Businesses that collect for charities face more scrutiny

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Businesses that profit from work collecting funds on behalf of registered charities will have to disclose how much of the raised money is kept, under a bill that passed in Parliament today.

The bill passed in Parliament with unanimous support.

The Fair Trading (Soliciting on Behalf of Charities) Amendment Bill was introduced by Minister for the Environment Amy Adams in 2009, but was taken over by National list MP for Dunedin Michael Woodhouse after the election.

The bill will amend the Fair Trading Act 1986 and will impose a requirement on professional fundraisers acting on behalf of charities who retain more than half the money collected in fees to disclose the percentage retained.

Submissions were heard by the Commerce Commission, and the Minister of Consumer Affairs overhauled the bill's wording.

Greenpeace New Zealand made a submission saying the bill did not achieve its own goal.

Fundraising Director Amanda Briggs-Hastie said calculating a percentage of the donation which is spent on a third party is usually not something that a charity is able to do.

The Public Fundraising Regulatory Association said in its submission the bill would have minimal impact because the majority of third party fundraising is not conducted on a "percentage of donation received basis, and therefore is outside the scope of the bill.''

The Charities Commission reported it regularly received complaints relating to third-party collections and noted a rising awareness in the media of the use of third-party contractors.

There are more than 25,000 registered charities in New Zealand who have a total income of $10.4 billion, $2.5b of which comes from donations.

When Ms Adams introduced the bill in the house in 2009 she said New Zealanders were concerned about how much of the money they donated went to where it was intended.

"Recent media reports have highlighted that it is not uncommon for professional telemarketing and street-collecting firms, which are used by many charities, to retain 75 per cent of what they collect, and in some cases up to 90 per cent.''

Before the bill was passed all costs associated with fundraising carried out by a charity directly had to be disclosed, but if a third-party business was employed to do that work, no record of the amount retained by that company came under public scrutiny.

Ms Adams did not believe the disclosure requirement would mean less money would be raised for charities in New Zealand.

National MP Michael Woodhouse said New Zealanders had a right to be given accurate information about the proportion of funds retained by groups.

Labour MP David Cunliffe said the bill was a good and addressed the concerns of the public but said it should have been a Government bill.

He said in 2002, Consumer Magazine conducted an inquiry into the Children at Risk Education Foundation Care and found that 75 cents in every dollar was going to its telemarketing company.

"When the average New Zealander on the street hears numbers like that they just have to ask the question how can that be right,'' he said.