Charity fundraising and regulation – the importance of compliance

Posted: 06/03/2020

Charities rely on public generosity. Fundraising is a key function for many and a process that is often subject to public and regulatory scrutiny. It is therefore very important that trustees and managers are aware of the standards and laws that apply to charity fundraising.

The Code of Fundraising Practice and the Fundraising Regulator

In recent years, the media has highlighted poor fundraising practices. This led to the establishment of the  Fundraising Regulator, an independent non-statutory body which works on the basis of sector self-regulation. The Fundraising Regulator covers England, Wales and Northern Ireland and there is a separate Scottish Fundraising Standards Panel. It sets standards through the Code of Fundraising Practice (the Code).

The Code is not a legal handbook but its content is based on the principle that fundraising should be legal, open, honest, respectful and accountable. The Charity Commission expects all charity fundraising to comply with the Code which applies to fundraising carried out by charitable institutions and third-party fundraisers in the UK that ask for donations of money or other property for charitable purposes.  

The Code aims to promote a high standard of fundraising; to provide a benchmark for organisations and fundraisers to assess their practices; to develop a culture of openness and respect between fundraisers and the public; and to make sure that charitable institutions and fundraisers know what is expected of them.

Putting the Code into practice means that charities need to make it very clear who or what they are fundraising for when raising money. All proceeds from fundraising must go towards the specific purpose of that fundraising. Any donations must be handled safely and securely to prevent theft, fraud or embezzlement so that donations can be used for their intended purpose.  

People who manage charity collections must be aware that there are specific laws about how to manage public collections, bank transactions and the signatories required to access charity bank accounts. The Code aims to employ standards for fundraising that ensure that trust and confidence in fundraising is not undermined.

The Fundraising Regulator can investigate charities in response to complaints from the public about fundraising that has caused or could cause a significant public concern.

Charity Commission

As the statutory regulator, the Charity Commission has a section on its website devoted to fundraising. As always, charities are advised to start with the Commission’s guidance as a means of ensuring compliance and good practice.

Gaming, alcohol and entertainment

Tombolas, raffles and lotteries, alcohol and entertainment are often associated with fundraising. While they can be highly effective, trustees should ensure they are fully aware of the laws related to gaming, entertainments and alcohol. For example, a local authority licence will be required for some activities such as sales of alcohol. Legal age restrictions and other controls on activities will also need consideration.

Data and information

As with most charitable activity, fundraising may involve data protection and information rights issues. For example, are you collecting information on donors? What are you doing with it? Who can access the information, and how?

Trading

Many charities establish trading businesses, whether as pure vehicles for pursuing fundraising activities or with a view to advancing the aims of the charity through the goods and services provided. Establishing a business raises many questions that trustees need to consider. These include whether is it in the best interests of the charity; how the relationship between charity and trading businesses will be managed; and whether there are potential reputational risks. Charities and their trading businesses may well need to seek specific corporate, commercial and regulatory law advice.

Control of fundraising activities

It is important to have clear policies and guidance in place for staff and volunteers on what you expect from those who are fundraising on your behalf. Unauthorised fundraising can ultimately be stopped with a court order but it is also important that charities monitor what is being done (or said) in their name and that they manage and react to poor practice quickly.

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