New reporting standards for charitable fundraising during natural disasters

14/03/2022

With the east coast of Australia experiencing severe weather and flooding, and recent bushfires on our west coast, charities in their response, relief and recovery efforts, should be aware of new guidelines for charitable fundraising during natural disasters.

In response to the increased public scrutiny of the fundraising activities of charities during natural disasters, the Australian Government and Fundraising Institute Australia (FIA) announced new standards for the reporting of charitable fundraising during natural disasters, covering, among other things, the timing of distribution.

Prior to the current disasters it was during the Black Summer bushfires in 2019 and 2020, when we last witnessed such an outpouring of generosity from the Australian community culminating in the giving of approximately $640 million for causes relating to the fires. However, at the same time concerns were raised by the community about whether donations were going to the people who needed it, when they needed it. For example, the Red Cross was criticised at the time for being too slow in distributing the $242 million it raised through charitable donations. And it wasn’t only the Red Cross under the spotlight.

What are the standards?

The Fundraising and Reporting During Natural Disasters Practice Note (the Practice Note) was developed by FIA and the Australian Government in collaboration with the charities sector to establish a set of minimum conduct standards which charities may follow and expand upon to achieve best-practice fundraising and reporting during times of natural disaster.

The Practice Note aims to improve transparency obligations for charities and give the public a better understanding of how their donations are being put to work, and includes requirements about communication around the intent and use of donations. In doing so, the Practice Note places importance on the transparency, accuracy and frequency of communications, particularly where fundraising is outsourced.

Communicating your disaster appeal intent

When intending to raise funds, charities should not only provide information on the natural disaster the appeal is in response to and the purpose of the appeal, but it should also provide details about the organisation raising funds, including its name, address, purpose and activities. Donors should also be made aware of the operating parameters of the organisation, including its governing rules and legal obligations.

By providing full disclosure and transparency of the nature and scope of appeals, charities can help ensure their donors are not only able to make a more informed decision about their donation in the first place but can also assure them that their donations are funding critical assistance.

Reporting the use of donations

To support understanding of the recovery process, especially where significant and long-lasting damage occurs, signatories to the Practice Note are required to publish regular reports about how donations are being used to fund response activities and the plans for future disbursement of funds. These reports should include details about the value of donations received, information on non-financial donations and the impact of the funds disbursed.

Who do the standards apply to?

Members of FIA will need to adhere to the standards as part of their ongoing membership compliance obligations. However, charities which are not members of FIA may voluntarily become ‘signatories’ at no cost and without the commitment to comply with the full FIA Code.

For more information you can access the Natural Disaster Practice Note and a Frequently Asked Questions document on the FIA website.

What are other considerations when fundraising during a natural disaster?

Charities need to be conscious of their legal and reporting obligations at all times, but especially in times of crisis where charities may receive donations which far exceed their expectations and previous revenues. For example, during the Black Summer Bushfires, WIRES received $91 million in bushfire donations compared to the $3.4 million received in 2018-19. While charities are able to expand their impact and reach with such funding, they need to be alert to their changing circumstances to ensure they have the support, resources and governance mechanisms in place to ensure funds are used appropriately.

While public figures and non-charitable organisations can have a significant impact on awareness raising, where third party fundraisers are involved, charities will also need to be conscious of any potential effects on branding, messaging and public understanding of how the funds will be used. For example, Celeste Barber’s amazingly successful bushfire fundraising campaign which raised $51.3 million for the NSW Rural Fire Service Brigades Donations Fund. While very successful, this campaign was also controversial due to incorrect representations from Ms Barber that funds from the campaign would also be distributed to victims, wildlife and welfare charities, and other fire authorities in other States and Territories. This case provides an important lesson about managing relationships with donors, fundraisers and charities, community expectations and the relevant laws, regulations and codes which must be considered when fundraising.

For more information about fundraising campaigns and third party fundraisers, you can read our previous article, ‘Has the Court gone too far? Lessons from Celeste Barber’s Bushfire fundraising campaign’.

Understandably in times of heightened stress, the public will have increased expectations on the rate and amount of support provided to victims of natural disaster. Charities can alleviate these concerns through open and regular communication on the important work undertaken in response, relief and recovery efforts.