06/03/2007 - 22:00

Not for profit: No small change for charity

06/03/2007 - 22:00

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Fundraising by not-for-profit groups in Western Australia is about to be subject to greater regulation, with the drafting of a new bill to improve accountability in the sector.

Not for profit: No small change for charity

Fundraising by not-for-profit groups in Western Australia is about to be subject to greater regulation, with the drafting of a new bill to improve accountability in the sector.

 

Yet the state legislation that regulates monetary collections by Western Australian charities is more than 60 years old, and has been criticised in some quarters for inadequate financial transparency and reporting requirements.

 

To fund raise in WA, organisations must be registered with the Charitable Collections Advisory Committee, under the Charitable Collections Act 1946 (CCA).

 

In order to better regulate fundraising activity, the state government has approved the drafting of the Public Collections Bill, which is intended to replace the CCA and the Street Collections (Regulation) Act 1940.

 

Based on a discussion paper from 2002, the new bill will address a number of anachronisms in the existing legislation by widening the scope of the ‘charity’ classification, improving financial reporting standards, increasing penalties for breaches of legislation and amending the regulations surrounding street collections.

 

Currently, animal welfare and environmental organisations are not considered charitable organisations, while clothing bin appeals are also exempt from direct control.

 

Although charities are required to submit an annual audited financial statement to the Department of Consumer and Employment Protection, differing standards between organisations make identifying financial mismanagement or fraudulent activity difficult, according to the discussion paper.

 

Financial statements, which are submitted to DOCEP, cannot be released to the public, despite funds being public monies, while the maximum penalty for a breach of legislation is just $100 under the CCA, or $500 for a body corporate under the Sentencing Act 1995.

 

Commercial fundraisers and consultants are not required to be licensed with DOCEP and their financial activity is unable to be scrutinised by the government agency.

 

With regard to street collections, organisations are currently allowed to appeal on a maximum of 50 days per year, effectively limiting organisations to one appeal annually.

 

Professional fundraising consultancy Xponential Group managing director, Brian Holmes, said this clause needed to be amended, as street appeals were becoming increasingly popular as fundraising events.

 

“One of the best ways to attract new donors, which is happening overseas and interstate, is face-to-face fundraising, approaching people on the street,” he said.

 

Mr Holmes believes street fundraising will become increasingly popular with charities, particularly as the effectiveness of mail outs is decreasing.

 

“Even 10 years back, you could…expect a reasonable response rate of six or seven per cent [to mail outs]. Today, the mailing response rate is around 0.6 or 0.7 per cent,” he said.

 

Xponential is a principal sponsor of the Fundraising Institute of Australia and has lobbied for the organisation to update its code of ethics. 

 

Mr Holmes said changes should reflect the scale of modern fundraising campaigns, which for some organisations could reach $1 million, and changing methods of payment, such as the increasing popularity of credit cards.

 

Fundraising Institute of Australia WA chapter president Fiona Paice said the organisation had introduced amendments to its code of ethics, removing a clause last month that proposed a profit/cost ratio for fundraising events of 40 per cent profit to 60 per cent cost.

 

She said the rule was problematic to enforce.

 

“It’s so difficult to police – how do you know if salary costs, advertising or PR are included? It’s very difficult and it does vary enormously,” Ms Paice told WA Business News.

 

Ms Paice said she was aware of situations in recent years where organisations incurred fundraising costs of up to 95 per cent for an event.

 

The FIA is also pushing for legislative consistency across states and guidelines, which reflect a contemporary environment and provide adequate protection for donors.

 

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