One central message of the Etherington Review, which followed last year’s fundraising scandals, was that charity trustees could not abdicate responsibility for their organisation’s fundraising to their fundraising departments, they needed to have much better and more effective oversight as to what was being done in their name.

To assist charity trustees to understand their role in this regard, the Charity Commission promised to update its main fundraising guidance (CC20). After an extended consultation period, the Charity Commission published its new Guidance on 7 June 2016.

The Guidance is targeted at charity trustees but should also be read by anyone involved in charity fundraising, to help them understand the new standards to which they will be held by their trustee boards. Trustees should be encouraged to find time to read through this new guidance. For those short on time, we have set out in this article a summary of the six key principles on which the new Guidance is based.

The overriding message of the new Guidance is that it is the charity trustees who are responsible for a charity’s fundraising. Whilst they can delegate day to day activities to paid staff, they cannot delegate their ultimate responsibility. Which means that where a system of delegation is in place, trustees will need to be very clear:

  • How they hold others to account for the role they carry out;
  • That they have access to the right information and advice with the appropriate level of detail in making decisions and monitoring activity; and
  • How they will seek assurance that their charity’s fundraising is compliant with the fundraising approach that has been set.

For most trustees, this will involve access to very different information on fundraising than they have previously received, where the focus may have been exclusively on outturn. In order to demonstrate that they have complied, charity trustees will need to have proper regard to the six principles.

Plan effectively

Trustees need to agree or set and then monitor a charity’s overall approach to fundraising. A fundraising strategy will need to take into account a charity’s funding needs and targets as well as its approach to risk (both financial and reputational) and the fundraising methods that will be used. As part of this planning exercise a charity will need to ensure that any fundraising strategy fits with the charity’s values and its approach to donors and the wider public. In order to ensure that the charity is not exposed to undue risk, the plan should be accompanied by systems which recognise and assess the risk inherent in any strategy and agree how such risk should be managed.

Supervise your fundraisers

Charity trustees need to have systems in place to oversee the fundraising which others carry out for the charity, including staff, volunteers, professional fundraisers and commercial partners.

The Charity Commission is recommending that delegation is clearly documented, understood and implemented, clear reporting procedures are in place, there are checks on any delegated authorities and reports are presented back to the trustees on a regular basis and at the right level.

There are also further checks which the Commission recommends for any charity working with commercial partners and a series of factors that should be taken into account before a charity decides to work with a commercial partner. Trustees should ensure that their board minutes record the fact that these issues have been addressed by the Board. The Commission also stresses the importance of appropriate supervision, even where the fundraising activity is being carried out through a trading subsidiary.

Protect reputation, money and other assets

Trustees must ensure robust management of their charity’s assets and resources to protect them from undue risk. This includes ensuring that there is adequate consideration of the impact of their charity’s fundraising on its donors, supporters and the public – including assessing the reputational risks when using particular methods of fundraising and agreeing levels of fundraising costs. The Commission gives the example of very high fundraising costs seriously damaging a charity’s reputation.

This duty also requires charity trustees to have financial controls and safeguards in place to ensure that the charity receives all the money to which it is entitled and is taking steps to reduce the risk of fraud. Trustees should be ready to explain fundraising costs and explain how they are in the best interests of the charity. The Commission suggests that this requires better and more transparent accounting for fundraising costs, so that donors have a fair indication about the extent to which the charity will benefit from their support.

Trustees should also have systems in relation to large, unusual or suspicious donations to ensure that the charity has sufficient safeguards in place from money laundering and other criminal activity.

Identify and ensure legal and regulatory compliance in relation to fundraising

The law relating to fundraising is a patchwork of different laws and regulations which are detailed and complex. Trustees are responsible for ensuring that the charity has access to sufficient information and appropriate advice to ensure its fundraising complies with all the rules.

The rules are signposted in the Annex to the Guidance, but trustees will need to ensure that they are properly informed about the laws relating to the particular methods of fundraising that they have chosen to follow. Compliance with data protection law is also essential.

Identify and follow any recognised fundraising standards that apply

These standards will usually be set out in the Code of Fundraising Practice, and it is the trustees’ role to ensure that effective systems are in place so as to ensure that the charity complies with all relevant standards. Regardless of whether the charity is a member of the IOF, or subscribes to the new Fundraising Regulator, the Charity Commission is clear that it expects all charities that fundraise to fully comply with the Code.

Be open and accountable

Trustees are reminded of the need to comply with relevant statutory reporting and accounting requirements on fundraising. The Commission makes it clear that reporting should enable the reader of accounts to understand what the fundraising activities were, how much was spent on raising funds, what was involved and how the income raised assisted the charity. Being open and accountable also means having in place effective systems to deal with complaints which are easy to follow, keeping the wording of any fundraising appeals clear so that the donor understands what the funds are being raised for and what will happen to any surplus funds or to donations if not enough funds are raised.

The Commission has also set out the circumstances which may be serious enough to trigger Commission intervention, using the Commission’s own risk framework.

What now?

Charity trustees are encouraged to:

  • Read the new Guidance
  • Consider the new Guidance with their Board
  • Ensure that their current fundraising strategy is set out clearly in writing and that the Board can demonstrate that sufficient regard has been given to each of the six principles
  • Follow fundraising developments carefully over the course of the next few months as the new Fundraising Regulator opens for business and starts to find its feet.