Adams Amy: Fair Trading (Soliciting on Behalf of Charities) Amendment Bill — First Reading 
Adams Amy: Fair Trading (Soliciting on Behalf of Charities) Amendment Bill — First Reading 
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AMY ADAMS (National—Selwyn) 
: 
 I move  
That the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill be now read a first time. 
 At the appropriate time I intend to move that the bill be referred to the Commerce Committee for its consideration. New Zealanders are generous people. We all recognise the important work that so many charitable organisations do to help the vulnerable in our communities. 
I am sure that like me many members of this House have spent countless hours standing on busy street corners collecting money or helping out at fund-raising events. We do this willingly and we are happy to play a small part in contributing to the wonderful work that our charities do. Charities Commission data indicates that there are more than 23000 registered charities in New Zealand and in the last year the sector had an estimated total income of around $10.4 billion $2.4 billion of which came from donations. 
If there is a threat to this sector it is that New Zealanders have increasingly begun to show concerns about how much of the money they give gets to those it is intended for. 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 percent of what they collect and even up to 90 percent. Although there is unquestionably a cost to raising funds the rights of consumers to be given accurate information must not be forgotten. 
Just yesterday in the  
Press 
 the “cynical marketing” award for the year was given by one commentator to the Epilepsy Foundation for reportedly raising $2.8 million in donations of which only $70000 went to people with epilepsy. Whilst shocking that story is by no means an isolated event. Stories like that have in my view damaged the fund-raising industry and severely shaken confidence in charitable giving. Many people have spoken to me of the reluctance they now have to respond to various forms of fund-raising as they feel they cannot tell the ethical from the disreputable. 
It is my hope that this bill and the debate and discussion that will come from it will help to draw a clear line between worthwhile and ethical charitable collection and the insidious practice of using the name of a charity to make a significant personal profit while passing on only a tiny portion of the donation and all the while leaving the generous consumer completely in the dark. 
I am aware that part of the issue of consumer confidence in this regard involves charities’ internal use of funds and some of the public debate has certainly focused on that. This bill deliberately does not seek to address that matter. Charitable organisations are regulated under the Charities Act and are subject to full financial disclosure rules meaning that there is already a process for public scrutiny of how their money it spent. On that point I wish to say that we must recognise that charities will quite appropriately have administration and fund-raising costs as part of providing services and those costs will vary depending on the scale and work of each charity. No one should be put off donating for that reason alone when the costs are at an appropriate level. 
Where fund-raising is carried out by the charity directly all costs associated with that fund-raising will be disclosed as part of the charity’s financial statements. However if a third-party business is engaged to do that work then no record of the amount retained by that company will be available for public scrutiny. 
I was moved to create this bill out of a fundamental belief that to ask for a donation to a charity without mentioning that one is not part of that charity but comes from a private company and without mentioning that the vast majority of what is donated will never make it to that charity is simply deceptive and wrong. Of course companies can charge for services they provide and I have no issue with the existence of a professional fund-raising sector but it is my view that their activities must be carried out ethically to ensure that consumers are not misled. 
It is not OK to withhold information simply because providing that information would mean that someone does not get the outcome he or she wanted. So I am unmoved by arguments that a disclosure requirement would mean that less money is raised. This sector must consider the rights of hard-working New Zealanders who are parting with their cash. Donors have the right to know how much of their money will go to the charity they are being asked to donate to. 
In creating this bill I have sought to highlight an issue that I believe needs to be addressed. Since the bill has been announced everyone I have spoken with about it including many many donors and a number of charities have without exception agreed that the problem exists and that it must be addressed. 
Where there have been reservations—and there have been only a few—they are focused solely on the issue of what the best method of dealing with it is. The Fundraising Institute of New Zealand which represents this sector has expressed to me a view that the answer should come from industry self-regulation and I believe it is appropriate for me to acknowledge that the Minister for the Community and Voluntary Sector the Hon Tariana Turia has let me know that her view is that although she supports the bill’s objectives she believes that the industry should be given time to see whether self-regulation can be effective. 
At this stage I would also like to acknowledge and thank the Minister of Consumer Affairs the Hon Heather Roy who has been very supportive of the goals of the bill from the outset and who has along with her officials assisted me greatly in this process. I would also like to acknowledge my colleague Aaron Gilmore with whom I had some helpful initial discussions around the formation of the bill. 
As I have already noted because the use of all funds within charities is already controlled under the Charities Act this bill seeks to address only that portion of the process from the time the funds are solicited to the time the funds pass into the charity. That is the domain of professional fund-raising firms that carry out this work as a profit-making enterprise. At this stage I should make it very clear that the bill will impose no restrictions on any fund-raising activities that a charity carries out directly through the use of its own employees or volunteers. 
Through this bill I am particularly seeking to target professional telemarketing firms and the so-called “chuggers” or “charity muggers” who approach and sometimes hassle passers-by on a busy street to donate regularly to a charity. I think few people realise that in fact those “chuggers” do not come from the charity but are paid on a commission basis of up to 90 percent of the funds collected in the first year. 
As the bill stands it has been drafted to provide a two-tier threshold of disclosure on third-party collectors who solicit funds in the course of trade so that if they are to retain more than 20 percent of any donation there will be a positive requirement to disclose that a portion is to be retained by way of fees. If the retention is to be greater than 50 percent then the actual percentage to be retained must be stated before a donation can be accepted. Donations of less than $20 made in person and by way of cash will be exempt in order to minimise confusion in small-scale street collections. I acknowledge that the obligation on those seeking to keep more than half the funds is onerous but I believe it is also appropriate and right that consumers should be made aware of that circumstance before parting with their hard-earned cash. 
I look forward to a comprehensive discussion at the select committee on the mechanics of the bill and an exploration of any and all other suggested ways to control the reprehensible aspects of the sector. I would like to make it clear at this stage that I am quite open as to the form that the actual requirements should take where any thresholds are set and how various activities should be defined. The fundamental issue for me and the test I will use to assess any proposals that come before the select committee is: “Is that fair on those who are donating?”. 
May I say at this point that one of the central motivations for me in this process has been to restore and protect confidence in those charities and fund-raisers that run highly ethical and appropriate campaigns. As we often see cowboys in an industry ruin the reputation of the whole industry. Through forcing disclosure of improper practices it is my hope that the many excellent and worthwhile fund-raising campaigns will not suffer from being tarred with the brush of disreputability. It seems to me that there is also the role of educating the public that direct giving is always preferable and that there is in particular the ability to take advantage of some of the initiatives this House has created this year such as payroll giving—and just last night we saw the exemption from gift duty that will be created for charitable giving. 
In essence this bill is about protecting consumers and restoring confidence in the sector of charitable giving through enhanced transparency and I hope to see full engagement of the sector in the select committee process. I look forward to hearing the remainder of the debate this afternoon and I ask other parties in the House for their support at this first reading stage so that this important issue can be examined in full at the select committee. Thank you.