Online crowdfunding campaigns for social causes guidelines

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Not for profit

This document covers guidelines for the licensing of online crowdfunding campaigns for social causes - exceptions to requirement for charitable collections licence. 

Purpose of Guidelines

The purpose of these Guidelines is to clarify the Department’s position in relation to online crowdfunding type collection activities and when an entity using an online fundraising facility will require a licence in accordance with the Charitable Collections Act 1946 (the Act).

These Guidelines include specific instances where the Associations and Charities Branch will not enforce the requirement for a charitable collections licence for a collection. The exceptions outlined in this document are based on either strict legal interpretation of the licensing provisions of the Act; or directional instruction by management to not enforce the licensing provisions of the Act. The latter direction is generally because the circumstances of the collection are sensitive and it is not in the public interest to pursue the collector for unlicensed collection of funds.

Fundraising in 1946 

It is relevant to note that, in 1946 when the legislation was passed, the expansion of charitable collections via online platforms was almost certainly not contemplated. Without legislative reform, the regulation of charitable collections will continue to be constrained by the requirements of the Act in its current form. There are apparent jurisdictional issues that arise in administering Western Australian legislation over collection campaigns that are initiated outside Western Australia, or facilitated by global companies based outside Western Australia.

Despite this, internal legal advice obtained in 2015 surmised that although the language of the Act is old-fashioned, ‘the underlying purpose of the Act is obvious and specifically includes advertising in a newspaper. The language is broad enough to encompass online platforms either as advertising generally or being equivalent to posters or notices in newspapers’. Consideration of whether a particular fundraising campaign will require a licence under the Act will largely depend on the facts surrounding the campaign and whether the purpose of the collection is considered ‘charitable’. It is largely this definition of ‘charitable’ that excludes certain collections from the licensing requirements of the Act. 

What is crowdfunding?

The term “crowdfunding” refers to the practice of raising funds through the pooling of relatively small financial contributions from a large number of investors, usually through an online platform. These Guidelines are concerned with donation-based crowd funding for a charitable purpose, within the context of administering the Act. The rise in popularity of online crowdfunding type campaigns and the ability to link and share fundraising campaigns via social media generally means that raising funds is now more successful and popular by virtue of the ease in setting up and circulating awareness of a campaign. As a result, it is important that there are clear guidelines to Departmental staff about when a public collection is considered charitable and therefore requires a licence under the Act.

Background

The Department is aware of the prolific use of online platforms by individuals or groups for the purpose of raising funds for a variety of purposes. The Associations and Charities Branch (the Branch) is responsible for the regulation of charitable collections as outlined in
the Act and sporadically monitors the use of online crowdfunding campaigns. The number of campaigns hosted by the various online platforms makes it unfeasible to ensure that all collections for a charitable purpose are legitimately approved in accordance with the
Charitable Collections Act 1946 (the Act).  

These Guidelines seek to provide some foundational direction to staff about how to deal with online collection campaigns, and specifically when a collection propagated by online means is exempt from the licensing regime. 

Until recently, the Department has maintained the position that an individual or group seeking to raise funds for or on behalf of themselves or a third party beneficiary must apply for a charitable collections licence in accordance with the Act.

A recent direction by the Department that an individual seeking to collect funds on their own behalf apply for a charitable collections licence in line with section 6 of the Act was challenged. This prompted internal legal review of the Department’s position and has confirmed a change in the Department’s application of the licensing requirements of section 6 of the Act.

The Branch now seeks to formalise this direction, and other historical directions related to online crowdfunding, as a Guideline to staff.
Legislative authority The Charitable Collections Act 1946 is cited as “An Act to provide for the regulation and control of the collection of money or goods for charitable purposes, and to repeal the War Funds Regulations Act 1939.

Section 6(1) of the Act provides:

No person shall –

  1. collect or attempt to collect any money or goods for any charitable purpose; or
  2. obtain or attempt to obtain money by the sale of any disc, badge, token, flower or other device for any charitable purpose; or
  3. conduct any entertainment or function to which any charge for admission is made, or sell or attempt to sell any ticket for admission to any entertainment or function in any case where it is held out that any part of the proceeds of the  entertainment or function are to be devoted (either wholly or partly) for any charitable purpose; or
  4. advertise, whether by way of poster, streamer, handbill, notice in any newspaper or any other means or hold out or represent in any manner that the whole or any part of the proceeds of any sports, races, fete, bazaar or other function will be paid into or applied for any charitable purpose, 

unless he is 

  1. the holder of a licence under this Act; or
  2. a member of the committee or other governing body, or a society, body or association which is the holder of a licence under this Act and who is authorised by such licensee; or
  3. authorised to do so by a person, society, body or association which holds a licence under this Act,

and except in accordance with such licence and authority.

Section 5 of the Act defines “charitable purpose”:

  1. the affording of relief to diseased, sick, infirm, incurable, poor, destitute, helpless or unemployed person, or to the dependents of any such persons; 
  2. the relief of distress occasioned by war, whether occasioned in Western Australia or elsewhere;
  3. the supply of equipment to any of His Majesty’s naval, military, or air forces, including the supply of ambulances, hospitals and hospital ships;
  4. the supply of comforts or conveniences to the members of the said forces; 
  5. the affording of relief, assistance or support to persons who are or have been members of the said forces or to the dependents of any such persons;
  6. the support of hospitals, infant health centres, kindergartens and other activities of a social welfare or public character;
  7. any other benevolent, philanthropic or patriotic purpose.

Of note in relation to the section 5 definition of “charitable purpose” is that subparagraph (g) includes “any other benevolent, philanthropic or patriotic purpose”.

According to the principles of legislative interpretation, the categories set out in subparagraphs (a) to (f) must also be for a benevolent, philanthropic or patriotic purpose. 

Section 10 of the Act establishes an advisory committee. The advisory committee considers and reports to the Minister on all applications for licence. Despite section 10, the Minister ultimately determines whether a licence will be granted or not.

11. Application for licence

  1. An application for a licence under this Act shall be made to the Minister, who shall refer the application for consideration and report by the advisory committee.
  2. In considering any application for a licence the advisory committee, in addition to taking into account any other matters thought fit by the committee, shall consider whether, having regard to the objects of the applicant, those objects would be more effectively carried out by any other person, society, body or association being the holder of or an applicant for a licence under this Act.
  3. After considering the report of the advisory committee on any application, the Minister may, in his discretion, grant or refuse a licence to any applicant and shall not be liable to any proceedings whatsoever as a consequence of any refusal.

It is relevant to note that the Minister has validly delegated the power exercisable under section 11(1) and 11(3) to the Commissioner for Consumer Protection. 

Guidelines

Any person or organisation proposing to raise funds for a charitable purpose in Western Australia, whether by street appeal, online means or otherwise, must be licensed in accordance with section 6 of the Act.

Application of the Charitable Collections Act 1946 to online crowdfunding type campaigns

Any person or organisation proposing to raise funds for a charitable purpose in Western Australia, whether by street appeal, online means or otherwise, must be licensed in accordance with section 6 of the Act.

In order to fall within the requirements of section 6 of the Act and thus require a licence, a collection must be for a charitable purpose as defined in section 5 of the Act. 

Until recently, the Department interpreted the licensing provisions of the Act by requiring any person or organisation intending to collect monies for a charitable purpose to hold a charitable collections licence. This broad position was applied regardless of whether the funds were intended to be used for personal benefit or on behalf of another person or group. 

This interpretation was recently challenged by a person with a significant public profile that set up an online campaign intending to collect money to assist in the purchase of equipment for personal use. Internal legal review of the Department’s position found that the individual was not required to obtain a licence and prompted reconsideration of how the Act is applied to crowd-funding campaigns. 

The rise in popularity of online crowdfunding type campaigns and the ability to link and share fundraising campaigns via social media generally means that raising funds is now more successful and popular by virtue of the ease in setting up and circulating awareness of a campaign. As a result, it is important that there are clear guidelines to Departmental staff about when a public collection is considered charitable and therefore requires a licence under the Act.

Jurisdictional nexus

Particular to the scenario of online crowdfunding is the question of when an online donation made by a person or entity will be considered to ignite the application of the Act. This question is not easily inferred from the wording of the Act, and as mentioned above, the concept of online fundraising was almost certainly not contemplated when the Act was drafted.

Legal advice obtained in 2011 gave some consideration the issue of jurisdiction: 

6. As with much legislation, the Charitable Collections Act 1946 does not contain an express localising provision stating its geographical scope of operation nor does it contain a provision which, for instance, further defines the “persons” to whom the prohibitions in the Act apply. So, in terms of (say) s.6(1)1(a) of the Act<there is no express provision which provides that the prohibited conduct is collection of monies in Western Australia without a licence; or that “the person” referred to in s.6(1) is (say) a person resident or domiciled in Western Australia.

19. There is nothing in the express provisions of the Act, or anything consistent with the purposes and objects of the Act, that would limit the operation of s.6 of the Act to persons resident in Western Australia or corporate bodies incorporated in or pursuant to Western Australian legislation. Indeed, the clear purpose of the Act, to regulate and control the collection of money or goods for charitable purposes (in Western Australia), would patently be frustrated if the principal provision of the Act, s.6, was limited in this way. 

The question of when the Act will apply to a charitable collection is complicated by the issue of jurisdiction over online crowdfunding platforms. It is unclear whether nexus is established by the collector or the donor, or both, and whether this is complicated in any way by setting up a collection campaign via an online crowdfunding provider.

Specific legal advice seeking direction on the question of jurisdiction over an online collection has not been obtained, however various advices have been provided which consider, amongst other things, the concept of nexus. 

Whether the Act will apply to an online campaign will largely turn on the specific facts of the collection. Current principles of nexus generally require that the physical location of an offence or illegal conduct determines which State will have jurisdiction over a matter, 
however this area of law within the context of the non-physical nature of the internet is very complicated and largely untested.

Factors which may establish the required nexus include:

  • a collection or attempt to collect from donors based in Western Australia;
  • a collection or attempt to collect on behalf of a Western Australia beneficiary; or
  • a Western Australian based entity that engages in charitable collections (for example, an entity established largely for the purpose of charitable collection).

A collection will only require a licence when the purpose of the collection is ‘charitable’

Section 5 of the Act defines ‘charitable purpose’. 

  1. the affording of relief to diseased, sick, infirm, incurable, poor, destitute, helpless or unemployed person, or to the dependents of any such persons;
  2. the relief of distress occasioned by war, whether occasioned in Western Australia or elsewhere;
  3. the supply of equipment to any of His Majesty’s naval, military, or air forces, including the supply of ambulances, hospitals and hospital ships;
  4. the supply of comforts or conveniences to the members of the said forces; 
  5. the affording of relief, assistance or support to persons who are or have been members of the said forces or to the dependents of any such persons;
  6. the support of hospitals, infant health centres, kindergartens and other activities of a social welfare or public character;
  7. any other benevolent, philanthropic or patriotic purpose.

Of note in relation to the section 5 definition of “charitable purpose” is that subparagraph (g) includes “any other benevolent, philanthropic or patriotic purpose”. According to the principles of legislative interpretation, the categories set out in subparagraphs (a) to (f) must also be for a benevolent, philanthropic or patriotic purpose.

General principle: A person collecting for their own benefit is not required to hold a licence under the Act as such a collection does not meet the definition of ‘charitable’. 

If a person is collecting on behalf of themselves, the current internal legal position is that this cannot be considered a collection for a charitable purpose, even if the reason for the collection is charitable. The concept of charity is, by definition, at odds with the collection of money for one’s own benefit. In other words, it is impossible for a person to be benevolent or philanthropic towards themselves. 

General principle: A parent or guardian collecting on behalf of a sick child or dependent is not required to hold a licence under the Act as such a collection does not meet the definition of ‘charitable’. 

The situation of a parent or family member collecting on behalf of a sick child or dependent does not meet the definition of ‘charitable’. This is because it is arguable whether there is any element of benevolence or philanthropy in such collection. The Branch takes the position that such a collection is merely an incident of the parental duty to provide the necessities of life, and therefore cannot be considered charitable. 

Other exceptions to the application of the Act to charitable collections

Injury vs disease/sickness/infirmity

General principle: A collection for the purpose of assisting a person or group of people suffering an injury does not require a licence under the Act as such a collection does not meet the definition of ‘charitable’.

A collection for the purpose of assisting a person or group of people who have suffered injury is not considered ‘charitable’.

This issue was the subject of legal advice in 2016, when the Association & Charities Branch considered whether an ex-AFL footballer was required to obtain a licence under the Act in seeking donations for a hyperbaric chamber for the treatment of numerous physical ailments.

As a general rule, the assistance of persons suffering from injury is not included in the definition of ‘charitable purpose’ under section 5(a) of the Act. Note with caution, that whether a collection is for the treatment of injury as opposed to a disease, sickness or general infirmity will largely turn on the particular facts of each case, and the mere fact that an ailment is described as an injury does not immediately exclude the operation of the Act.

Terminally ill beneficiaries, funeral funds and bereavement assistance

Due to the personal and sensitive nature of a collection to provide financial assistance for a terminally ill beneficiary or burial of a deceased person(s), the Department has taken the stance that it is not in the public interest to pursue the collector for a licence under the Act, unless there are allegations that the funds have not been used for the stated collection purpose.

Repatriation

In line with the Department’s position on obtaining a charitable collections licence for a funeral fund or bereavement assistance, a collection for the purpose of assisting in the repatriation of a deceased person(s) will not be pursued for a licence under the Act.
Compliance action will only be considered if there is a bona fide complaint or concern the funds have not been used for their advertised purpose. 

Summary: Application of Guidelines – exceptions to requirement to obtain a charitable collections licence

  • Where an individual is seeking to raise funds on their own behalf; or
  • Where a parent or guardian is seeking to raise funds for a child or dependent family member,

such collection does not require a licence in accordance with section 6 of the Charitable Collections Act 1946. This is because the collection is not for a ‘charitable purpose’ as defined in section 5 of the Act. 

The Branch has been directed to not pursue an entity for a licence in accordance with the Act in the following circumstances:

  • A collection for the purpose of financial assistance to a terminally ill beneficiary or payment towards a funeral service;
  • A collection for the purpose of assisting repatriation of a deceased person.
Consumer Protection
Fact sheet
Last updated 20 Sep 2017

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