You are on page 1of 13

Mr Ken McLeod Our Ref: CI/2010/005476

turlinja@internode.on.net

Dear Mr McLeod

Compliance Officers from the Office of Liquor, Gaming and Racing, a division of
Communities NSW have finalised an inquiry into the Australian Vaccination Network Inc
(AVN), an organisation which is authorised to undertake fundraising appeals under the
provisions of the Charitable Fundraising Act 1991 (the Act). The inquiry arose due to
complaints from you and two other members of the public.

I can advise that the inquiry did not detect any evidence of offences under the Crimes Act
1900. The inquiry found that AVN is an organisation that is largely supported by members.
Section 5 (3) of the Act specifically states that certain forms of fundraising do not constitute
fundraising appeals for the purposes of the Act and therefore are outside of the Act’s
jurisdiction. Of particular relevance to AVN are donations from members and membership
renewals, neither of which constitutes fundraising appeals for the purpose of the Act. As the
AVN accounting system did not distinguish between fundraising and non-fundraising income
for the purpose of the Act at the time of the inquiry, it was not possible to determine an exact
percentage split of all AVN income. However a best estimate is that approximately 80% of
AVN income does not come within the jurisdiction of the Act.

Evidence of a number of breaches by AVN of the Act, the Charitable Fundraising Regulation
2008 and the conditions attached to authority to fundraise number 11694 were detected
during the course of the inquiry. Further detail of individual breaches is provided in the
attached Schedules of Breaches.

You raised a number of concerns over some months. The concerns you raised are
addressed in either the Schedule of Breaches or the discussion of specific purpose appeals
later in this letter. I reaffirm the Agency’s position that it regards AVN as pursuing a charitable
purpose as set out in the letter to you dated 15 October 2009 and I enclose a copy of that
letter for your information.

In particular, I note that AVN conducted fundraising appeals for a charitable purpose during
the period 5 July 2007 to 1 June 2009 without holding an authority to fundraise. I also note a
possible perception by members of the public who access the Government Licensing website
at licence.nsw.gov.au that the authority to fundraise granted to AVN on 2 June 2009 was
backdated to 5 July 2007. This is not the case. However it is understandable why this
perception exists as the entry on the website states “Start date: 05/07/2002, Expiry date:
01/06/2011”. This clearly implies that AVN held an authority to fundraise continuously from 5
July 2002. This is not the case and accordingly, this entry is unintentionally misleading.
This appears to be a system problem which has been referred to the appropriate IT branch
for investigation and identification of possible solutions.

During the course of the inquiry evidence of possible breaches of the Charitable Trusts Act
1993 was detected in relation to the following specific purpose appeals conducted by AVN:

1. Fighting Fund – to support a homeless family, allegedly seeking to avoid a court order
to immunise a child with legal and living expenses. The appeal ran for a short time in
2008 and raised $11,810. None of the funds were spent on this purpose.
2. Advertising Appeal – initially this was an appeal for the specific purpose of raising
funds for an advertisement in the Australian commencing in March 2009 and
concluding July 2009. The specific purpose was changed during the course of the
appeal to fund advertisements in Child magazine. This appeal raised $11,910. None
of the funds were applied to the specific purposes. It is noted that AVN did spend
some $15,000 during the period December 2009 to July 2010 on various forms of
advertising.
3. Bounty Bag Program and Vaccination Testing – for a number of years AVN has
solicited for donations generally in a manner where, despite it not being AVN’s
intention, one specific purpose was created in that donations could only be spent on
one or more of four purposes, including funding the provision of AVN material in the
Bounty Bag program and testing of vaccines. No funds raised have been spent on
these two purposes.

There is evidence that funds donated for the above specific purposes have been applied to
other purposes including the running costs of AVN. Accordingly these matters have been
referred to the Department of Justice and Attorney General, the Department that administers
and regulates the Charitable Trusts Act 1993.

As you are already aware the Minister revoked AVN’s authority to fundraise on 14 October
2010 under the following grounds as set out in section 31 (1) of the Act and for the following
reasons:

(a) that any fundraising appeal conducted by the holder of the authority has not been
conducted in good faith for charitable purposes

The Organisation has failed to publish a disclaimer on its website as recommended


by the Health Care Complaints Commission (HCCC). This has resulted in an
unacceptable risk of potential donors to the Organisation being misled when making a
decision whether or not to make a donation, which has led to appeals not being
conducted in good faith.

(c) that any fundraising appeal conducted by virtue of the authority has
been improperly administered

The Organisation’s website is misleading in that it may lead people making donations
to believe that they are donating to a cause which promotes vaccination whereas the
Organisation adopts an anti-vaccination position. When requested by the HCCC to
publish a disclaimer on its website the Organisation failed to do so.

(f) in the public interest, the authority should be revoked

The failure of the Organisation to comply with the HCCC recommendation resulted in
the Commission publishing a Public Warning on 26 July 2010 advising that this failure
“poses a risk to public health and safety”. In this circumstance it is in the public
interest to not permit the Organisation to conduct fundraising appeals under the Act.

The revocation will take effect on Wednesday 20 October 2010.

Finally, I advise that the revocation of the authority to fundraise does not affect AVN’s ability
to accept donations from members and fees for renewals of membership.

If you require further information please contact Simon Hughes on 02 9995 0630 or at
Simon.Hughes@communities.nsw.gov.au .

Yours sincerely

Daniel Zuccarini
A/Assistant Director Charities
18 October 2010
Schedule of Breaches – Conditions attached to an authority granted under Charitable Fundraising Act 1991
Australian Vaccination Network Inc – CI/2009/005476

Condition Summary of requirement Breach particulars


CONDITIONS APPLYING TO AUTHORITY TO FUNDRAISE CFN 11694 IN FORCE FROM 2/6/2009 UNTIL 1/6/2011
1 Proper and effective controls must be exercised by an authorised Proper and effective controls were not exercised over the
fundraiser over the conduct of all fundraising appeals, including conduct of all fundraising appeals, including accountability for
accountability for the gross income and all articles obtained from any gross income and expenditure incurred, including but not
appeal and expenditure incurred. limited to as examples:

• Expenses not appropriately authorised by governing


body
• Failure to bank proceeds of appeal without deduction
• Petty cash system not conducted appropriately

3(1) An authorised fundraiser must, in relation to each fundraising appeal it AVN failed to maintain the following records:
conducts, maintain such books of account and records as are necessary to • a register of assets
correctly record and explain its transactions, financial position and financial • a register of receipt books
performance, including the following documents:
(a) a cash book for each account (including any passbook account)
held with a bank, building society or credit union, or with any other
institution, or institution of a class, prescribed under section 20 (6) of the
Act, into which the gross income obtained from any fundraising appeal is
deposited or invested,
(b) a register of assets,
(c) a register recording details of receipt books or computerised receipt
stationery,
(d) a register recording details of tickets or computerised ticket
stationery,
(e) a petty cash book (if petty cash is used).
6(1) The annual financial accounts (also known as financial reports) of an The financial accounts of the organisation for the financial
authorised fundraiser that is an organisation must contain: year ending 31 December 2009 did not include:
(a) an income statement that summarised the income
(a) an income statement (also known as a statement of financial
and expenditure of each appeal
performance, a statement of income and expenditure or a profit and loss
(b) a balance sheet summarising all assets and
statement) that summarises the income and expenditure of each
liabilities resulting from the conduct of fundraising
fundraising appeal conducted during the financial year, and
appeals at the end of the year.
(b) a balance sheet (also known as a statement of financial position)
that summarises all assets and liabilities resulting from the conduct of
fundraising appeals as at the end of the financial year.
6(3) The annual financial accounts of an authorised fundraiser that is an The financial accounts of the organisation for the financial
organisation are to include a declaration by the president or principal year ending 31 December 2009 did not include the required
officer or some other responsible member of the governing body of the statement.
organisation stating whether, in his or her opinion:
(a) the statement of financial performance gives a true and fair view of
all income and expenditure of the organisation with respect to fundraising
appeals, and
(b) the statement of financial position gives a true and fair view of the
state of affairs of the organisation with respect to fundraising appeals
conducted by the organisation, and
(c) the provisions of the Act, the regulations under the Act and the
conditions attached to the authority have been complied with by the
organisation, and
(d) the internal controls exercised by the organisation are appropriate
and effective in accounting for all income received and applied by the
organisation from any of its fundraising appeals.
6(5) The annual financial accounts of an authorised fundraiser that is an The financial accounts of the organisation for the financial
organisation, after being audited in accordance with the provisions of year ending 31 December 2009 were not submitted to an
section 24 of the Act or otherwise according to law, are to be submitted to AGM of AVN by 30 June 2010. These financial accounts were
an annual general meeting of the membership of the organisation within 6 not available until 31 May 2010.
months after the conclusion of the financial year.
13 If the authorised fundraiser is an organisation, all payments made in AVN’s governing body did not properly authorise expenditure
connection with: involved in the conduct of appeals and the disposition of funds
(a) any expenditure involved with the conduct of a fundraising appeal, resulting from appeals.
and
(b) any disposition of funds and profits resulting from a fundraising
appeal,
must be properly authorised by or on behalf of the organisation.
14 (2) A person conducting or participating in a fundraising appeal must use his AVN failed to respond to an email dated 10 November 2009
or her best endeavours, at all times, to answer honestly any question and addressed to Ms Dorey requesting information as to
directed to the person in relation to the purpose of the appeal or the details details of AVN appeals.
of the appeal, or to arrange to find answers to questions that he or she is
unable to answer. In particular, if it is requested, information is to be given
as to how the gross income and any articles obtained from the appeal will
be distributed and on the other matters referred to in sub-paragraphs (3)(a)
and (4).
18 If the authorised fundraiser is an organisation: The minutes of AVN meetings do not reflect all business
(a) it must be administered in relation to its fundraising activities by a conducted by the governing body in relation to its fundraising
governing body of not fewer than 3 persons, and activities.
(b) all business transacted by the governing body in relation to its
fundraising activities must be properly recorded in the organisation’s
minutes.
20 If the authorised fundraiser is an organisation, it must establish: AVN did not keep a pecuniary interest register or have in
(a) a register of pecuniary interests, and place a mechanism for dealing with conflicts of interest.
(b) a mechanism for dealing with any conflicts of interest that may Potential for conflict re advertising in the AVN magazine by
occur involving a member of the governing body or an office-holder or Fountain of Beauty and AVN remuneration to Ms Dorey
employee of the organisation. should have been noted in the register.
22 The authorised fundraiser must provide a mechanism that will properly and It is noted that during the investigation of the first August 2009
effectively deal with complaints made by members of the public and complaint into AVN, a formal finding was made of a breach of
grievances from employees in relation to its fundraising activities. Condition 22. Since then AVN has put in place a compliant
mechanism.
Schedule of Breaches – Charitable Fundraising Act 1991
Australian Vaccination Network Inc (AVN) – CI/2009/005476

Section Summary of requirement Breach particulars


9(1) A person who conducts a fundraising appeal is guilty of an offence unless AVN conducted fundraising appeals during the period 5 July
the person: 2007 to 1 June 2009 without holding an authority to fundraise.
Notably during this period AVN was advised twice in writing by
(a) is the holder of an authority authorising the person to conduct the appeal,
Communities NSW that fundraising without an authority to
or
fundraise was unlawful.
(b) is a member of an organisation, or an employee or agent of a person or
organisation, that holds such an authority and is authorised, by the person
or organisation that holds the authority, to conduct the appeal, or
(c) is authorised under section 9(3) to conduct the appeal without an
authority.
Maximum penalty $5,500.00 fine
9(2) A person who conducts a fundraising appeal in contravention of any AVN has breached various authority conditions whilst holder of
condition attached to an authority authorising the appeal is guilty of an an authority to fundraise during the period 2 June 2009 to 24
offence. February 2010 as detailed in the attached separate Schedule.
Maximum penalty $5,500.00 fine
20(7) A person conducting a fundraising appeal, or any member of the governing Section 20 (6) of the Act requires proceeds of appeals to be
body of an organisation on whose behalf such an appeal is conducted, who: banked without deduction. Section 20 only applies to holders
of authorities to fundraise. AVN held an authority to fundraise
(a) by act or omission is in any way directly or indirectly concerned in or for the period 2 June 2009 to 24 February 2010
party to a contravention of this section, or
(b) aids, abets, counsels or procures a contravention, There is evidence all money received from fundraising appeals
was not immediately banked into AVN’s bank account before
is guilty of an offence. deductions. For example part of funds collected from
occasional donations made at seminars was retained for petty
cash. Accordingly there is evidence of a breach of section
20(6) of the Act.
Maximum penalty of $5,500.00 fine or six months imprisonment or both
Section Summary of requirement Breach particulars
22(3) A person or organisation that contravenes this section is guilty of an offence. Section 22 of the Act requires certain records of expenditure
In the case of an unincorporated organisation, every trustee or other person and income in relation to each appeal.
who, at the time of the offence, was a member of the governing body of the
organisation is guilty of an offence. AVN did not include all particulars in its records as required by
the regulations. See breaches of clauses 10 (a) and (b) in
attached separate Schedule.
Maximum penalty of $5,500.00 fine

48 (1) A person is not prohibited (despite any law to the contrary) from holding AVN has not obtained written prior approval before
office or acting as a member of the governing body of a non-profit remunerating Ms Dorey.
organisation having as one of its objects a charitable purpose merely
because the person receives any remuneration or benefit from the It is noted that a written application for approval was received
organisation if: from AVN in May 2010 and is pending the final result of the
inquiry.
(a) the Minister, by order published in the Gazette, has declared that this
section applies to that office, or
(b) the Minister has given prior approval of a person who receives any such
remuneration or benefit holding that office or acting in that capacity, or
(c) the person concerned holds that office or acts in that capacity by virtue
of his or her office as a minister of religion or a member of a religious order.
(2) An approval under this section is subject to any conditions imposed by
the Minister when giving the approval.
(3) An approval under this section is to be in writing. Applications for such
approvals must be addressed in writing to the Minister by the organisation
concerned.
(4) For the purposes of this section, every body, organisation or office
referred to in section 7 (1) is taken to be a non-profit organisation having
among its objects one or more charitable purposes.
Schedule of Breaches – Charitable Fundraising Regulation 2008
Australian Vaccination Network (AVN) – CI/2009/005476

Clause Summary of requirement Breach particulars

9 (5) (c) An expense is not a lawful and proper expense: There is evidence of expenses not being appropriately
authorised by the governing body of AVN in the minutes of
meetings post 2 June 2009 whilst it held an authority to
(a) …………. fundraise.
(b) if is not supported by documentary evidence or is not otherwise verifiable
as being properly incurred, or
(c) In the case of an expense paid or incurred by an organisation that is an
authorised fundraiser, it was not properly authorised
10 For the purposes of section 22 (2) (b) of the Act, the following particulars are Income and expenditure records do not show particulars of all
to be included in relation to each fundraising appeal: items of income and expenditure associated with an appeal.
(a) particulars of all items of gross income received or receivable, Fundraising and non-fundraising income is not distinguished in
AVN accounts.
(b) particulars of all items of expenditure incurred (including the application
or disposition of any income obtained from the appeal),
(c) particulars of the transactions to which the particulars in paragraph (a) or
(b) relate.
Note. Accordingly, particulars of all invoices, receipts, vouchers and other
documents of prime entry relating to each fundraising appeal, and such
working papers and other documents as are necessary to explain the
methods and calculations by which accounts relating to the appeal are made
up, must be included in the records kept under section 22 of the Act.