C.3 Fundraising

Fundraising activities are often the public face of your organisation. The management of these activities represents your organisation’s integrity and an opportunity to demonstrate your accountability in the way you engage with the public. Your commitment to the values of your organisation and the values of the Code of Conduct will be displayed through your fundraising activities. It is the right of your donors to know these are upheld. Furthermore, the dignity of donors should be respected and they should be viewed as participants in the mission of your organisation and not simply to provide resources.

This section of the Code includes seven sets of Standards each with its respective Principles and Obligations. Standards C.3.1 - C.3.4 describe the basic values underlying fundraising: legal obligations and ethical principles, truthfulness and responsibility. Standards C.3.5 - C.3.7 describe the practicalities of donations: how to accept donations, apply the funds raised, and disclose any costs associated with fundraising. 

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C.3.1 Legal obligations and ethical principles

Principle

Signatory organisations will abide by applicable fundraising legislation and will be aware of best practice standards in fundraising.

Obligation

  1. Signatory organisations will have processes and procedures in place to ensure that all legislative requirements are met in their fundraising activities.
  2. Signatory organisations are encouraged to be aware of and comply with the Fundraising Institute Australia’s Code of Ethics and Professional Conduct and their standards for the type of fundraising undertaken.

Why

In your fundraising efforts, your organisation must fulfil legal obligations and uphold ethical principles.

Australia has a complex regulatory system for fundraising which differs for each state and territory. Your organisation must be aware of and comply with these legal requirements through the development of appropriate internal processes and procedures.

The application of ethics in your fundraising is not only a requirement but also an opportunity. It provides you with the means to enter into ongoing relationships of trust with your donors, supporters and volunteers and, most importantly, with the beneficiaries of the funds raised.

Values

This standard reflects the Code of Conduct’s commitment to:

  • Accountability to all stakeholders
  • Building creative and trusting relationships with communities
  • Honesty and transparency in all dealings

Practical Guidance

Here are some practical suggestions for your organisation to strengthen its approaches to legal and ethical practices in fundraising: 

Legislative and regulatory obligations

  • Be aware of and understand your organisation’s legislative and regulatory obligations in relation to fundraising.
  • At the federal level, these are established through the Australian Charities and Not-for-profit Commission (ACNC). Check the ACNC website regularly for reference and to keep abreast of any new developments.
  • At the state level, these are established through different government bodies in each state and territory. Check the ACNC website or the Fundraising Institute Australia website for up-to-date contact details of the relevant government bodies in each state and territory. 
  • Establish a register within your organisation to keep track of all federal and state registrations and obligations for fundraising purposes.
  • Delegate responsibility within your organisation to regularly check your obligations and to ensure you have the required certificates or permissions for different types of fundraising in different states.

Ethical and Good Practice

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C.3.2 Truthfulness

Principle

Fundraising solicitations by or on behalf of signatory organisations will be truthful, will accurately describe the organisation's identity, purpose, programs, and needs and will only make claims which the organisation can fulfil.

Obligation

  1. Signatory organisations will ensure that staff, volunteers and contractors are aware of the requirement that fundraising solicitations must be truthful.
  2. Fundraising materials and solicitations will accurately identify the organisation’s name, address, Australian Business Number and purposes.
  3. Fundraising solicitations will clearly state if there is a specific purpose for the donations (see also Non-development activity at Principle B.1.5 and Control of funds and resources at B.2.3) and Advocacy at B.4).
  4. Fundraising materials and solicitations will, in particular, avoid material omissions, exaggerations of fact, misleading visual portrayals and overstating either the need or what a donor’s response may achieve.
  5. Solicitations should accurately portray intended recipients, their situations and the potential solutions.

Why

Your organisation plays an important role with the public and donors to foster a positive perception of countries, partners and beneficiaries as active participants in the aid and development process.

You are accountable to your partners and beneficiaries to accurately depict them, including their role and circumstances. Images and messages that depict them as suffering victims can undermine the positive purposes of aid and development work.

Communications with the public and donors should be honest, truthful and transparent, while accurately representing your activities and ensuring informed public response that is not the result of manipulation. Donors put their trust in you; if broken, it could affect the credibility of the whole sector.

Values

This standard reflects the Code of Conduct’s commitment to accountability to:

  • Accountability to all stakeholders
  • Building creative and trusting relationships with communities
  • Honesty and transparency in all dealings

Practical Guidance

Here are some practical suggestions to enable truthful communication in your organisation’s fundraising: 

Organisation and policy

  • Create and document a policy or guidelines, approved by your governing body, for all fundraising activities. The document should include reference to:
    • The requirement for accurate and truthful depictions of your organisation and its work
    • Guidance to ensure respect and dignity of the individuals portrayed as active and positive agents in the aid and development process
    • Accurate disclosure of the types, amounts and/or ratios of fundraising expenses
  • Develop a manual or implementation guide to accompany the policy or guidelines. This would include plans and approaches for fundraising, detailed implementation guidance, and a checklist to ensure that all images and text have been considered for compliance with the obligations outlined in this Standard.
  • Establish an monitoring system that tracks designated contributions
  • Establish staff responsibilities and a clear process for reviewing images and text for compliance with this Standard prior to their use
  • Prepare examples of images and text that directly and unequivocally demonstrate the correct and approved fundraising approaches by your organisation or any representative of the organisation
  • Provide regular training for staff, volunteers and contractors in the correct and approved use of images and messages, for example using the examples from the preceding bullet point
  • Involve program staff in decisions regarding images and messages for fundraising appeals
  • Inform donors of the percentages of their contributions that will go to overseas programs, to administrative costs, and to offset fundraising expenses.

Images and text

  • Images and text which are consistent with this Standard should:
    • Be accurate
    • Portray beneficiaries as active agents in the aid and development process where this is the case
    • Portray all people with respect and honesty
    • Put a human face on or give a personal and truthful story about the impact of a disaster, or the difficulties stemming from injustice
    • Present a message of potential change
    • Appeal for support on the basis of justice and common humanity rather than guilt
    • Emphasise respectful and truthful accounts of the issue, story, purpose of the appeal and the experience of people affected
    • Portray a balanced picture of the needs and accomplishments of local communities
    • Contribute to a positive understanding of development
  • Images and text which would undermine and be inconsistent with this Standard should be avoided. Examples of this include images or text which may:
    • Portray beneficiaries as objects of charity or as victims
    • Fuel prejudice
    • Foster a sense of superiority
    • Present donors as ‘going to the rescue’
  • Fundraising solicitations should include accurate wording describing the intended use of funds, and realistic expectations of what will be achieved with them
  • Images and text of children must comply with your organisation’s child protection policies (see Standard B.3.4 Protection of Children)
  • Relevant partners and, if possible, the people being depicted should be invited to provide comment and approval on the images used.

Resources

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C.3.3 Responsibility

Principle

Signatory organisations will be responsible for all fundraising activities outsourced to a third party and will put all such contracts and agreements in writing.

Obligations

  1. Signatory organisations will ensure that all contracts for fundraising meet the applicable legislative and regulatory requirements.
  2. Signatory organisations will have written contracts with third-party fundraisers that specify the expectations, responsibilities and obligations of each party.
  3. Signatory organisations will ensure that any form of fundraising undertaken by a third party clearly identifies the signatory organisation as the beneficiary of the funds.

Why

This Standard is relevant to signatory organisations that outsource fundraising activities to third parties, such as specialist fundraising or collection organisations and volunteer supporters.

Third party arrangements are often not clear to donors. It is important that your organisation takes responsibility for any fundraising done through third parties and that all responsibilities and obligations of each party are clear and clearly documented.

Donors put their trust in your organisation, and should be able to trust third party suppliers to represent your work honestly and accurately. If the trust is broken, it could affect the credibility of the whole sector.

Values

This standard reflects the Code of Conduct’s commitment to:

  • Accountability to all stakeholders
  • Honesty and transparency in all dealings

Practical Guidance

Here are some practical suggestions to ensure your organisation is using third party fundraisers in a responsible manner: 

Organisational and policy

  • Your governing body should carefully consider its approach to using third party providers for fundraising activities, weighing risks such as being misrepresented, against advantages such as increased fundraising revenue.
  • Create and document a policy or guidelines, approved by your governing body, for all of your fundraising activities, including in relation to third parties. It should address when and how activities will be outsourced to any types of third parties: paid, on commission or voluntary. The document should include reference to:
    • A requirement for documented arrangements and agreements with all third parties
    • What is considered reasonable remuneration or commission by third party suppliers. Salaries or commissions should not be disproportionate to the funds raised.
    • The principles of practice and obligations which any third party supplier must operate under i.e. agreed ethical practices and an obligation to accurately represent the organisation and its work
    • A description of how these policy and practices will be monitored

Commercial third party fundraising suppliers

If you work with commercial third party fundraising suppliers, it is recommended that your organisation:

  • Sign contracts that include reference to a monitoring and review schedule for performance
  • Develop written or electronic guidance to inform third party suppliers and their staff about your organisation and its work, the standards of practice required and the relevant obligations under this Code
  • Regularly monitor compliance with signed agreements
  • Provide training to third party fundraising suppliers covering:
    • The provision of accurate information about your organisation
    • Ethical practices expected, such as:
      • The positive and respectful depiction of partners and beneficiaries (refer to Standard C.3.2 Truthfulness)
      • Not subjecting potential donors to undue influence, harassment, intimidation or coercion
      • Taking special care when approaching people who may be more vulnerable and feel easily pressured to donate
  • Ensure the public is informed whether those seeking donations are volunteers, employees, on commission or contractors
  • Ensure third party supplier organisations have all necessary insurances. 

Non-commissioned fundraisers

  • Your governing body should carefully consider its approach to using others, such as volunteers or those working without commission, to conduct fundraising activities on your behalf. The many advantages, including increased revenue and access to new constituencies, should be weighed with risks, such as misrepresentation.
  • Develop documented guidance and clear procedures for all voluntary fundraisers including accurate information about your organisation and its work, advice on conducting effective fundraising activities, and risk assessment
  • Where voluntary supporters are undertaking fundraising on your behalf, ensure that necessary insurances, such as public liability, are in place.

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C.3.4 Protection for donors

Principle

In all fundraising activities conducted by or authorised by signatory organisations, there will be policies and procedures in place to protect the rights of donors.

Obligations

  1. Signatory organisations will have policies and procedures in place to ensure that the privacy of donors or potential donors is protected consistent with the Privacy Act (as amended), including the right to:
    1. Have their names deleted or suppressed from mailing lists, including those that the organisation intends to share;
    2. Identify collectors, see documentation confirming their bona fides and know whether they are volunteers, paid staff or agents of the organisation; and
    3. Be informed about the purposes for which funds are being raised and be able to access information on programs supported by their donation.

Why

This principle recognises that donors should be able to have full trust and confidence in the signatory organisation that their rights to privacy are respected, that they will know who is collecting their donation, and the purpose for which it is being used.

Values

This standard reflects the Code of Conduct’s commitment to:

  • Accountability to all stakeholders
  • Honesty and transparency in all dealings

Practical Guidance

Here are some practical suggestions for your organisation to strengthen its approaches to legal and ethical practices in fundraising: 

Organisational and policy

  • Develop a Privacy Policy which ensures donors’ contact details are maintained in accordance with the requirements of the Privacy Act 1988 (Cth) and the Australian Privacy Principles.
  • Develop clear and documented procedures on how donor’s contact details will be collected, recorded, maintained and protected
  • Ensuring relevant staff are aware of and implement your organisation’s privacy policies and procedures
  • Provide a copy of your organisation’s privacy policy to donors at the time you collect their contact details
  • Place your privacy policy on your website and make it readily available to donors.
  • Provide donors with the option of unsubscribing to mailing lists which are used for fundraising solicitations or that may be shared with other parties
  • Ensure program information in fundraising solicitations is accurate
  • Ensure that information about programs supported by donations is accessible to donors such as through newsletters, updates on social media, regularly updated website, and in other promotional materials. 

Fund raising collectors

  • Develop written guidance for all fundraisers including accurate information about your organisation and its work, and the rights of donors.
  • Ensure that collectors inform donors and potential donors of:
    • their own identity
    • the full name of the organisation being represented
    • the full business address of that organisation. 

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C.3.5 Acceptance of donations

Principle

Signatory organisations will ensure that decisions to accept or reject donations supports the purpose of the organisation.

Obligation

  1. The governing body of the signatory organisation will have a position on acceptance and refusal of funds.

Why

Developing a position on what donations your organisation will and will not accept ensures that your organisation is able to maintain its independence from donor influences. It protects the interests and reputation of your organisation and minimises the risk of any adverse publicity that may result from the acceptance of a particular type of donation.

This standard also assists in meeting the ACFID Code of Conduct requirements relating to the control of funds and resources (B.2.3).

Values

This standard reflects the Code of Conduct’s commitment to:

  • Accountability to all stakeholders
  • Honesty and transparency in all dealings

Practical Guidance

Here are some practical suggestions for your organisation to strengthen its approaches to legal and ethical practices in fundraising: 

Organisational and policy

  • When developing a position on the acceptance and refusal of funds, you might consider these questions:
    • Does the donation compromise the Objects and Mission of your organisation?
    • Does the organisation accord with your organisation’s principles and values?
    • Would the donation damage the reputation of your organisation?
    • Does the donation compromise your ability to exercise independence?
    • Would the donation lead to a negative reaction from existing or potential Donors?
    • Would a conflict of interest be created for any person in the signatory organisation by accepting the donation?
    • Is the donation compliant with legislation?
  • Common types of donations that would not be accepted by signatory organisations include:
    • those that are in conflict with the organisation’s goals;
    • those that come from a company or an individual that lacks good standing in the organisation’s constituency; or
    • donations that are made with the expectation of influence over an organisation’s decisions.
  • Ensure that donations are sought from a wide range of sources so that no single donor is seen to exercise influence over the organisation.
  • Develop clear guidelines on who in the organisation has authority to manage decisions to accept or reject donations.
  • Develop a protocol that should be followed when a staff or governing body member believes that the organisation has accepted, or is considering accepting, funding from an inappropriate source.
  • It is recognised that Code signatory organisation may not be able to apply this position to donations received through some types of fundraising such as on-line or face-to-face fund raising.

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C.3.6 Application of donated funds

Principle

In public fundraising for a specific purpose, signatory organisations will have a plan for handling any excess and for substantiating the application of donors’ funds.

Obligations

  1. Signatory organisations will ensure that when fundraising for specific purposes they will have a plan for use of any excess funding and make this known at the commencement of the fundraising appeal.
  2. Signatory organisations will maintain financial records that enable substantiation of application of donor funds and will provide this on request.

Why

At the time of conducting an appeal for a specific purpose, it is unknown how generously the public will respond.  When an appeal is successful, funds raised may be in excess of what the signatory organisation has the capacity to legitimately spend on a particular project. Sometimes, the organisation will receive more funds than it ultimately needs for a specific purpose.

Various factors beyond the organisation’s control may also affect how much an organisation is able to apply to a particular cause, such as the capacity of local partners to absorb funding and implement projects, goods not being available to purchase, the local political climate, civil unrest, and whether aid is able to flow through to the affected area,

This standard recognises that organisations need to be accountable to donors for the use of their funds. This means that your organisation needs to clearly communicate to donors how it intends to use any excess funds received that are solicited for a particular purpose.

Values

This standard reflects the Code of Conduct’s commitment to:

  • Accountability to all stakeholders
  • Honesty and transparency in all dealings

Practical Guidance

Here are some practical suggestions for your organisation to strengthen its approaches to legal and ethical practices in fundraising: 

Organisational and policy

  • Before launching an appeal, set internal fundraising targets that are based on reasonable estimates of expected program costs. Once these targets have been reached, stop actively soliciting further funds until the need for additional funds has been re-assessed.
  • Before launching an emergency appeal, undertake an assessment of your organisation’s capacity to implement an emergency program, including access to established local partners, the capacity of any field presence, and appropriate expertise. If your organisation does not have the capacity that would be needed, consider partnering with another organisation or re-direct donors to another organisation who is able to respond.
  • When developing gift catalogues that promotes the purchase of community ‘gifts’ such as toilets, vaccination programs, goats, a micro-business loan, or women’s literacy,  clearly communicate whether that gift represent actual items that will be purchased with the donors funds or whether that gift is indicative of broader program expenditure. Donors need to clearly understand how their gift purchases will be applied by your organisation. 
  • When your organisation begins soliciting funds for a specific purpose, you need to clearly communicate how you will use any funds that cannot be applied for the purpose solicited. This may include using those funds for another campaign, activity or project that is consistent with the organisation’s overall mission, or it may include returning funds to donors.
  • Maintain financial records that enable substantiation of the application of donor funds. This means that your organisation needs to know how much it has received for a particular purpose and how much it has spent on that same purpose.
  • It is recognised that responding to donor requests to provide information regarding the application of donor funds can place a significant administrative burden and cost on signatory organisations.  However in order to demonstrate good governance and accountability, signatory organisations need to have systems established that enable them to respond to requests by donors to provide information regarding the application of donor funds.  

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C.3.7 Disclosure of fundraising and administration costs

Principle

Any use by signatory organisations of expenditure ratios (e.g. percentage of funds spent on administration and fundraising costs) will truthfully and transparently disclose all costs incurred in the donation program.

Obligations

  1. Signatory organisations should not give the impression that fundraising has no costs nor that aid and development programs have no administrative component.
  2. If using financial ratios, signatory organisations will comply with the Financial Reporting guidance at C.2.2 and the Financial Definitions at Section F of the Guidance.
  3. Signatory organisations will fully and accurately disclose to the public their fundraising and any administration costs incurred, and will reflect this in financial ratios, if used, in publications and marketing material.
  4. Signatory organisations will accompany any use of ratios with a note explaining how these have been determined.

Why

Ratios use financial data to summarise some aspects of organisational performance. In response to stakeholder concerns, some signatory organisations use financial ratios to reassure donors that every effort is made to maximise the funds directly applied to aid and development activity. In other words, organisations seek to reduce their overhead costs to show that a high percentage of all funds donated are directly applied to development projects.

There are two key reasons for ensuring that financial ratios are used honestly and transparently. The first reason is so no signatory organisation is obtaining a fundraising advantage through misrepresentation of its comparative efficiency through financial ratios.  This means that organisations need to be transparent in communicating how their financial ratios have been calculated and how their overhead costs have been met. The second reason is to enable donors to understand that organisations need to incur costs to help them to undertake aid and development activities.

Values

This standard reflects the Code of Conduct’s commitment to:

  • Accountability to all stakeholders
  • Honesty and transparency in all dealings

Practical Guidance

Here are some practical suggestions for your organisation to truthfully and transparently disclose all costs incurred in the donation program.

  • This Standard requires your organisation to communicate openly and honestly with your donors about how their funds are applied and how the costs that you incur in running your organisation are met. Here is some practical guidance that might assist your organisation:
  • In your organisation’s Annual Report, include discussion and analysis on your organisation’s expenditure in key reporting categories including program costs, community education, fundraising costs, accountability and administration costs.
    • Where your organisation uses financial ratios to communicate with stakeholders, you should also attach a note, providing information on how the ratio has been determined. For example:
    • Administration Expense ratio (total administration expense/total expenses);
    • Program Expense ratio (total program expenses/total expenses);
    • Fundraising Expense ratio (total fundraising expenses/total expenses);
    • Cost of Fundraising ratio (total fundraising expenses/total fundraising revenue.
    • Charts or graphs that provide information about the composition of the signatory organisations assets or information about revenue or expenses over say a five year period.
  • Communicate to donors that in order to run an organisation and use funds effectively, there are unavoidable regulatory and administrative overheads, and important investments in staff and management systems.
  • Inform donors that a nominated percentage of a donation towards a particular appeal will be deducted to contribute towards administrative expenses for receiving and receipting donations for that appeal.
  • If your organisation intends to distribute all donated funds directly to a project, explain to donors how the costs incurred in administration and fundraising are being covered (such as through other funds, volunteers, retained earnings, a bequest etc.)

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