4. Some other matters for consideration
4.1 Commercial fundraisers
Commercial fundraisers are not presently required to be licensed under the Charitable Collections Act, although this will almost certainly change with new legislation. Any agreement between an association and a commercial fundraiser is subject to contract law, and associations should seek legal advice before entering into agreements.
Commerce has developed some guidelines for consideration by associations contemplating entering into an agreement with a commercial fundraiser. These guidelines are available on Commerce's website.
4.2 Bequests and gifts
Some incorporated associations obtain funds though gifts and bequests. A bequest is a gift of property in a will. While this is a valid means of acquiring funds, it is very important for associations to ensure that gifts and bequests have been given to the association without any undue influence or coercion. If challenged, courts will look very closely at gifts and bequests received by associations to ensure that they were given freely and with the person's full knowledge and intention. It will be more difficult for associations to claim gifts and bequests that are given by elderly people, people with intellectual disabilities and people with limited experience and education.
If an incorporated association is planning to raise funds through a request for gifts and bequests, it is essential to discuss the project with a solicitor and to have the solicitor draft all the necessary documents (eg letters of request, forms and promotional material) in order to avoid legal pitfalls. It may also be beneficial to apply to the ATO for endorsement as a Deductible Gift Register (DGR).
And remember, if the request for gifts and bequests indicates that the funds will be used for a charitable purpose, the association will need a charitable collections licence before it commences mailing out any material.
4.3 Deductible Gift Register status
Incorporated associations that qualify as a DGR can receive tax-deductible gifts. This can make them more attractive to donors wishing to claim an income tax deduction for the gift, for example, sponsors and private donations.
To be a DGR, an association must either:
- be listed in income tax law as a deductible gift recipient; or
- be endorsed by the ATO as a deductible gift recipient.
ATO endorsement requires the association to:
- be covered by one of the eligible categories (eg. an animal welfare charity);
- have an Australian Business Number (ABN);
- maintain a gift fund into which all gifts are deposited;
- make provision in the rules that, upon dissolution, all property (including the gift fund) be given to another deductible gift recipient;
- provide in the rules that the Tax Commissioner will be informed of material changes to the rules and winding-up;
- be located in Australia; and
- make application for deductible gift recipient status, as this is not automatic.
Some associations may not have deductible gift recipient status as a whole, but its smaller units may be eligible.
The ATO publication, GiftPack for deductible gift recipients and donors, provides a detailed guide to assessing deductible gift recipient eligibility, and applying for DGR status.
You can obtain this publication from the ATO office in Northbridge, or by telephoning 1300 720 092 (quote the publication code NAT 3132).
Information on how to apply for an ABN is provided in Section 7 - Taxation.
A fundraising activity may involve the need to take out specific, one-off insurance, if the event is not going to be covered by existing policies. Before you go ahead with an event, find out what your association's insurance policy covers and what additional cover is required. Personal injury, product liability and cover for volunteers are particular areas to consider.
If using sub-contractors, check what insurance they have. If an association contracts a local church group to make lamingtons for sale and a disgruntled member of the public sues because the lamingtons made him/her sick, the association may be as liable as the church group, which may or may not have insurance.
Insurance topics are covered in more detail in Insurance and risk management.
4.5 Local authorities
Certain activities may require local government approval for fundraising. This is likely to be the case when using a public space and/or in relation to local health, noise, safety or traffic by-laws.
A case study in Harmony
The Harmony Community Development Association Inc has planned the following fundraising events for 2008:
The association will need to: