Fundraising Licences and Fund Governance for Australian Charities
State-by-state fundraising rules, how to separate restricted funds (including Zakat, Sadaqah, Lillah and Waqf), and the line on private benefit and related-party transactions.
Money is where governance, regulation and donor trust collide. Three questions come up over and over: do we still need state fundraising licences, how do we separate restricted funds properly, and what counts as private benefit? This guide answers each in plain English for ACNC-registered charities.
Do we still need state fundraising licences if we're ACNC-registered?
Mostly, yes. Fundraising regulation is still state-by-state, despite years of harmonisation talk. ACNC registration unlocks federal tax concessions but does not replace state licences.
The current picture (always verify with each regulator):
- NSW, Vic, Qld, WA, SA, Tas, ACT — all have their own fundraising laws and licences. Several recognise ACNC registration as evidence to streamline the application, but you still apply and report separately.
- NT — limited fundraising regulation; check current rules.
If you fundraise nationally (anyone with an Australian address can donate), the conservative position is to hold the licences in every state you actively solicit donations. "Active" means: targeted ads, direct mail, events, door-knocking, or campaigns aimed at residents of that state. A passive donation page that anyone could find is a softer trigger but still draws scrutiny in some states.
Build a fundraising-licence register: state, licence number, expiry, renewal lead time. Treat it like insurance — non-negotiable.
Restricted vs unrestricted funds: getting the basics right
A restricted fund is money that came in with strings — donor intent, grant agreement, appeal scope, or religious requirement. Unrestricted funds can be used for any charitable purpose within your registered subtype.
Practical rules:
- Set up separate ledgers (or fund codes) for each restricted purpose, not just separate notes.
- Tag every receipt at the point of capture, not at year-end.
- Report on restricted balances in board papers, not only in the annual financials.
- Don't borrow from restricted to unrestricted "just for cashflow" — it is a breach of trust and, depending on the source, possibly illegal.
Zakat, Sadaqah, Lillah and Waqf — separation in practice
For Islamic charities, fund governance is doctrinal as well as legal. Each fund has different eligibility rules, and donors expect you to honour them.
- Zakat — obligatory annual alms; recipients must meet eligibility under the eight categories in Surah At-Tawbah (9:60). Cannot be used for general operations or non-eligible beneficiaries.
- Sadaqah — voluntary charity; broader use, but donors often specify a cause.
- Lillah — gifts "for the sake of Allah"; flexible, but typically used for masjids, education and general welfare. Not eligible for Zakat recipients exclusively.
- Waqf — endowment; capital must be preserved, only the income (or usufruct) is distributed.
Operationally, this means:
- Separate accounts or sub-ledgers for each fund.
- Receipts that name the fund the donor contributed to.
- Eligibility assessments tied to the beneficiary registry for Zakat disbursements.
- Annual Zakat reconciliation showing 100% of collected Zakat distributed within the year (or held with a documented reason).
Our Zakat/Sadaqah/Lillah/Waqf playbook goes much deeper on the operational mechanics.
Private benefit and related-party transactions
A charity exists for public benefit, not the private benefit of insiders. The ACNC and ATO take this seriously.
The line, simplified:
- Incidental private benefit is acceptable. A staff Christmas lunch is fine.
- Material private benefit to Responsible Persons, related parties or donors is not.
- Related-party transactions (paying a director's company for services, renting from a board member, employing a Responsible Person's spouse) must be at arm's length, properly documented, declared as a conflict, and approved without the conflicted person voting.
If you cannot show all four — arm's length, documented, declared, approved without the vote — restructure the transaction or don't do it.
A simple test: would your worst-case donor be comfortable reading about this in a newspaper? If not, the answer is already in the question.
Where to get help
Fundraising compliance and fund separation are exactly the kind of work that quietly drains time from program staff. Synergaid's marketing and fundraising support helps charities tidy up campaign workflows, donor receipting and restricted-fund reporting so finance and fundraising stop arguing at year-end.
Related reading
Related Resources
More from the AidSynergy briefing.
ACNC Registration and Eligibility Explained for New Australian Charities
Plain-English answers on whether you need to register with the ACNC, how DGR status differs, which subtype to pick, and what changes if you work overseas.
Zakat, Sadaqah, Lillah and Waqf — A Fund-Governance Playbook for Islamic Charities
Four religious funds. Four very different rule sets. A practical playbook for separating, allocating and acquitting Islamic funds at the standard your scholars (and your donors) expect.
DGR Receipting Done Right: What the ATO Actually Requires
The smallest mistake on a DGR receipt is enough to invalidate a donor's tax deduction. Here is what the ATO actually requires — and the receipting workflow that quietly handles it for you.
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