Charities face prosecution for dodgy spruiking tactics

CHARITIES risk stiff fines if they outsource their fundraising to companies that hound potential donors.

Charities are under increased scrutiny over how they collect donations. Picture: John Appleyard

• Crackdown on charities using middlemen to hire ‘charity chuggers’
• Charities making use of expensive fundraising companies

CHARITIES risk stiff fines if they outsource their fundraising to companies that hound potential donors.

Consumer agencies are cracking down on dodgy donations, warning charities they will be prosecuted for misleading or deceptive conduct.

The Australian Competition and Consumer Commission (ACCC) yesterday revealed some nonprofits are handing an entire year’s worth of donations to third-party marketers.

Consumer agencies are cracking down on dodgy donations. Picture: Mark Stewart

“Charities are big businesses,’’ ACCC deputy chair Delia Rickard told The Daily Telegraph.

“It’s an area we’re actively looking at cracking down on.’’

Ms Rickard said the ACCC was worried some charity spruikers loiter outside Centrelink offices, pressuring unemployed or disabled people to sign up for ongoing donations. She said some charities were spending large chunks of donations on administration and marketing costs, including commissions to middleman collectors.

“They all take fairly significant commission … some of them get a whole year’s worth of contributions,’’ she said.

“(Some collectors) are not disclosing commissions or misleading people when they ask how much of the money goes to the charities.

Ms Rickard said there were also cases of people posing as legitimate charity collectors to rip off generous Aussies. “We see some out spruiking with a bucket pretending to be a charity when they’re not.’’

There’s a concern some charity spruikers loiter outside Centrelink offices, pressuring unemployed or disabled people to sign up.

Consumer Affairs Australia and New Zealand — representing government consumer agencies — has warned charities they must be “open, truthful and fair’’ when collecting donations.

The group’s new fundraising guide says a charity would be guilty of “unconscionable conduct’’ if its volunteers followed elderly people in shopping centres to pressure them into signing direct debit forms, or “yelled at them in front of fellow shoppers”.

Charity collectors who told donors that all money went to research would be guilty of misleading or deceptive conduct if 60 per cent of the money was paid in commissions.

Under Australian consumer law, charities could be fined up to $1.1 million or collectors fined up to $220,000 for misleading or deceptive conduct.

Ms Rickard said people wanting to donate to a charity should donate through their official websites to keep administration costs low.

“I think the best thing is to go to the website — you can be assured a greater percentage of your money is given to the intended cause,’’ she said.

NSW Fair Trading requires fundraisers to take all “reasonable’’ steps to ensure that at least half the money they collect is spent on the target.

But the Australian Charities and Not-for-profits Commission does not require charities to reveal how much they spend on administration or marketing costs.

The commission this week placed more than 800 NSW charities on a watch list for failing to submit their annual statements on time.