Action against licensed charities

The Commissioner for Consumer Protection has revoked the charitable collection licence of Strike A Chord Inc.

Commissioner Anne Driscoll and the independent Charitable Collections Advisory Committee formed the view that the licence of the charity, whose mission statement is to share the gift of music with seriously ill and disadvantaged children, should be revoked following a detailed investigation.

Ms Driscoll said that there were concerns about the governance arrangements of the charity.

"While there appeared to be a genuine endeavour to assist disadvantaged children, our main concern was that there was not sufficient independence between Strike A Chord and profit-making companies supplying services to the charity,” the Commissioner said.

"It's important that charities ensure that managing committees comprise members with sufficient independence to ensure decisions can be made without conflicts of interest being present.

"The investigation by Consumer Protection concluded that the financial reporting of the charity did not have a satisfactory level of accuracy, transparency and detail.

"Combined costs associated with consultancy fees, staff salaries and staff benefits increased in recent years, reducing the amount of funds available to be directed to the charitable purpose. While the charity employed people with expertise in event management, it lacked expertise in financial management.

"I would like to acknowledge that Strike A Chord did offer to relinquish its licence but this was not legally possible because a charity licence can only be relinquished at the end of the licensing period.”

On 27 December 2012, the Commissioner also revoked the licence of Lighthouse Laboratories Inc of Midland, a not-for-profit company which had been raising money for research into childhood cancer. The Commissioner for Consumer Protection and Committee found that the charity had mismanaged funds, failed to effectively carry out its charitable purpose and did not have independent governance practices in place.

The Commissioner said it is important for all charities in WA to be able to establish that the donations received are applied effectively and efficiently as their donors and the community would expect.

"It is important that charities undertake from time to time, a critical self-examination of how they operate. People may have the best of intentions when they form charities and raise funds, but these organisations must be managed appropriately,” Ms Driscoll said.

"Charities need to be acutely aware of any issues regarding conflicts of interest, executing duties and responsibilities with care, and clearly defining the activities designed to achieve the charitable purpose. While we recognise that fund-raising activities incur costs and some projects may take some time to mature before producing results, the charitable purpose needs to be achieved in a reasonable amount of time.

"There are more than a thousand licensed charities in WA run by dedicated staff and volunteers who collectively raise millions of dollars in donations to support a variety of worthy charitable purposes. The not-for-profit and charity sector carries out amazing work to support the WA community and, with few exceptions, carry out their tasks with great integrity and sense of purpose. 

"It is essential that the public's trust and confidence in the charities and not-for-profit sector is maintained and, it's for this reason, we have a licensing system with controls to manage the funds as well as the organisation behind the charity. A strict set of rules are in place to ensure that the money raised by charities is used efficiently and effectively.”

A list of registered charities in WA can be found on the Consumer Protection website: www.commerce.wa.gov.au/charities. Enquiries about charities can be made by email: charities@commerce.wa.gov.au or by calling 9282 4373.

Background

The regulation of charity laws in WA is assisted by an independent Charitable Collections Advisory Committee. The Committee, which has members with longstanding experience in the sector and related professions, provides recommendations to the Minister for Commerce and Commissioner for Consumer Protection.  The Committee often requests information from charities that it believes is necessary to determine if the charity is effectively directing funds towards the intended purpose. All charitable collections licences must be renewed and their accounts and activities are reviewed as part of that process.

END OF RELEASE

Media Contact: Alina Cavanagh
9282 00679 or 0423-846397
alina.cavanagh@commerce.wa.gov.au

Consumer Protection
Media release
13 Mar 2013

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