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Charity walks away from Appco as CEO defends 'chuggers' model

Charity marketing giant Appco has revealed that just one charity has severed ties in the wake of claims of widespread sham contracting and bullying. 

Defending Appco's model as an indispensable part of fundraising in Australia, company chief executive Martin Gaffney warned bad publicity was putting in jeopardy a lucrative source of funds for charities.

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Working for Appco Group

A group of former Appco workers have mobilised to join a class action, alleging sham contracting, underpayment and humiliating rituals.

"Charities' biggest concern is that this publicity will result in this revenue stream drying up ... They're nervous that if Appco was forced to stop fundraising or to move to an employment model, it would be a challenge for their fundraising," he said.

"They're concerned their cost of fundraising will increase dramatically."

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Appco makes millions of dollars by taking a portion of charity donations collected directly from the public on the street. Its 1000-strong work-force  – labelled "chuggers", slang for "charity muggers" – are hired as independent contractors via marketing companies, and paid on a 100-per cent commission basis.

The model is cheaper for charities, which only pay Appco when a donation is made, but it leaves workers to work often gruelling hours earning well below the equivalent minimum wage without penalties or leave entitlements.

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Class action

The company is now fighting an estimated $80 million class action by former workers, some of whom ended up being paid as little as $2.50 an hour.

Mr Gaffney said the class action was "fundamentally flawed", but admitted a sales job at Appco was not for everyone.

Appco chief executive Martin Gaffney has defended his company.
Appco chief executive Martin Gaffney has defended his company. Photo: Steven Siewert

"We never purport to be for everybody. It is an opportunity and if people want to be part of it and if it works for them, that's fantastic. If not, we wish them every luck and every success," he said.

The firm is also investigating allegations of ritualised humiliation within its ranks. Videos emerged last month of workers taking part in "sluggie races" which involved workers crawling on the floor like slugs as punishment for poor performance. Other workers took part in "chicken fights" where they donned chicken heads and "pecked" at each other while their colleagues jeered and shouted.

Jacob Bywater, a former employee of Appco, is leading a class action against the company.
Jacob Bywater, a former employee of Appco, is leading a class action against the company. Photo: Steven Siewert

Appco has hired law firm Baker McKenzie to look into the allegations and investigate whether the practices were widespread.

Mr Gaffney said he was horrified by the revelations but would not commit to terminating any other companies found to have taken part.

"I am not going to commit that we will terminate their agreement, but what I will commit that we will do a further investigation," he said.

"If there is intentional bullying or harassment and we feel an owner has taken complete disregard for [someone's]  rights, we will absolutely be reviewing that marketing company's agreement," he said.

Volunteer perception

Appco receives as much as 60 per cent of donations given to charities on the street. Workers must wear the uniform of well-known charities even though they don't actually work for them. Mr Gaffney said workers are clearly labelled "paid collectors" and that Appco's cut of any donation is disclosed on the donation form

But he acknowledged people might wrongly assume the workers are volunteers and all donations go to the charity.

"There's an assumption that people are volunteers and there's an assumption that all the money is going to go to charity," he said.

"There's definitely a perception that all fundraisers in the field should be volunteers these days, and the old line is that anyone who is out shaking a can should be a volunteer ... The big volunteer teams that charities used to have don't exist anymore."

He said the public was largely uneducated about modern fundraising practices.

"Fundraising costs money, that's the reality," he said.

"This idea that charities can exist on their own fundraisers is a really outdated notion and any charity will tell you that that's why they use an agency like Appco."

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