Emil Ford Lawyers

ASIC Charitable Investment Fundraising Relief: an opportunity and a warning

There are a number of challenges for charities and not-for-profits in regard to raising funds. The Australian charities and not-for-profits sector is large, with many organisations vying for the donor’s money. It can also be difficult for a charity to solicit donations where they do not have Deductible Gift Recipient status. These are some of the reasons why some charities use alternative avenues for fundraising.

One of these alternatives is the operation of a debenture (bond) program or managed investment scheme. A debenture program can be a cost-effective alternative to financing in today’s low interest rate financial market as it allows a charity to borrow money from its supporters at a lower borrowing rate than the major banks, whilst offering a higher interest rate than the deposit rate of the major banks.

However, there is a catch. A debenture program and managed investment scheme are deemed to be financial products under the Corporations Act 2001. With some exceptions, the Corporation Act 2001 requires a person or organisation offering financial products to be licensed and comply with technical disclosure requirements.

To make these alternative fundraising schemes more viable for charities, ASIC provides relief to charities subject to certain conditions through ASIC Corporations (Charitable Investment Fundraising) Instrument 2016 and Regulatory Guide 87, which succeed prior ASIC Class Orders. In order to receive relief under these instruments, a charity must lodge an appropriate Identification Statement with ASIC and comply with several ongoing conditions of relief such as a simpler set of disclosures to investors and lodgement of audited financials with ASIC.

We have recently assisted several charities with applying for and receiving relief from ASIC from the strict requirements of the Corporations Act 2001. As part of this process, several of our clients discovered that they had been, and currently were, in breach of the Corporations Act 2001. We were able to assist them to ensure that they were no longer in breach.

This article therefore serves two important functions:

1.       Food for thought for those charities who might wish to consider a debenture program as an alternative form of fundraising; and

2.       A reminder for those charities that do offer debentures to ensure that they are complying with the applicable legislation and regulations.

If your charity does offer debentures, have you applied for and received relief under the new Charitable Investment Fundraising Instrument?

If your charity has received relief, do you have systems in place to ensure compliance with the ongoing conditions of relief?

If you would like more information or have any questions, please contact or

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