Other matters for consideration
Commercial fundraisers are not presently required to be licensed under the Charitable Collections Act 1946. Any agreement between an association and a commercial fundraiser is subject to contract law, and associations should seek legal advice before entering into agreements.
Consumer Protection has developed some guidelines for consideration by associations contemplating entering into an agreement with a commercial fundraiser. These guidelines are available on Consumer Protection’s website.
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 (e.g. letters of request, forms and promotional material) in order to avoid legal pitfalls. It may also be beneficial to apply to the Australian Taxation Office for endorsement as a Deductible Gift Recipient (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.
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
- endorsed by the ATO as a deductible gift recipient.
- ATO endorsement requires the association to:
- be covered by one of the eligible categories (e.g. 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 to the ACNC 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.
More information concerning Deductible Gift Recipients can be found on the ATO website. You can also download an application form to apply for endorsement as a Deductible Gift Recipient. Information on how to apply for an ABN is provided in 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 .
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
An association has planned the following fundraising events:
- a children's colouring-in competition for International Environment Day;
- a raffle to raise funds for the annual camp for children with disabilities, with tickets to be sold in local shopping centres; and
- a Harvest Festival to celebrate harvest time. The Festival will have food and wine stalls, games and craft stalls.
The association will need to:
- obtain a licence for charitable fundraising;
- apply for a trade promotions lottery licence for the colouring-in competition;
- apply for a standard lottery licence for the raffle and apply to the shopping centres for space and permission to sell tickets;
- apply for an occasional liquor licence to sell alcohol at the festival; and
- apply for a temporary food stall licence to sell food.