Be careful with crowdfunding says new ACNC guide

A new online guide by the Australian charity regulator, ACNC, has warned charities to do their ‘homework’ when generating funds from online crowdfunding.

Crowd SizeThe guide, called Crowdfunding and Charites, seeks to help charities and nonprofits navigate the difficulties and traps that can come from crowdfunding in Australia. The ACNC guide said, Although crowdfunding has the potential to provide great benefits for charities and donors, there are some aspects of the practice that people need to consider before embarking on a campaign or donating to a cause.

The guide stresses the importance of research before starting a crowdfunding campaign to ensure the organisation knows the different requirements set by websites, as well as the different regulations in place in the states around the country. The report highlights that each individual state and territory (except the Northern Territory) has its own set of laws and regulations that charities need to know about and follow. This can be especially tricky when crowdfunding across the entire country where an organisation may need to get permission from all states involved.

The report also urges charities to consider how their public image will be portrayed by certain crowdfunding websites and what affect this could have. Donors are likely to associate a charity with the crowdfunding website it uses, the charity’s board needs to be comfortable that the website reflects the values of the charity itself, the report states.

As stated in the report it is important that organisations take full responsibility in ensuring everything being done meets government requirements and shouldn’t presume the crowdfunding website will handle it.

Charity board members should be satisfied that any crowdfunding website they use is reputable, secure and complies with relevant Australian law. They should also be satisfied that any crowdfunding website they use meets their expectations, and the community’s expectations, of fair practice. It is important that using a crowdfunding website does not jeopardise the charity’s reputation and standing in the community.

ACNC Commissioner, Susan Pascoe, said, “Emerging ways to fundraise and donate, such as crowdfunding, bring with them great potential benefits for charities, fundraisers and donors. But with any new or emerging fundraising method, there are also aspects of its use that people need to consider before they embark on a fundraising campaign or donate to a cause.”

To find out more the full report can be found here.

Story: Brad Mayall