Appeals conducted jointly with traders

What is a trader?

Nowadays, many charitable organisations engage the services of a trader to conduct appeals on their behalf.

Traders, more commonly known as ‘commercial fundraisers’, are persons who conduct fundraising appeals in connection with the supply of goods or services in the course of their trade or business partly for their own benefit.

Traders are not required to hold an authority to fundraise. Instead, any appeal they conduct must be done jointly with a person or organisation that holds an authority.

The responsibilities outlined in this section do not apply to fundraisers exempted from the requirement to hold an authority to fundraise.

Do I need to enter into an agreement with a trader?

A written agreement must be executed wherever an authority holder conducts an appeal with a trader. 

For example, if a restaurant chain advertises that a specific monetary value of each meal or particular product sold would go to a charitable organisation or purpose (i.e., an authority holder), then a written agreement must be executed between the restaurant and the authority holder.

Particulars of contract

To ensure that the responsibilities between parties are made clear, especially around how collected funds will be used, distributed and monitored to promote transparency, written agreements between authority holder and trader must include:

• the rights, duties and responsibilities of each party 
• how variation to the agreement may be made 
• how the agreement may be terminated and for what reasons 
• notice that alternative dispute resolution will apply to disputes and how alternative dispute resolution mechanisms will apply 
• types of insurance policies, the level of insurance, and the terms and conditions of the relevant insurance policy 
• an undertaking by the trader that they will comply with all relevant state and federal laws 
• the trader’s obligation to comply with reporting requirements and also to help facilitate the authority holder to comply with reporting requirements 
• appropriate internal controls/safeguards for accountability measures (e.g. traceable donations) 
• trader’s responsibility to maintain records, types of records and manner of keeping records 
• amount of return to be obtained/basis of method of amount calculated (can’t be a percentage) and manner of payment 
• details of any commission, wage or fee payable to the trader and any other persons
• type and limits on amount of expenses that may be borne by the trader and authority holder.

What must be disclosed in advertising?

Appeals conducted jointly with traders often include advertisements, for example brochures or leaflets, signage, online or television marketing. All advertisements, notices and/or information concerning the joint appeal must;

• Have been approved by the authority holder prior to distribution,
• Identify the trader and the holder of the authority, by outlining the full name, place of business and contact details,
• Ensure the name of the trader is displayed in the same font size as the name of the authorised fundraiser,
• Give details of the benefit to be received by authorised fundraiser and the trader including how funds or proportion of profits raised will be distributed. This must be expressed as a percentage of gross proceeds or a dollar amount, and
• Include details of the date the appeal commences and ends.

Participants in appeals with traders should also note the disclosure requirements under Disclosure by Participants and Questions to Participants.

Appeals involving donated goods

Where the appeal conducted jointly with a trader involves collection of donated goods, details of the benefit to be received by the authority holder (charity) must be expressed in the advertisement, notice or information as:

• A percentage of the average gross income derived or expected to be received by the authorised fundraiser, or
• If the collection device is a bin, an average dollar amount derived or expected to be derived from each bin for each month.

Example 1: The donated goods and materials become the property of and sold by [Trader]. The proceeds of sale will be paid to [Trader]. From these proceeds [Trader] will pay [Authority holder] 60 per cent of the average gross income.

Example 2: The donated goods and materials become the property of and sold by [Trader]. The proceeds of sale will be paid to [Trader]. It is expected [trader] will pay [Authority holder] $... per bin each month.

The advertisement, notice or information must be updated if at any time there is a significant change in details. The details must be reviewed at least every 12 months.

What requirements apply to an appeal with a trader for collection of goods?

Authority holders may engage traders in appeals that involve the collection of donated goods, for example, where traders own, distribute, collect or sort through items for a fee or benefit.

Appeals often involve the collection of donated goods by way of collection bins or bags.

The trader must maintain a register of bins and/or bags distributed or used in each appeal including:

• Date of distribution,
• Location, and
• Number of bags/bins distributed.

Monthly reports  

At least once a month for the duration of the appeal, the trader must provide a report to the authority holder containing information recorded on bins/bags including:

• Date of report,
• Date of distribution,
• Locality,
• Number of bins/bags distributed,
• Aggregate gross weight of sorted clothing obtained from the appeal (Clothing appeals only), and
• Certification by the trader that the report is accurate.

Bins

Where items are donated through collection bins, each bin distributed by the trader must:

• be consecutively numbered with the number displayed prominently, and
• display the total number of bins currently used in connection with the appeal (this number should be reviewed and updated at least every 12 months from start of the appeal or where there is a significant change in number of bins used).

Donated clothing

Where a fundraising appeal for collection of donated articles of clothing is to be conducted jointly by an authority holder with a trader, the authority holder must ensure:

• if the collection device is a bin, each bin must have ‘COMMERCIALLY OPERATED’ displayed on its chute, or
• if the collection device is a collection bag, each bag, or any advertisement, notice or information distributed with each bag, must have printed ‘COMMERCIALLY OPERATED’ in a clearly visible position..

Any advertisement, notice or information for such a fundraising appeal must also bear the words “COMMERCIALLY OPERATED”.

The trader must additionally maintain a separate record for each appeal that includes date and aggregate gross weight of unsorted clothing obtained from the appeal.

What requirements apply to an appeal with a trader for the sale of goods and services?

Traders must maintain a record of goods and services supplied in an appeal.
If the appeal includes goods for sale, the trader must maintain a record including:

• Date, number and cost of units purchased or manufactured by the trader
• Date and number of units sold, and
• Gross income obtained from sales.

How much can I spend on a trader?

The return from any appeal must be fair and reasonable and the authority holder must take all reasonable steps to make sure this occurs. 

Donation only appeals

The authority holder must receive at least 50 per cent of the gross incomes raised.

An authorised fundraiser must take all reasonable steps to ensure that the expenses payable in respect of the appeal for donations only do not exceed 50 per cent of the gross income. Expenses include amounts incurred by the authority holder and by the trader.

Goods or services appeals

An authority holder must take all reasonable steps to ensure that the expenses payable do not exceed a fair and reasonable proportion of the gross income raised.

Do traders need to maintain records?

Traders must maintain records of fundraising appeal as required under the Act. For example, records of:

• Money collected and deposited as part of appeal,
• Participants and employees, including child participants,
• Collection devices used,
• Goods collected,
• Goods and services supplied, and
• Receipts.

See also Record Keeping for records to be maintained as part of a charitable fundraising appeal.

Location of records

Any records and documents to be maintained by the trader, by agreement with the authority holder or as required by the Act, must be kept at the registered office of the authority holder.

Exemptions

Records may be removed from the registered office of the authority holder:

• for auditing purposes, or
• by law, regulations or authority conditions, or
• to be taken to a place where NSW Fair Trading has been notified in writing the change in location. For example, for them to be kept at the office of the trader.

Where an exemption applies authorising records to be kept at the office of the trader, those records must be made available to the authority holder upon request.

What are the banking requirements for traders?

A trader can maintain a bank account where the money from fundraising appeals is deposited.

Traders must maintain separate accounts for each authority holder

A separate account must be maintained for each authority holder. The account can only consist of money raised in the appeals conducted jointly with the authority holder which the parties agree to be held in the trader’s account.

Maintenance of banking records

The income from the fundraiser/s must be clearly identifiable in the banking and accounting records of the trader. The records must be provided to the authority holder in accordance with their written agreement.

What receipts can traders issue?

A trader may only use receipts or tickets issued by the authority holder as part of an appeal. Both the authority holder and the trader must maintain records of the receipts that have been issued.

Do I notify Fair Trading when I engage a trader?

Authority holders must notify NSW Fair Trading within 28 days when a new trader is engaged or the details of an existing trader change.

Particulars that must be updated include: Full name, business, postal and email and website addresses, and contact numbers.

Other information that must be updated include: Full name of each director (if an organisation) and owner of the trade or business conducted by the trader, the period for which the trader will be engaged, as in the written contract, and the type of appeals to be conducted.