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Our Ref: CI/2010/005476
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 Proper and effective controls were not exercised over the 1 Proper and effective controls must be exercised by an authorised conduct of all fundraising appeals, including accountability for fundraiser over the conduct of all fundraising appeals, including gross income and expenditure incurred, including but not accountability for the gross income and all articles obtained from any limited to as examples: appeal and expenditure incurred. • • • Expenses not appropriately authorised by governing body Failure to bank proceeds of appeal without deduction Petty cash system not conducted appropriately
An authorised fundraiser must, in relation to each fundraising appeal it conducts, maintain such books of account and records as are necessary to correctly record and explain its transactions, financial position and financial 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).
AVN failed to maintain the following records: • a register of assets • a register of receipt books
The annual financial accounts (also known as financial reports) of an authorised fundraiser that is an organisation must contain: (a) an income statement (also known as a statement of financial performance, a statement of income and expenditure or a profit and loss statement) that summarises the income and expenditure of each fundraising appeal conducted during the financial year, and (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.
The financial accounts of the organisation for the financial year ending 31 December 2009 did not include: (a) an income statement that summarised the income and expenditure of each appeal (b) a balance sheet summarising all assets and liabilities resulting from the conduct of fundraising appeals at the end of the year.
The annual financial accounts of an authorised fundraiser that is an organisation are to include a declaration by the president or principal officer or some other responsible member of the governing body of the 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.
The financial accounts of the organisation for the financial year ending 31 December 2009 did not include the required statement.
The annual financial accounts of an authorised fundraiser that is an organisation, after being audited in accordance with the provisions of section 24 of the Act or otherwise according to law, are to be submitted to an annual general meeting of the membership of the organisation within 6 months after the conclusion of the financial year. If the authorised fundraiser is an organisation, all payments made in connection with: (a) and any expenditure involved with the conduct of a fundraising appeal,
The financial accounts of the organisation for the financial year ending 31 December 2009 were not submitted to an AGM of AVN by 30 June 2010. These financial accounts were not available until 31 May 2010. AVN’s governing body did not properly authorise expenditure involved in the conduct of appeals and the disposition of funds resulting from appeals.
(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 or her best endeavours, at all times, to answer honestly any question directed to the person in relation to the purpose of the appeal or the details 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). AVN failed to respond to an email dated 10 November 2009 and addressed to Ms Dorey requesting information as to details of AVN appeals.
If the authorised fundraiser is an organisation: (a) it must be administered in relation to its fundraising activities by a governing body of not fewer than 3 persons, and (b) all business transacted by the governing body in relation to its fundraising activities must be properly recorded in the organisation’s minutes.
The minutes of AVN meetings do not reflect all business conducted by the governing body in relation to its fundraising activities.
If the authorised fundraiser is an organisation, it must establish: (a) a register of pecuniary interests, and (b) a mechanism for dealing with any conflicts of interest that may occur involving a member of the governing body or an office-holder or employee of the organisation.
AVN did not keep a pecuniary interest register or have in place a mechanism for dealing with conflicts of interest. Potential for conflict re advertising in the AVN magazine by Fountain of Beauty and AVN remuneration to Ms Dorey should have been noted in the register. It is noted that during the investigation of the first August 2009 complaint into AVN, a formal finding was made of a breach of Condition 22. Since then AVN has put in place a compliant mechanism.
The authorised fundraiser must provide a mechanism that will properly and effectively deal with complaints made by members of the public and grievances from employees in relation to its fundraising activities.
Schedule of Breaches – Charitable Fundraising Act 1991 Australian Vaccination Network Inc (AVN) – CI/2009/005476
Section 9(1) Summary of requirement A person who conducts a fundraising appeal is guilty of an offence unless the person: (a) is the holder of an authority authorising the person to conduct the appeal, or (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 condition attached to an authority authorising the appeal is guilty of an offence. Maximum penalty $5,500.00 fine 20(7) A person conducting a fundraising appeal, or any member of the governing body of an organisation on whose behalf such an appeal is conducted, who: (a) by act or omission is in any way directly or indirectly concerned in or party to a contravention of this section, or (b) aids, abets, counsels or procures a contravention, is guilty of an offence. Section 20 (6) of the Act requires proceeds of appeals to be banked without deduction. Section 20 only applies to holders of authorities to fundraise. AVN held an authority to fundraise for the period 2 June 2009 to 24 February 2010 There is evidence all money received from fundraising appeals was not immediately banked into AVN’s bank account before 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. AVN has breached various authority conditions whilst holder of an authority to fundraise during the period 2 June 2009 to 24 February 2010 as detailed in the attached separate Schedule. Breach particulars AVN conducted fundraising appeals during the period 5 July 2007 to 1 June 2009 without holding an authority to fundraise. Notably during this period AVN was advised twice in writing by Communities NSW that fundraising without an authority to fundraise was unlawful.
Maximum penalty of $5,500.00 fine or six months imprisonment or both
Summary of requirement A person or organisation that contravenes this section is guilty of an offence. In the case of an unincorporated organisation, every trustee or other person who, at the time of the offence, was a member of the governing body of the organisation is guilty of an offence. Maximum penalty of $5,500.00 fine
Breach particulars Section 22 of the Act requires certain records of expenditure and income in relation to each appeal. 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.
(1) A person is not prohibited (despite any law to the contrary) from holding
office or acting as a member of the governing body of a non-profit organisation having as one of its objects a charitable purpose merely because the person receives any remuneration or benefit from the organisation if: (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.
AVN has not obtained remunerating Ms Dorey.
It is noted that a written application for approval was received from AVN in May 2010 and is pending the final result of the inquiry.
Schedule of Breaches – Charitable Fundraising Regulation 2008 Australian Vaccination Network (AVN) – CI/2009/005476
Clause 9 (5) (c) Summary of requirement An expense is not a lawful and proper expense: (a) …………. (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 to be included in relation to each fundraising appeal: (a) particulars of all items of gross income received or receivable, (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. Income and expenditure records do not show particulars of all items of income and expenditure associated with an appeal. Fundraising and non-fundraising income is not distinguished in AVN accounts. Breach particulars 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 fundraise.
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