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When you’re running a not-for-profit or a charity, one of your main tasks will be to raise money for your venture. Raising funds for your organisation can take various forms- you might make cold calls, go knocking door to door or set up a stall at your local shopping mall and chat with grocery-shoppers about your cause.
As well intentioned as your efforts might be, you simply can’t just get up and start doing those things. In order to raise money for your organisation, there are certain laws you need to follow. So, whether you’re thinking of starting a not-for-profit venture or are already running one, continue reading this article to know what laws you need to be keeping up with.
What Is Fundraising?
Fundraising is a way to get members of the public or certain organisations to donate to a particular cause. A few ways a not-for-profit or a charity might fundraise include:
- Advertising
- Games, such as raffles and bingo nights
- Crowdfunding
- Fundraising events
- Selling items door to door i.e chocolates with proceeds going to charity
All of these activities would generally be considered appropriate for fundraising, as long as they follow the proper rules and regulations. Although, raising money for a not-for-profit or a charity isn’t something that is regulated by the federal government. Instead, local council laws apply for fundraising related matters. Due to this, multiple different regulations can be relevant to anyone conducting a fundraiser.
What Do I Need To Do?
It’s imperative to know exactly what laws apply to your not-for-profit or charities fundraising goals, that way you can operate it legally.
First things first, you need to see whether you can actually be classed as a charitable fundraiser. The definition of a charitable fundraiser differs depending on where you’re based, so it’s important to check local regulations. Once you are sure you meet the requirements of a charitable fundraiser, you’ll need to follow the relevant regulations and complete any administrative tasks, such as gaining written consent.
To make things easier, we put together a table that breaks it down for you.
| Region | Law | When Does The Law Apply? | What Do You Have To Do? |
| New Zealand | Charities Act 2005 | The law applies when an organisation is registered as a charity under the Charities Act 2005. The organisation must be non-profit and have exclusively charitable purposes that benefit the community. | Register your organisation with the Charities Services. You must also comply with the reporting standards set by the External Reporting Board (XRB). |
Any Other Laws I Need To Be Aware Of?
It’s not just national laws that are going to apply for fundraising activities. Local council regulations are also going to play a large role in determining the legal legitimacy of your fundraisers. That’s why it’s important to be aware of things like zoning laws and what local council permits you might need to have.
Keep in mind, the laws we mentioned above simply cover two things: whether your fundraiser can be classed as a charitable fundraiser and the steps you need to take to legally operate it. When it comes to fundraising, a number of different legal factors are going to apply. For instance, regulations relating to safety, taxes and fair trading (to name a few).
There can be a lot of different things you need to look out for and it can get overwhelming! It’s always best to have a chat with an expert in Regulatory Compliance so they can give you the right advice and ensure you check every box necessary.
Am I A Charity Or A Not-For-Profit?
When you’re reading up on different rules for each region, it is important to be wary of definitions. For example, a charity and a not-for-profit are not used synonymously with one another. A not-for-profit cannot share any of its funds with the members however, charities operate a little differently (although they are subject to some strict regulations).
Different pieces of legislation may have varied definitions for things. It can help to look out for these differences as sometimes, simple misunderstandings can lead to big mistakes! If you’re having trouble getting a grasp of what you’re reading, our legal experts are happy to help.
Next Steps
If you are thinking of raising money for your not-for-profit or charity, then it’s important to be aware of all the rules and regulations so you can follow through on them. To summarise what we’ve discussed:
- Fundraising is essential for not-for-profits and charities, relying on public donations
- Fundraising methods include advertising, games (like raffles and bingo), crowdfunding, fundraising events, and door-to-door sales
- Fundraising is subject to local council laws, not federal government regulation
- To operate legally, you must know and follow the specific fundraising laws in your region to see if your classed as a charitable fundraiser
- In New Zealand, the Charities Act 2005 applies when an organisation is registered as a charity, requiring registration with the Charities Services and compliance with the reporting standards set by the External Reporting Board (XRB)
- Local council regulations, such as zoning laws and permits, are also crucial for fundraising legality
- It’s advisable to consult a Regulatory Compliance expert for guidance and ensuring compliance
- Charity and not-for-profit are distinct entities with different rules
- Differences in definitions across legislation can lead to misunderstandings, so it’s important to seek expert advice when needed
- To fundraise legally, understand and follow local regulations relevant to your organisation
If you would like a consultation on fundraising laws, you can reach us at 0800 002 184 or [email protected] for a free, no-obligations chat.
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