Man holding jar with 'charity' label

A new independent research report on commission-based fundraising in the charity sector has been released by the Australian Competition & Consumer Commission (ACCC). The report, Research into the Commission-based Charity Fundraising Industry in Australia, forms part of the ACCC’s 2017 compliance and enforcement focus on consumer issues arising from commission-based sales.

It is based on interviews with three fundraising agencies, one industry association, 14 charities and 13 individuals who currently or have recently worked in commission-based fundraising. More than 500 individual donors who had recently been solicited and made a donation took part in a survey.

There are over 50,000 registered charities in Australia. Donations remain a significant source of income with 26% (in 2015) relying on donations and bequests for more than 50% of their total annual income.

The report found that some charities operated on a model in which third-party marketing firms earn fees for each donor that signs up from face-to-face or telemarketing approaches. The fee is commonly calculated by a multiple (typically eight to 17 times) of the monthly donation to which the donor commits.

“Not all charities use third-party fundraising agencies, but this research raises some concerns about the level of transparency by some charitable organisations around these relationships and disclosure regarding the size and structure of fees paid to these agencies,” ACCC Chairman Rod Sims said.

“We found it surprising just how many multiples of the monthly donations some charities were paying third party fundraisers for face-to-face or telemarketing services.”

Under this model, some contracts between charities and agencies include a ‘claw-back’ feature so that fees are refunded to the charity should donors cancel within a certain time period (most commonly three months). Approximately 50% of donors cancel within the first 12 months.

The ACCC does not regulate the charity sector but has a role to play in ensuring commercial fundraising agencies used by charities are meeting their obligations under the Australian Consumer Law (ACL).

Access the report online

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