Charity fundraising rules

Ensure your charity enjoys the fruits of its fundraising labours

Straightened economic circumstances require charities to innovate in their efforts to encourage philanthropic activity amongst potential donors. More traditional methods, such as street and house to house collections, grant funding, legacies, events, lotteries and prize draws, have been supplemented by digital fundraising, direct mailing, commercial partnerships and the creative efforts of professional fundraisers whom charities may choose to engage. As seeking money from the public is, inevitably, a public activity, a charity exposes itself and its reputation each time it embarks on any kind of fundraising campaign. Highly publicised scandals of recent years (such as the tragic suicide of regular charity donor Olive Cooke, the distinctly dubious and disreputable practices of the Presidents Club, the condemnation resulting from the mismanaged relationship between Otterbeck Distillery and the Captain Tom Foundation) are evidence of the real and immediate damage, not to say regulatory censure, poor fundraising practices can wreak. One bad apple can quickly affect the whole barrel, with public trust and confidence in the wider sector suffering as a consequence of failings by individual charities. Accordingly, extensive law and regulation now surrounds how charities entice us to give them our money.

Charity Commission principles: an orchard of opportunity

As always, the buck stops with charity trustees. They retain overall responsibility for fundraising activity undertaken by their charity, including when working with third parties such as professional fundraisers. Their fundamental duty to act in their charity’s best interests underpins all fundraising efforts and, in this context, the Charity Commission sets out six principles to apply:

• Plan effectively
• Supervise those fundraising for your charity
• Protect your charity’s reputation, money and other assets
• Identify and ensure compliance with relevant laws and regulations
• Identify and follow relevant recognised standards in the Code of Fundraising Practice (which is overseen by the Fundraising Regulator)
• Be open and accountable.

The precise application of the principles will vary according to the particular method of fundraising deployed, but, whether your charity is engaging in a lucrative commercial sponsorship deal with a household name company or organising a raffle and a coffee morning at the village hall, these principles are paramount.

Code of Fundraising Practice: low-hanging fruit

The Fundraising Regulator may seem like a body with which only the larger, higher profile charities need concern themselves. This would be a false assumption: whilst not all charities will opt to register with the Fundraising Regulator, the Charity Commission expects all charities to adhere to the  standards in the Code of Fundraising Practice, whether registered with the Fundraising Regulator or not. The Code begins with four core values which are expected to inform all charity fundraising:

• Legal: all fundraising must be legally compliant
• Open: all fundraisers must engage openly with the public about their process and provide further explanation when asked, where appropriate
• Honest: fundraisers must act with integrity and be clear with the public about which cause they are fundraising for and how a donation will be used
• Respectful: fundraisers must always be respectful in their dealings with the public.

In general terms, the Code requires charities to apply all funds raised for the cause for which they were raised and to abide by any conditions attached to individual donations. They must maintain records of donations (and any conditions) and must not indicate that funds are restricted to be spent in a particular way if in reality there is no such applicable restriction. When appealing for funds for a specific purpose, charities must explain what will happen to the money if they raise too much or too little.

The Fundraising Regulator is the guardian of the Code and, in the course of investigating complaints about charity fundraising practices, will review whether the Code has been breached. It publishes summaries of its investigations (in which the charities involved are named) and may also refer matters to other regulators, including the Charity Commission and the Information Commissioner’s Office. Referral could lead to further regulatory action: for example, if the Charity Commission concludes that a charity’s fundraising activity has not been legally compliant, this will amount to a finding of “mismanagement” by the trustees (a sanction for which, depending on the circumstances, could be their removal).

Law and regulation: no rotten tomatoes

The detailed law and regulation governing charity fundraising includes the following areas (this is not an exhaustive list):

• What is required of a professional fundraiser or commercial participator
• The statements that paid fundraisers must make, in some circumstances, when asking for funds from the public
• When you must display its registered charity status on a range of documents and on its website
• Collecting cash in the street
• Collecting cash, or goods or direct debit details door to door
• Lotteries and raffles
• Data protection when collecting or handling personal details such as names, contact details and credit or debit card details
• Avoiding unsolicited calls to numbers registered with the Telephone Preference Service and Corporate Telephone Preference Service
• Fundraising involving children
• Event fundraising
• In relevant circumstances, commenting on your charity’s fundraising activity when preparing the annual report and accounts.

Someone said that “in the garden of humanity, charity is the sweetest fruit”. Muddle, mistake and ignorance of the law can turn that fruit sour. Fundraising successfully in accordance with the law, the Charity Commission’s principles and the Code of Fundraising Practice can be complex and trustees are encouraged to seek advice and training, as required. We are here to support you in the compliant generation of funds for your charity’s purposes and to help you avoid those banana skins. Please do get in touch if you have any questions about the topics raised in this article.