Spreading the Christmas spirit? Remember these rules for fundraising

As seen in the December/January edition of Club Insight (Issue 6).

With Christmas just around the corner, I’m sure many of you have already started rehearsing the expression of surprise and joy that is expected when unwrapping Christmas presents – whether you’re lucky enough to receive the gift you were hoping for, or the novelty tie you were dreading. But Christmas is also a time for giving back to the community, and I know many clubs will be conducting fundraisers and other public appeals over the coming weeks, even if they are not registered as charities themselves.

It is important to remember that charitable fundraisers must comply with certain rules – rules that are often overlooked in the age of online “crowdfunding” campaigns. I know the lead up to Christmas is frantic enough without confusing rules and regulations, so to make it easy for you, I’ve compiled a summary of considerations regarding charity fundraisers and appeals.

Registration of charities and other groups

It is an offence to conduct a fundraiser in Queensland if the cause in question has not been properly sanctioned by the Office of Fair Trading (OFT). To receive permission from the OFT, your group must be established for either of the below two purposes:

1. Charitable purposes helping people who are in need because of sickness, poverty, or other circumstances, whether by providing them with education, care, shelter, or other support; or
2. Community purposes promoting the welfare of the public at large, such as constructing a public building, maintaining a park, or repairing a public recreation facility.

In addition, to be eligible for registration with the OFT, the group concerned must:

• have a constitution that includes the group’s operating rules and charitable objectives, as well as a clause stating that the group is not-for-profit;
• involve at least three people or members – albeit the group does not have to be formally established as a company or an incorporated association; and
• have a committee or a group of people who manage and control the group.

Groups that satisfy these eligibility requirements can apply to the OFT for registration. If being registered for a charitable purpose, they must advertise their application in local newspapers and members of the public may object to the group’s registration on certain grounds (this requirement does not apply to groups seeking to fundraise for community purposes). Once registered, the groups are only permitted to use their income and assets to promote the objectives stated in their constitution, and their financial statements must be audited to ensure that this requirement is met.

One-off appeals

Even one-off appeals, such as appeals to raise funds for a sick child in need of medical treatment, must be approved by the OFT. Such appeals must generally run for no more than six months, though OFT may allow this timeframe to be extended in some cases. Donations can only be accepted during the designated timeframe and at the end of the appeal, all funds raised must then be used for the purpose of the appeal.

The following requirements must all be satisfied in order for the OFT to approve a one-off appeal.

• The appeal must be conducted by at least three promoters who are not related to the beneficiary.
• The promoters must sign a letter acknowledging that they must submit audited financial statements to the OFT within four weeks of the end of the appeal.
• The promoters must nominate a charity that will receive any donations that are not able to be used for the purpose of the appeal. For example, if the appeal seeks to raise $50,000 for treatment of a sick child and $80,000 is raised, then the extra $30,000 must be paid to the nominated charity.
• A bank account must be opened for the appeal, and the account must be operated by at least two people who are not related to the beneficiary or to each other.

Other considerations

While the above rules are relevant to Queensland, it’s important to keep in mind that most states and territories have their own laws concerning the operation of charities and running of fundraising campaigns. Groups hoping to fundraise across state borders should therefore consider whether it is necessary to register their cause in multiple states to avoid breaching the regulations.

If your club is planning a fundraising campaign or appeal for those in need this Christmas, give me a call on 07 3224 0353 to check your compliance and ensure you don’t get caught with eggnog on your face this festive season!

Article written by Matthew Bradford (Partner) and Glen Rolley (Associate).