Fundraising is a major tool that supports charities and not-for-profits (NFPs) to raise money and fund a variety of services and community programs. But the rules around it can be a little tricky. After all, different jurisdictions have different fundraising laws, and ‘tax-deductible gifts’ are a separate concept tied to deductible gift recipient (DGR) endorsement.
So, do you want to know exactly how to raise funds, accept donations, run fundraising events and more?
Know the rules before you raise funds
In Australia, fundraising (everything from raffles to crowdfunding to corporate partnerships) is regulated by states and territories, not by the Australian Charities & Not-for-profits Commission (ACNC). Your board or committee (aka ‘Responsible People’) is accountable for how fundraising is conducted and reported, even when you work with external agencies. And if you do online fundraising, you might be on the hook for compliance across multiple jurisdictions. We recommend you start by checking the ACNC Fundraising Hub and your state regulator.
All Commonwealth, state and territory governments have agreed to follow a set of National Fundraising Principles, which are rolling out jurisdiction by jurisdiction. Because some states have already solidified the principles into law, you’ll need to double-check the current requirements around where you operate and where donors are located.
Receiving tax-deductible gifts
A tax-deductible gift is one that a donor can claim as a tax deduction – but only when it’s made to an endorsed deductible gift recipient. The ACNC registers entities as charities, while the Australian Taxation Office (ATO) is responsible for DGR endorsement. Not all charities are eligible for DGR status, and endorsement can apply to your organisation as a whole or only to a certain fund or institution (e.g. a public fund for a particular purpose).
If you’re chasing DGR endorsement, you’ll have to first nominate the DGR category that fits your purposes and structure. If you end up being endorsed, make sure you create receipts so donors can claim at tax time, and see that any surplus assets rules in your governing document meet DGR requirements.
Gifts and fundraising for non-DGRs
You can still raise funds and accept donations without DGR status; your donors just won’t be able to claim tax deductions for those contributions. Many non-DGR organisations rely on fundraising activities such as raffles, membership fees, events, sponsorships, grants, and fee-for-service work. Regardless of DGR status, your ‘Responsible People’ have to make sure your fundraising is always lawful and in the organisation’s best interests, and that any money raised is used to further your charitable or community purpose.
Be transparent and don’t include any misleading statements in your mission. In other words, don’t promise that “100% of all contributions” are used to fund your programs if there are actually some costs that are deducted.
Tax deductible donations
If you’re DGR endorsed, donors can claim tax deductions for gifts of money or property that meet the ATO’s current rules. If your endorsement is limited to a specific fund, only donations to that fund will be deductible. Make clear on your donation page and receipts whether a donation is tax-deductible and, if your organisation has multiple funds, which entity or fund the donation feeds into.
Top tip: Direct donors to the ACNC Charity Register so they can verify your charity registration and DGR status. It’ll make you look more trustworthy to the public and potential new donors.
Fundraising events
Ticketed fundraising events – from a gala dinner to a trivia night or walk-a-thon – can be great ways to raise money and involve volunteers. But be aware that they might also trigger licensing under state or territory fundraising laws (and separate rules for raffles and lotteries), so check your local regulator before you run an event or launch an online campaign.
From a tax perspective, the ATO has concessions for NFPs on some fundraising events (e.g. when supplies can be input-taxed) and notes when raffles/bingo can be GST-free.
Tax and fundraising
- Income tax: Registered charities are usually exempt from income tax. Some not-for-profit entities that aren’t charities can self-assess or apply for exemption. If not exempt, fundraised amounts will likely still be non-assessable in certain circumstances, but double-check with the ATO or your tax agent.
- GST: Different GST treatments can apply to fundraising events, raffles, and the sale of goods and services. Make sure you understand which supplies are taxable, GST-free, or input taxed so you can price tickets and claim the right amount of credits.
- Record-keeping: Keep good financial reports about all funds raised, money spent, contributions, donations and more, particularly when grants or sponsorships are involved.
A few compliance tips
- Make your policies transparent: Document your fundraising and gift acceptance policies (including how you’ll handle bequests and manage third-party fundraisers, etc.). Doing this will help staff and volunteers stay consistent.
- Check your status: Check your ACNC registration and, if relevant, DGR endorsement. Then explain on your website whether donations are tax-deductible. Keep your register entry current as well.
- Plan your budget: Map out all upfront costs (venue, catering, insurance, licences) and set realistic targets for funding so that you understand the full costs and any potential risks for every event. Good reporting will show the difference your fundraiser made.
Fundraising ideas to try out
Not sure where to get started? Community walks, online appeals, school trivia nights, raffles, workplace giving, bake stalls, quizzes, matched donations, and peer-to-peer campaigns are all hugely popular among NFPs because they can raise funds while supporting your organisation’s ambitions.
When you plan things early, fundraising can be a very low-risk and highly impactful way to support your overarching community goals. Just make sure you always follow the rules and show how every dollar raised furthers your mission.
