Crowd-Funding: What do you need to know as a charity, donor and fundraiser?
Crowd-funding has become one of the most popular methods of online fundraising for NFPs and charities. While it is an easy way for individuals and groups to raise funds for important charitable causes, there are a number of areas that need to be considered first. This article explains the importance of crowd-funding and what charities, donors and fundraisers need to know about it.
It is the responsibility of a charity’s board or committee to ensure that any crowd-funding website they use is reputable, operational and will meet the objects of the charity.
In order to satisfy potential donors that the crowd-funding website is genuine, the charity should be mindful to only choose platforms that echo the charity’s own values and purposes.
Many crowd-funding websites have terms and conditions pertaining to fees, eligibility criteria and target amounts. It is very important for a charity to have clear protocols in place for funds that are received in a campaign that fails to reach the target amount. For example, charities should explicitly state at the outset of their campaign, that any funds they receive on the way to reaching their target can be used for other charitable purposes should the campaign miss its target.
In Australia, the laws governing fundraising are administered on a state-by-state basis.
A charity that wants to fundraise at a national level will be required to register to fundraise in each state and territory.
Charities must also be aware that fundraising without registration in particular states and territories can constitute a breach. While states such as Queensland are attempting to reduce their reporting obligation protocols for fundraising, this approach is not yet uniform across all of the Australian states and territories.
Fundraising in NSW
Any person or organisation that fundraises in NSW must apply for an ‘authority to fundraise’ licence. They would do this through NSW Fair Trading.
Alternatively, they must enter into an arrangement with a holder of a licence to fundraise on that holder’s behalf.
There are various fundraisers who are exempted from holding a fundraising licence. These include:
- Appeals run by organisations that raise less than $15,000 in a single financial year;
- Universities and local councils;
- Parents and Citizens Associations of government schools, formed under the Education Act 1990; and
- Religious organisations.
It is also important for donors to be wary when it comes to crowd-funding campaigns.
The best way to ensure that you are donating to a reputable platform is to do your research.
Give wisely, and confirm that the charity you are donating to is registered with the ACNC.
Furthermore, ask questions. Is the charity transparent about what it intends to do with its donations? Where will the funds go if the target is not met?
Is it worth it?
Yes, crowd-funding is an easy way for charities and donors to campaign and raise funds for causes that are important to them.
However, each stakeholder should also be cautious of their obligations and only proceed with crowd-funding when they can be sure that they are well-informed of the potential risks.
If you have any questions around crowd-funding, please contact Carroll & O’Dea Lawyers via our Contact Page or call us on 1800 059 278.