1. Executive summary
Charities rely heavily on donations from organisations and the public to provide them with the necessary funds to undertake their benevolent work. While the Charitable Fundraising Act 1991 (the Act) has specific objectives for the legislation, the Act’s overarching purpose is to provide a regulatory framework that instils confidence in the public to donate to charities.
On 15 May 2017, the NSW Government announced an inquiry led by the Honourable P.A. Bergin SC into the fundraising activities of the Returned and Services League NSW (RSL NSW) and related entities (the Bergin Inquiry). The announcement followed allegations of financial misconduct and questions about the expenditure of funds raised and held by RSL NSW, RSL LifeCare, and DefenceCare. The inquiry was initially commenced under section 26 of the Act.
The allegations of financial misconduct into such a well-known charitable fundraising organisation attracted significant public interest and threatened reputational damage to the charitable fundraising sector. The Government identified the need to conduct a public inquiry into the above matters with heightened inquiry powers to help maintain public confidence in charities, then and in the future.
The Charitable Fundraising Amendment (Inquiries) Act 2017 (the Act) was passed by the NSW Parliament on 10 August 2017. This introduced Part 3A into the Act to allow for the holding of a public inquiry and provide additional powers and appropriate immunities and protections to ensure that the Bergin Inquiry, and any future inquiries, could be conducted with the necessary rigour.
Section 41U of Part 3A of the Act requires the Minister for Fair Trading (the Minister) to review the operation of the Part during the 3 years after its commencement and to publish a report on the review.
The Department of Customer Service (the Department) completed the review on behalf of the Minister. To assist in conducting the review, the Department released a discussion paper in July 2021 and submissions were invited from key stakeholders.
The review found that the terms of Part 3A of the Act remain valid and its terms are appropriate for securing the objectives of the Act.
2. Recommendations
As the objectives of Part 3A of the Act remain valid and its terms remain appropriate for securing those objectives, Part 3A of the Act should remain in its current form.
3. Background
The confidence of the public to continue to donate to charities is a critical consideration for the regulatory framework established by the Act. Although there were existing investigation powers in the Act, the circumstances surrounding the Bergin Inquiry strongly suggested that a publicly conducted inquiry with heightened powers would be important to assist in maintaining that confidence.
The Charitable Fundraising Amendment (Inquiries) Act 2017 was passed by the NSW Parliament on 10 August 2017. Its objective was to amend the Act to enhance the existing powers to inquire into fundraisers. The former Minister, the Hon Matthew Kean MP, stated when introducing the amending Bill that:
It is vital that the confidence of the public to donate to worthy charities is not eroded as a result of the malfeasance of a few in other charities. We need to strengthen the Act to give people confidence that the money they are donating is going to its intended purpose.
The bill proposes to improve the inquiry powers of the Act by providing an alternative for an inquiry to be held as a public inquiry, providing a robust framework to inquire into cases of importance and of public interest. This is a very important point. It is envisaged that these new powers and protections will be used only for the most serious of cases. The bill also contains a framework of crucial safeguards so that the enhanced powers are used appropriately. The ability to hold a public inquiry will be only where, in the opinion of the Minister of the day, it is in the public interest to do so, and will require the approval of the Premier.
The powers contained in this bill establish a futureproof framework for the holding of public inquiries to ensure that non-compliance, malfeasance and wrongdoing are revealed, deterred and discontinued at the earliest opportunity. This in turn will help ensure that the public can be confident in donating to the many worthy New South Wales charities.
Following the passage of the amending Act, the Bergin Inquiry continued as a public inquiry and the authorised inspector was appointed as the public inquirer under the provisions of the newly inserted Part 3A of the Act.
Between 15 May 2017 and 10 November 2017, 105 notices or summonses were served by the Bergin Inquiry on various entities and persons. There were 4 private hearing days and 32 public hearing days with a total of 35 witnesses who gave evidence in the public hearings of the Inquiry. A report detailing the findings of the Bergin Inquiry was published in January 2018 (the Bergin Report).
The Bergin Report outlined 29 recommendations, 23 of which directly related to reform in the charitable fundraising regime. These recommendations sought to improve governance and the regulatory framework without increasing red-tape. The Bergin Report also aimed to eradicate measures that would impede future attempts at interjurisdictional harmonisation.
The Charitable Fundraising Amendment Act 2018 (the Act) passed in October 2018 to facilitate the implementation of the NSW Government’s response to the Bergin Inquiry recommendations.
The amendments centred on improving oversight of charities, facilitating legislative harmonisation, streamlining administrative processes and enhancing accountability and transparency measures, thereby increasing public confidence in the charitable fundraising sector.
The amendments also strengthened compliance oversight through new penalties and powers for NSW Fair Trading, so it can more effectively investigate allegations of malfeasance.
4. Review process and findings
4.1 Consultation process
On 13 July 2021, a discussion paper setting out the key elements of Part 3A of the Act and including a number of questions to guide responses was released. Submissions were invited from key stakeholders at the beginning of the consultation period.
The consultation period closed on 13 August 2021 and 2 submissions were received.
4.2 Objectives of Part 3A of the Act
The objective of Part 3A of the Act is to allow for the holding of a public inquiry and provide additional powers and appropriate immunities and protections to ensure that the Bergin Inquiry, and any future inquiries, could be conducted with the necessary rigour.
Submissions to the review believed the objectives of Part 3A of the Act were fit for purpose. Concerns were noted over the potential impact of Part 3A on national harmonisation of charitable fundraising regulation. However, as it does not impose any further regulatory requirements on fundraisers, this issue is avoided.
4.3 Establishment of public inquiries
Division 2 of Part 3A provides for the appointment of the public inquirer, their qualification and liability protections. This division also details the requirements to provide reports to the Minister and to issue guidelines relating to the conduct of the public inquiry.
Submissions to the Review were supportive of the appointment of a current or retired judge as the public inquirer. Stakeholders believed this ensures that the inquiry process is rigorous, evidence-driven and that any outcomes are regarded as legitimate.
Submissions also agreed that discretion about publishing inquiry reports be the responsibility of either the Minister or an independent officeholder as an appropriate way to promote transparency without impeding the lawful operations of charities.
4.4 Hearings
Division 3 of Part 3A confers the public inquirer with the ability to control how the public inquiry examinations and hearings will be conducted. The intent of this division is to allow the public inquirer to create the most appropriate environment for the giving of evidence in a particular inquiry.
Submissions were in agreement that the inquirer should consider the impact on these entities when conducting an inquiry and that procedural fairness is both applied and seen to be applied. This is to make sure that charities under investigation are treated fairly and given a reasonable opportunity to explain their conduct.
4.5 Powers of the public inquirer
Division 4 of Part 3A outlines the broad powers that a public inquirer has to conduct a public inquiry and obtain the most accurate and reliable evidence possible.
The division provides the public inquirer with all the powers, rights and privileges of a Judge of a Supreme Court in relation to compelling a witness to attend, answer questions and produce documents.
The public inquirer has the ability to impose appropriate punishment on a person found in contempt or who disobeys any direction, order or summons issued.
Submissions to the Review did not highlight any issues with the powers provided to the public inquirer under Division 4 of Part 3A of the Act.
4.6 Miscellaneous
Division 5 of Part 3A contains a number of miscellaneous powers to support the operation of a public inquiry. It provides that a public inquirer may issue a warrant for the apprehension of a witness who fails to attend in answer to summons. It also makes it an offence to fail to comply with a direction to attend at a hearing or a direction about preventing or restricting the publication of evidence.
Submissions to the review deemed these powers to be reasonably appropriate and that it aids the effectiveness of the public inquiry in obtaining evidence.
4.7 Conclusion
The review found that the terms of Part 3A of the Act remain valid and remain appropriate for securing the objectives of the Act.
Importantly, the review found that retention of Part 3A does not obstruct ongoing work towards national harmonisation. The public inquiry powers do not impose any further regulatory and reporting requirements on fundraisers and can exist alongside nationally harmonised regulation.
The Department of Customer Service will continue engaging with other jurisdictions and industry to identify opportunities to progress national harmonisation of regulation of the charitable fundraising sector.
5. Appendix A - Key stakeholders
- Fundraising Institute Australia
- Public Fundraising Regulatory Association
- Australian Charities and Not-for-Profits Commission
- Justice Connect
- Australian Red Cross Society
- The Salvation Army Australia
- St Vincent de Paul Society NSW
- NSW Premier and Cabinet
- NSW Treasury
- NSW Department of Communities and Justice
Contact us
NSW Fair Trading
Address: PO Box 972, Parramatta NSW 2124
Phone: 13 32 20 | TTY 1300 723 404
Department of Customer Service
For more information contact: Policy@customerservice.nsw.gov.au