It would be an understatement to say that fundraising featured prominently in the charity press in 2015.

Following a number high-profile incidents in the national media, and formal findings of fundraising malpractice, the Government commissioned a formal review of fundraising, Sir Stuart Etherington announced recommendations for reform in September, the Government accepted these in full and work on implementation has been in progress ever since. 

Alongside this, the Charity Commission issued proposed updates to its guidance on charity fundraising, fundraising-related amendments to the Charities (Protection and Social Investment) Bill 2015-16 (Charities Bill) were proposed, the Institute of Fundraising (IoF) announced changes to its Code of Fundraising Practice and the Information Commissioner’s Office (ICO) began work on updating its direct marketing guidance. There has also been an ongoing debate around the Fundraising Preference Service (FPS), one of Etherington’s recommendations.

What should charities be considering and preparing for in the face of this flurry of changes?

Proposed changes to fundraising regulation

Trustees should note proposed key changes to the system of regulation as a result of Etherington’s review:

  • The replacement of the Fundraising Standards Board with a new self-regulator (currently just referred to as the “Fundraising Regulator”), which will be the single body charged with regulation and the first port of call for complaints from the public. The new regulator will take over responsibility from the IoF for setting the fundraising code of practice. It will have the backing of a statutory body, the “third line of defence”
  • The system will catch all charities which fundraise, not just those which are registered with a fundraising regulator, as is the case currently
  • The introduction of a sliding scale levy on charities which spend more than £100,000 a year on fundraising. The levy will be used to fund the new regulator
  • Increased sanctions could be available to the new regulator, including naming and shaming, cease and desist orders, compulsory training etc. (but not fines)
  • A possible requirement that charities adopt an “opt-in” system for communications
  • Introduction of the FPS.

New emphasis on trustees’ responsibilities

The Charity Commission has issued proposed updates to guidance CC20 on charities and fundraising, now entitled “Charity fundraising: a guide for charity trustees”. The title highlights the clearer focus on the responsibilities of trustees, and this change reflects Etherington’s recommendation that trustees be the first of the “three lines of defence” in the proposed new fundraising system.

Trustees should be aware that they may be held to account for their charity’s fundraising activities (whoever carries them out, whether a professional fundraiser, employee or volunteer) and should follow six key principles to fulfil their duties in relation to fundraising, namely:

  1. Plan effectively – Trustees should be directly involved in setting and monitoring their charity’s overall approach to fundraising, taking into account risks, their charity’s values and income expectations.
  2. Supervise fundraisers – Trustees should oversee whoever carries out fundraising on their charity’s behalf, ensuring that in-house and volunteer fundraisers know what is expected of them and that arrangements with fundraising agencies are in their charity’s best interests.
  3. Protect their charity’s reputation, money and other assets – Trustees should consider the impact of their charity’s fundraising on its reputation and ensure that the charity is protected from loss or fraud.
  4. Know and comply with specific laws or regulations that apply to fundraising – Trustees should be aware of the need to comply with laws on, for example, data protection, licensing (eg for lotteries) and working with commercial partners (including professional fundraisers) and should seek legal advice to ensure compliance.
  5. Know and comply with recognised standards that apply to fundraising – Currently these are set out in the Code of Fundraising Practice, and charities which are members of the IoF must comply with these as a condition of membership.
  6. Be open and accountable – Trustees should comply with reporting requirements on fundraising and be able to explain their charity’s fundraising work to donors and the public. Some larger charities must comply with requirements on accounting for and reporting on fundraising activities, set out in the SORP. The Charities Bill may also introduce new reporting requirements (see below).

The finalised guidance will not necessarily be as “neat” as it could be – it will soon need to be updated again given other developments that are due to take place in the future.

The Charities (Protection and Social Investment) Bill 2015-16

Trustees should keep an eye on the potential changes to fundraising to be introduced by this Bill, which is still making its way through Parliament. At present the Bill:

  • requires trustees of large charities (ie those with an income of more than £1million) to provide certain details on fundraising in their annual reports and include specific provisions in contracts with fundraising agencies on how the public and vulnerable people will be protected from undue pressure and poor practice, and how the charity will monitor the agencies
  • introduces mandatory registration with a fundraising self-regulator, and requires charities to comply with that regulator’s guidance; and
  • gives additional powers to the Charity Commission to regulate fundraising.

Fundraising code

The IoF announced changes to its Code of Fundraising Practice in September last year, and these became effective in December 2015. Charities which are members of the IoF should now: 

  • ensure that their opt-in and opt-out statements on printed communications are in the same font size as the larger of any text asking for the recipient’s personal details or any text specifying the donation amount, or in the absence of such text, in a font size of at least 10 points; and
  • include clear statements explaining how donors can opt out from receiving communications in all materials they send out, with the same font size requirements as above.

A six-month transition period (ending 10 June 2016) has been allowed for organisations which have already designed and printed non-compliant marketing materials and campaigns.

Data protection

Charities should also watch for developments in discussions about the FPS, a centralised service which will allow members of the public to opt out of fundraising communications from charities. Detail on the FPS proposals in Etherington’s review was deliberately incomplete and a working group will discuss how exactly the service will be rolled out. However, various charities have raised concerns about a possible “blanket opt-out” from all charity communications, arguing that the service should be more sophisticated to cater for a range of donor preferences. 

The ICO is due to publish revised guidance on direct marketing early this year, and the Government has recently launched a consultation on plans to make it a legal requirement for anyone making direct marketing calls to display their phone number on caller ID. Both will affect charities carrying out fundraising activities. We hope to update you on these developments in the next edition of our newsletter (Summer 2016).

Keeping up with these developments, let alone implementing actual changes to fundraising practice as and when they occur, will require close attention from charities engaged in fundraising. Given the ever closer scrutiny from the public and various regulators, charity trustees in particular should make sure they are pro-active in the monitoring of their charities’ fundraising practices and are not inadvertently “caught out”.