An update on charity fundraising
The Fundraising Regulator for charities in the UK opened its doors earlier this year to a brave new world of fundraising standards. A combination of factors has led to a renewed focus on the regulation of charity fundraising in the UK, including the Etherington Review, the death of Olive Cook and the scandal generated by fundraising agency Neet Feet. This briefing explains the changed fundraising landscape in England and Wales and sets out what charities can expect from the new Fundraising Regulator and vice versa.
The new regulatory framework
There has been talk of voluntary regulation in the charity fundraising world as far back as 1986, when a working party report titled ‘Malpractice in Fund-raising for Charity’ called for self-regulation by charities within a strong statutory framework.
Now, the underpinnings of a voluntary regulatory regime have been put in place and the duties of charities that engage in fundraising have been tightened. Four notable changes have been made to charity fundraising regulation this year.
Firstly, and perhaps most significantly, a new Fundraising Regulator has been established. Set-up of the new Regulator began in January 2016 and it officially launched on 7 July 2016 this year. The new body will regulate charity fundraising practices on a voluntary basis.
Secondly, The Charities (Protection and Social Investment) Act 2016 was passed in March and contains provisions to amend charities’ agreements with professional fundraisers and commercial participators. The Act also creates a statutory framework allowing the Government to establish a compulsory charity fundraising regulator, in the event that voluntary regulation doesn’t work as well as anticipated, so the threat of further government intervention is very real.
Thirdly, the Charity Commission in England and Wales published an updated version of its fundraising guidance (CC20). The Commission’s updated guidance emphasises that trustees are ultimately responsible when it comes to a charity’s fundraising compliance.
Finally, the Information Commissioner’s Office (“ICO”) updated its Direct Marketing Guidance this year, with a section of the guidance being specifically addressed to charities. The ICO has the power to issue monetary penalties of up to £500,000 for certain breaches. Charities suspected of breaching the law on marketing during their fundraising activities can be referred to the ICO by the new Fundraising Regulator.
What charities can expect from the new Fundraising Regulator
A key aspect of the new fundraising regulatory regime is that it is voluntary.
Funding for the new Fundraising Regulator has come from the sector itself: charities that spend over £100,000 on fundraising activities annually were asked to pay a levy to help cover the Fundraising Regulator’s costs. Going forward, the Regulator will also be funded by a fee which charities will be asked to pay on a voluntary basis, a ‘fundraising promise’.
The Fundraising Regulator is set up to investigate cases where there is public concern and adjudicate on such cases. In the event that members of the public complain about a charity’s fundraising practices, the Regulator will investigate. The Regulator’s first adjudication is on the case of fundraising agency Neet Feet, which hit the headlines for its aggressive sales techniques and went into voluntary liquidation in Summer 2016.
The Fundraising Regulator will recommend best practice on charity fundraising, and will take proportionate remedial action against charities where necessary. The Regulator has entered into Memoranda of Understanding (“MOUs”) with the Charity Commission and the ICO, and will refer charities to these regulators for breaches when it considers this is appropriate.
The Fundraising Regulator is also tasked with operating a Fundraising Preference Service (“FPS”) in future. The FPS will work alongside the Telephone and Mail Preference Services to ensure that members of the public only receive fundraising communications that they want and need.
One regulator fits all?
The Fundraising Regulator is set up to oversee fundraising by charities in England and Wales and has entered into an MOU with the Charity Commission. It will also regulate charities based in England or Wales which are fundraising in Scotland.
However, the Fundraising Regulator will not regulate Scottish charities which raise funds in England. Although it will not regulate the fundraising practices of charities based in Scotland, it is anticipated that the Fundraising Regulator will enter into an MOU with OSCR (the Scottish charity regulator).
The regulation of charity fundraising in Northern Ireland is still being discussed.
What charities should do now
Charities should revisit their agreements with professional fundraisers or commercial participators. These now need to comply with the requirements of the Charities (Protection and Social Investment) Act 2016.
The new Fundraising Regulator has a number of projects in the pipeline, including the FPS, detailed above, which is expected to launch in 2017. The Fundraising Regulator’s detailed paper on its plans for the FPS is required reading for charities that rely on or regularly ask for donations from the public.
Charities should also look out for the Fundraising Regulator’s consultation on the Code of Fundraising Practice which is expected in the New Year.