Landmark regulator reviews find bushfire charities managed funds responsibly despite concerns
Landmark reviews by the Australian Charities and Not-for-profits Commission (ACNC) found high-profile charities acted appropriately in responding to the 2019-20 summer bushfire disaster.
Bushfire Response 2019-20 – Reviews of three Australian charities focused on the Australian Red Cross Society (Red Cross), the Trustee for NSW Rural Fire Services & Brigades Donations Fund (NSW RFS Trust) and NSW Wildlife Information Rescue and Education Service Incorporated (WIRES).
All three charities received substantial donations, attracting attention and generating high public expectations.
Overall, more than $640 million dollars for relief and recovery efforts was raised through generous public donations.
The ACNC decided to conduct the reviews and make the report public to address concerns there was a gap between the public’s expectations of charities and the reality of responding to the disaster.
ACNC Commissioner the Hon Dr Gary Johns said that given the scale of the disaster, the huge amount of money raised and the level of community expectation, it was important to provide assurance to the public by conducting these reviews.
The reviews found the charities acted legally and responsibly, allocating funds to bushfire response programs and their delivery, and protecting donations from fraud. The charities balanced immediate relief with the need to supply funds for the long-term recovery phase.
“We found each charity to be credible and professional,” Dr Johns said. “They were able to show us that they were taking the necessary steps to manage the funds responsibly in a time of great uncertainty, where the situation was rapidly changing.”
The ACNC found that the charities also faced challenges in being able to deliver relief quickly, which affected the perception of their effectiveness.
These challenges included changing demand and donation levels, difficulty identifying legitimate fire victims, the need to combat fraud and the messages of third party fundraising campaigns that were out of the charities’ control.
In addition, the massive increase in funds required greater planning and stricter governance processes as well as enhanced fraud protection measures.
Dr Johns confirmed that criticism and concerns that charities were withholding funds and not distributing them correctly to people in need was unfounded.
He said the public should be assured that charities could only use charitable funds for charitable purposes.
“Donated funds are ‘charitable funds’, as is any interest they earn, and legally charities can only use their charitable funds to deliver their charitable programs,” he said. “In emergency situations it is not always possible for charities to begin delivering programs immediately because they need information and time to plan how to maximise their impact.”
“Charities must act within their rules,” he said. “A third party may raise funds for a charity and the charity has no control over the message given. Nonetheless a charity can only use donated funds for activities that advance their charitable purpose. In the case of the NSW RFS Trust this was confirmed by the Supreme Court.”
He said some concerns were based on a misunderstanding of charity operations and the costs of delivering services.
“Running a charity costs money – it requires infrastructure and staff to deliver programs,” he said. “There is no benchmark for charities’ administration costs because it is not a reliable measure of effectiveness. Focusing on what a charity achieves gives a better understanding of its work than financial information alone.”
Additionally, he said that the complexity of the disaster situation could not be underestimated.
“We heard that identifying legitimate victims was a challenge,” Dr Johns. “There was a lack of comprehensive data on properties damaged by the bushfires, a lack of information about how animals were affected, and no national licensing for wildlife carers and rescue organisations.”
He said the charities also needed to protect donated funds from fraud.
“The extraordinary event of the bushfire disaster led to great generosity, but it also led to an upswing in fraudulent claims,” Dr Johns said. “The charities had to balance measures to prevent fraud with the need to get money out the door quickly. We were satisfied they managed this appropriately.”
Normally reviews by the ACNC are covered by secrecy provisions and are not made public.
The ACNC secured the cooperation of the charities involved and permission to publish the report to aid public understanding of charity operations and maintain public trust and confidence in the sector.
“Australians are incredibly generous as the summer disaster appeals proved,” Dr Johns said. “They deserve to know that their donations are going to the right place and being used to help those in need, which is why we conducted these reviews.”
“We are also fortunate in Australia to have a diverse, experienced and skilled charity sector able to respond to the broad needs that arise following a disaster,” he said. “I am satisfied with the outcome of these reviews and I want all Australians to feel reassured that their generosity and trust in charities is well placed.”