedback from industry and members of the public on the proposed deemed registration model as outlined in the discussion paper, with submissions open until 18 September 2020 (see here for more information on the submission process). Through our work in this area, we are aware of the significant impacts that the current fundraising regime has on our clients in the NFP sector. Accordingly, we look forward to providing NSW Fair Trading with our feedback and we welcome comments from our clients who have issues that are of specific concern or interest. Please contact us if you would like assistance in making a submission.

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