- Fundraising agreements between charities and commercial organisations are now subject to stricter rules.
- Larger charities (those with an income over £1m) are now required to explain their fundraising practices in their annual report.
Trustees should also be aware that the Fundraising Standards Board (FRSB) has been replaced by a new body – the ‘Fundraising Regulator’. The new body has assumed ultimate responsibility for setting standards and investigating poor fundraising practice.
Why are the rules changing?
You may remember the Daily Mail’s 2015 campaign against charities that ran ‘boiler room operations’ of cold callers employing ‘Wall Street tactics’ to pressure people into making donations? The campaign prompted a parliamentary inquiry, which concluded that the charity trustees overseeing these ‘scandalous’ fundraising practices had been either ‘incompetent or wilfully blind’.
The sharp practices employed by a handful of charities tarnished the reputation of the entire sector. The aim of the new rules is to restore public trust by making trustees more diligent in their oversight of fundraising activities (particularly when commercial organisations are involved).
So what does this mean for charities, trustees and fundraisers?
1. Stricter rules on commercial fundraising
Does your charity use professional external fundraisers? Or do you have commercial partnerships with businesses that donate part of their profits to your charity? If so, your charity’s agreement with the commercial organisation needs to include:
- Details of any voluntary fundraising scheme or standard that the commercial organisation undertakes to be bound by;
- Details of how the commercial organisation will protect vulnerable people and others from unreasonable intrusion on their privacy, unreasonably persistent fundraising and undue pressure to donate; and
- Arrangements enabling the charity to monitor compliance with the requirements in the agreement.
Charities must explain how they have dealt with these points in any new fundraising agreements. We also recommend they update existing fundraising arrangements to ensure continued compliance.
2. New rules for annual reports
Is your charity required to have its accounts audited? If so, the trustees must explain the following in the charity’s annual report:
- The charity’s approach to fundraising. It is particularly important to explain whether any professional fundraisers or commercial partners were involved (and if so, how).
- The details of any voluntary fundraising schemes or standards that the charity or anyone fundraising on its behalf has agreed to (giving details of any non-compliance).
- Whether the charity monitored fundraising activities (and if so, how).
- How many complaints the charity, or anyone acting on its behalf, has received about fundraising.
- What the charity has done to protect vulnerable people and others from unreasonable intrusion on their privacy, unreasonably persistent approaches or undue pressure to give in response to fundraising.
What will the new regulator do?
“I have made it clear that the sector has one last chance to prove that self-regulation can work, but I am willing to step in and impose statutory regulation if necessary.”
Rob Wilson, Minister for Civil Society, January 2016.
The Fundraising Regulator is supposed to ensure that charity fundraising practices are transparent and above board. The government has intimated that a repetition of the Daily Mail episode is likely to lead to statutory regulation.
One of the Regulator’s tasks is to establish a Fundraising Preference Service, which will enable the public to opt out of fundraising communications. We don’t yet have the detail on how this service will work, or who will fund it.
Charities undertaking significant fundraising activities will be expected to register with the Regulator. The Regulator’s website describes registration as a way for ‘charities and other fundraising organisations… to signal their commitment to best practice.’ At present, registering with the Regulator is voluntary, but the government has said that if there are too few takers, it will consider compulsory registration. Former FRSB members will be contacted by the new Fundraising Regulator when details of the new registration system are available.
The Code of Fundraising Practice will still apply, but overseen and enforced by the Regulator. The Regulator’s powers include:
- Investigating fundraising complaints against any charity referred to it
- Publicly naming charities that are not abiding by the Code
- Requiring charities to seek approval for future fundraising campaigns.
More information
For further information, please refer to: Charity Fundraising: a guide to trustee duties.
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For advice on how these changes may affect your organisation, contact Taylor Vinters’ charities and social ventures team on [email protected]
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