Information for charities conducting fundraising activities

Released: November 2016, updated February 2019

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 Persons (its board, committee, or governing body). Fundraising is often the public face of a charity. The way a charity conducts fundraising can have a significant effect on a charity’s work and its reputation. Public perception of the processes a charity uses to raise funds is an important factor for a charity’s Responsible Persons to consider. The erosion of public trust through a lack of transparency and attention to good governance in fundraising practices has the potential to be highly detrimental to the charity itself – and the sector as a whole.

Where a charity decides to work with a professional fundraising agency, the Responsible Persons of the charity carry the ultimate responsibility for any actions taken in the charity’s name. 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 risk in this area and take action to responsibly manage these risks are an area of concern for the ACNC.

When conducting fundraising, the Responsible Persons of a charity must take the time to reflect on their governance responsibilities. The Responsible Persons have stewardship of the charity’s most treasured resource – its reputation and the trust of the community. They should consider how fundraising activities will affect their charity’s reputation alongside any considerations of monies spent and raised.

The Responsible Persons of a charity must be aware of the issues and apply due diligence when managing their relationships with fundraising agencies. This applies to any area where a charity contracts a third-party supplier – due diligence and well governed management of supplier relationships is not limited to fundraising.

This guidance will focus the attention of the responsible persons of charities and help them shape the way they consider working with fundraising agencies.

1. Fundraising and charity governance

The way a charity conducts fundraising is crucial to its success and, importantly, its reputation. 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. However, it is important for charities to remember that oversight of the activities conducted by a fundraising agency remains the responsibility of the charity.

Being responsible for fundraising activities undertaken in their name, it is essential that charities are diligent when considering working with a fundraising agency. All members of a charity’s board or management committee (referred to by the ACNC as ‘Responsible Persons’) should carefully consider the policies and practices of a prospective fundraising agency and examine whether their charity has appropriate oversight of the all the activities conducted by the agency in its name. The ACNC expects responsible persons to properly manage the governance of fundraising.

The purpose of this guidance is to assist charities to consider and implement appropriate processes of due diligence when engaging a fundraising agency.

Although the ACNC does not directly regulate fundraising activities, its regulation of charity governance and its responsibility for promoting trust and confidence in Australia’s charities means the way charities conduct fundraising is an area of interest and concern. For information about specific regulations for fundraising activities, contact the relevant state or territory regulatory body.

Activities most commonly outsourced to fundraising agencies are face-to-face fundraising (for example, street collections or door-knocking appeals), direct mail marketing and telephone fundraising. While working with a fundraising agency can extend a charity’s capacity, it brings about important responsibilities. Charities should consider how they ensure the protection of their ethics and reputation. They should be aware that the public is unlikely to understand or make a distinction between the actions of a third-party provider and the charity itself. The ACNC expects charities to takes steps to identify that the fundraising agency it works with complies with all relevant legal obligations, for example obligations under employment or consumer law.

Please Note: New 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, released in December 2017 and available on the Australian Consumer Law website 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 subcontract some of those activities and other elements of 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.

Outsourcing work to a fundraising agency does not absolve a charity of its responsibility to comply with relevant laws. If a fundraising agency working on behalf of a charity fails to comply with legal requirements, it is possible that the charity’s responsible persons may be held liable for the failure to comply. The ACNC expects a charity’s responsible persons to be familiar with relevant laws and to take reasonable steps to ensure the fundraising agency they work with is compliant.

A charity may also be held accountable by donors, media and the public for any unethical practices or inappropriate behavior of a fundraising agency or others in the supply chain, even if they have been legally compliant. It is important that a charity’s responsible persons think not only about compliance with ‘black letter law’ but also the ethics and public expectations of fundraising practices, such as dealing with vulnerable persons. A charity cannot absolve itself of responsibility unethical practices or inappropriate behaviour by blaming such instances solely on the agency or individuals involved.

When considering working with a fundraising agency, a charity should be concerned with a number of aspects, not only the financial cost. Although 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, there are a number of factors beyond cost which charities should examine. These include:

  • its values and how they align to the charity’s
  • its operational transparency
  • its reputation
  • its financial situation
  • its experience and areas of expertise
  • its performance
  • its structure and use of subcontractors

Charities also should have a thorough understanding of the operations of any fundraising agency it is considering working with. Before entering into an agreement with a fundraising agency, a charity should be confident that it has carefully examined the agency and considered:

  • its employment policies and practices (including for any subcontractors)
  • its training and monitoring of its staff
  • its methods, including how it deals with vulnerable people
  • its workplace health and safety policies and records
  • its policies and processes to address complaints
  • its compliance with all relevant legislation at federal, state and local government levels
  • the suitability of its senior management
  • its financial management and business stability
  • its processes for quality assurance
  • its policies for data protection (including financial information security).

A charity should be satisfied that the fundraising agency it is considering is aware of its legal obligations, has appropriate policies and processes to ensure compliance, and shares the values of the charity.

If a charity uses an external fundraising agency, it 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, charities should disclose this arrangement.

For example, a charity should not solicit donations with a statement that ‘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 charities make false or misleading statements – or act in a way that creates a false or misleading impression –they 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.

Further information on the Australian Consumer Law for charities and not-for-profits is available here and on the ACCC website.

Before entering into an agreement with a fundraising agency

There are important steps that a charity can take to ensure it has been diligent in assessing a fundraising agency it is considering working with. 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 due diligence before entering into an agreement:

  • Assess the risks of working with a fundraising agency
  • Know the operations, processes and culture of the fundraising agency
  • Consider the supply chains involved
  • Be prepared to seek expert advice
Assess the risks

Charities should review the risks involved in working with fundraising agencies; both legal and financial risks, and risks to their reputation. They should examine the operations of the agency that they are considering and develop a risk assessment before entering into an agreement. It is important to remember that different agencies will present different risks; for example, an agency with a large number of employees or subcontractors may present a high risk associated workplace laws, and an agency that does not handle any sensitive data may have a low risk associated with privacy laws. A charity’s assessments should be included in the charity’s risk register.

Know the fundraising agency

Charities should have a detailed understanding of the operations of the fundraising agency they are considering, including knowledge of how they comply with relevant laws. Charities should ask questions of the fundraising agency to develop this understanding. These questions should be detailed enough to provide a clear understanding of, and highlight any gaps in, the agency’s processes. It is not enough to ask “Do you have a grievance process?”; instead, the request should be “Please supply your grievance process”. A fundraising agency should be prepared to answer questions about their operations and legal compliance.

Charities should also consider whether the agency’s values are consistent with the values of the charity. If a charity is prepared to work with a fundraising agency, the charity must be prepared to justify the practices of the agency to its donors and to the public.

Consider the supply chains

To help them deliver their services, fundraising agencies may subcontract activities and other elements of an agreement to other organisations or individuals. Some of these supply chains can be lengthy. 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, the charity may be held accountable for the actions of all organisations and individuals involved in its fundraising – even if they are hired down the supply chain.

Seek expert advice

Charities should consider their own capacity to properly conduct an assessment of a fundraising agency and be prepared to seek expert advice if required. Particular in areas of high risk, charities may benefit from seeking independent advice from a professional, such as a lawyer, to assist them. This is part of responsible charity governance.

Charities should also familiarise themselves with the fundraising bodies in Australia and their free resources. 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:

  • Be familiar with relevant legislation and regulatory bodies
  • Keep detailed records
  • Conduct periodic reviews
  • Establish a process to address non-compliance
Be familiar with legislation and regulatory bodies

As mentioned, the ACNC is not directly responsible for fundraising. The ACNC regulates registered charities and is responsible for oversight of charity governance, of which fundraising is an important element. However, legislation relevant for fundraising is administered by different regulatory authorities at different levels of government.

Charities should be aware of the government authorities responsible for regulating the various aspects of fundraising. This can help to inform charities about the obligations of fundraising agencies and those within a fundraising supply chain.

Keep detailed records

Keeping records is an obligation or registered charities under the ACNC Act. Charities 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 operations aspects of any agreement. In addition to providing a layer of accountability, keeping records will help charities meet the ACNC Governance Standards.

Conduct periodic reviews

An ongoing relationship with an agency should be subject to regular reviews. Charities should examine the performance of the fundraising agency to determine if it is still compliant with its legal obligations and is meeting the charity’s expectations. As compliance requirements and agency business practices change over time, a strong process for thorough reviews is critical.

A charity’s contract or service agreement with the fundraising agency should explicitly outline all compliance requirements, but a charity should not rely solely on this. Charities should request evidence of its performance or compliance from the agency and any subcontractor in the supply chain. It is not sufficient to accept unsubstantiated assurances; a charity should obtain satisfactory evidence of compliance.

Establish a process for non-compliance

Charities should have a process to address a fundraising agency’s failure to comply with its stated requirements – both legal obligations and performance expectations. This should involve a comprehensive review of an agency’s performance and the steps to practically address the problems. This may include the charity reconsidering its engagement or terminating the agreement. In many cases, such a process may involve seeking the independent expertise and advice of a professional adviser.

Fundraising is a significant aspect of many charities’ operations and charities need to understand that oversight is an important aspect of good governance. Outsourcing fundraising activities – even if this involves a lengthy supply chain – does not absolve a charity of this governance responsibility. Charities should make sure that they are sufficiently informed about the policies, processes and practices of a fundraising agency before entering into any agreement.

Fundraising is, in many cases, the only time that members of the public will come into contact with a charity, and it is crucial that charities make a good impression. Not only will poor fundraising practices and techniques likely result in fewer donations and fewer long-term supporters, they will damage the reputation of the charity, and even the sector as a whole. This is important to keep in mind when considering working with a fundraising agency and the agreement which underpins the collaboration.