Before entering into an agreement with a fundraising agency
There are important steps that a charity can take to ensure it has been diligent in assessing a fundraising agency it is considering working with. While these steps are not representative of all that a charity can do, they provide a broad outline which can guide a charity’s particular approach.
The key steps to due diligence before entering into an agreement:
- Assess the risks of working with a fundraising agency
- Know the operations, processes and culture of the fundraising agency
- Consider the supply chains involved
- Be prepared to seek expert advice
Assess the risks
Charities should review the risks involved in working with fundraising agencies; both legal and financial risks, and risks to their reputation. They should examine the operations of the agency that they are considering and develop a risk assessment before entering into an agreement. It is important to remember that different agencies will present different risks; for example, an agency with a large number of employees or subcontractors may present a high risk associated workplace laws, and an agency that does not handle any sensitive data may have a low risk associated with privacy laws. A charity’s assessments should be included in the charity’s risk register.
Know the fundraising agency
Charities should have a detailed understanding of the operations of the fundraising agency they are considering, including knowledge of how they comply with relevant laws. Charities should ask questions of the fundraising agency to develop this understanding. These questions should be detailed enough to provide a clear understanding of, and highlight any gaps in, the agency’s processes. It is not enough to ask “Do you have a grievance process?”; instead, the request should be “Please supply your grievance process”. A fundraising agency should be prepared to answer questions about their operations and legal compliance.
Charities should also consider whether the agency’s values are consistent with the values of the charity. If a charity is prepared to work with a fundraising agency, the charity must be prepared to justify the practices of the agency to its donors and to the public.
Consider the supply chains
To help them deliver their services, fundraising agencies may subcontract activities and other elements of an agreement to other organisations or individuals. Some of these supply chains can be lengthy. Charities need to be aware of the full extent of such arrangements and understand how each link in the supply chain conducts itself and meets its obligations. Ultimately, the charity may be held accountable for the actions of all organisations and individuals involved in its fundraising – even if they are hired down the supply chain.
Seek expert advice
Charities should consider their own capacity to properly conduct an assessment of a fundraising agency and be prepared to seek expert advice if required. Particular in areas of high risk, charities may benefit from seeking independent advice from a professional, such as a lawyer, to assist them. This is part of responsible charity governance.
Charities should also familiarise themselves with the fundraising bodies in Australia and their free resources. These organisations provide information about fundraising practices in Australia, codes that ensure good practices, and legislation that governs fundraising:
Managing an existing agreement with a fundraising agency
There are important steps that a charity can take to ensure it is confidently managing its agreement with a fundraising agency. Again, while these steps are not representative of all that a charity can do, they provide a broad outline which can guide a charity’s particular approach.
The key steps to managing an existing agreement:
- Be familiar with relevant legislation and regulatory bodies
- Keep detailed records
- Conduct periodic reviews
- Establish a process to address non-compliance
Be familiar with legislation and regulatory bodies
As mentioned, the ACNC is not directly responsible for fundraising. The ACNC regulates registered charities and is responsible for oversight of charity governance, of which fundraising is an important element. However, legislation relevant for fundraising is administered by different regulatory authorities at different levels of government.
Charities should be aware of the government authorities responsible for regulating the various aspects of fundraising. This can help to inform charities about the obligations of fundraising agencies and those within a fundraising supply chain.
Keep detailed records
Keeping records is an obligation or registered charities under the ACNC Act. Charities should have detailed records of any agreements it has with fundraising agencies. These records should be clear, readily accessible, and cover both the financial and operations aspects of any agreement. In addition to providing a layer of accountability, keeping records will help charities meet the ACNC Governance Standards.
Conduct periodic reviews
An ongoing relationship with an agency should be subject to regular reviews. Charities should examine the performance of the fundraising agency to determine if it is still compliant with its legal obligations and is meeting the charity’s expectations. As compliance requirements and agency business practices change over time, a strong process for thorough reviews is critical.
A charity’s contract or service agreement with the fundraising agency should explicitly outline all compliance requirements, but a charity should not rely solely on this. Charities should request evidence of its performance or compliance from the agency and any subcontractor in the supply chain. It is not sufficient to accept unsubstantiated assurances; a charity should obtain satisfactory evidence of compliance.
Establish a process for non-compliance
Charities should have a process to address a fundraising agency’s failure to comply with its stated requirements – both legal obligations and performance expectations. This should involve a comprehensive review of an agency’s performance and the steps to practically address the problems. This may include the charity reconsidering its engagement or terminating the agreement. In many cases, such a process may involve seeking the independent expertise and advice of a professional adviser.