UK: Fundraising Update – The Fundraising Regulator: Current Developments

Last Updated: 29 August 2017
Article by Sarah Williams

The news on fundraising may have been more about data protection and consent recently, but there are other fundraising developments which also require charities' attention. The Fundraising Regulator, which was established just over a year ago and assumed responsibility for the regulation of charitable fundraising only from 7 July 2016, has had a busy agenda – from securing funding for its operations through the levy, to investigating complaints of poor fundraising practices, consultation on the code of fundraising practice and, close on the horizon, the establishment of a Fundraising Preference Service. This blog considers some of the ways in which the Fundraising Regulator's operations may affect you.

Do you have to pay the levy?

If your charity is one of the more than 2000 'eligible' charities to have received a formal letter and invoice from the Fundraising Regulator for payment of a fee for 'regulatory services', you might be wondering if you are legally obliged to pay.

The short answer is 'No', on the basis that the levy is entirely voluntary. However, as the levy currently represents the only source of funding for the Fundraising Regulator, it is axiomatic that the Regulator will not be able to operate without the support of the sector. 'Eligible' charities are registered charities whose fundraising expenditure is £100,000 or more (based on your annual return for the year to end 2014) or those which are exempt from registration but which fundraise from the public.

The Charity Commission's view is that paying the levy is a proper use of charitable funds. However, each charity must consider, bearing in mind its own particular circumstances, whether payment of the levy is appropriate. Part of this consideration should include the consequences, including potential reputational impact, of not paying.

What about registration?

Registering with the Fundraising Regulator, and signing up to its terms and conditions, means you agree to ensure your fundraising is 'legal, open and honest and respectful' (the Fundraising Promise) and to comply with the Code of Fundraising Practice (the Code). Once registered, you will be able to apply the Fundraising Regulator's badge to your fundraising materials, designed to serve as a kite mark of good practice to the public.

Those who have paid, or intend to pay, the levy, will automatically be signing up to register with the Regulator. For other charities (unless invited) general registration should open shortly, expected around April 2017. The annual registration fee – not payable if you already pay the levy – will be £50 for charities, with a sliding scale from £100-£1,200 for third party fundraisers depending on annual income.

As with payment of the levy, registration is not compulsory. Charity trustees should, therefore, ensure they have considered properly whether registration is appropriate for their organisation. Where a charity decides that payment of the levy, or registration, as the case may be, is not appropriate, it remains incumbent on the trustees to ensure that their fundraising complies with current legislation (see more below) and good practice and that they have adequate complaints procedures in place to handle any concerns which may arise. Given the ongoing regulatory and media interest in this area, and the reputational damage a negative decision or story can cause, any fundraising arrangements should be kept under review and the charity's risk register updated accordingly. In particular, the charity trustees should consider what fundraising practices are being carried out in the charity's name and how they can and should monitor those practices: are they confident that the charity's fundraising is being carried out in a way which is legal and in line with the charity's values?

Do you need to do anything about any fundraising agreements you may have in place?

Yes. New requirements for fundraising agreements between charitable institutions and their professional fundraisers or commercial participators were brought in last year. These were introduced in legislation (the Charities (Protection and Social Investment) Act 2016) in the wake of the spate of newspaper stories in 2015 on charity fundraising.

The provisions were brought into in force on 1 November 2016. Unusually, no transitional provisions were included in the legislation. The Fundraising Regulator has taken the view that the provisions apply to all such agreements, including those already in existence on 1 November.

The provisions seek to emphasise trustee responsibility for, and oversight of, their charity's fundraising, with a view to focusing both charities and fundraisers on regulating their fundraising activities, especially regarding vulnerable people. They do this by adding to the prescribed list of requirements for agreements between charities and professional fundraisers or commercial participators.

Broadly speaking, the additional requirements for such agreements are that they must specify all of the following:

  1. details of any voluntary scheme for regulating fundraising or fundraising standards that the commercial participator/professional fundraiser has undertaken to be bound by for the purposes of the agreement (eg have they agreed to comply with the Code?);
  2. how the commercial participator/professional fundraiser is to protect vulnerable people and other members of the public from certain specified behaviours while undertaking the fundraising activity to which the agreement relates; and
  3. what arrangements are in place enabling the charitable institution to monitor compliance by the commercial participator/professional fundraiser with these requirements.

The specified behaviours are:

  • unreasonable intrusion on a person's privacy;
  • unreasonably persistent approaches for the purpose of soliciting or otherwise procuring money or other property; and
  • placing undue pressure to give money or other property.

The legislation provides no definition of 'unreasonable intrusion', 'unreasonably persistent approaches' or 'undue pressure', but the Fundraising Regulator has set out examples of practices which it considers may fall within the scope of these terms in its FAQ section on the legislation.

Charities with arrangements with professional fundraisers and/or commercial participators should, therefore, if they have not done so already, review those arrangements to consider what steps need to be taken to comply. Unfortunately, this is not necessarily a straightforward task, as the requirements may apply differently to each arrangement. And, although the requirements appear to be aimed more at agreements with professional fundraisers than most arrangements with commercial participators, they still need to be considered in the context of any commercial participation arrangement.

Although the provisions are already in force, the Fundraising Regulator has said that, for pre-existing agreements, it will take a 'flexible approach' until the end of March 2017. It will look to charities and their professional fundraisers and/or commercial participators to make such 'reasonable contingency arrangements' as may be required as a consequence of the new requirements. The question will be what 'reasonable contingency requirements' are in any particular case.

One practical action which may be suitable, short of re-negotiating existing agreements, is to exchange letters or emails (by authorised personnel) with the professional fundraisers/commercial participators about how they are going to comply with the new requirements, including confirmation that their fundraisers understand the provisions and do not, and will not, engage in the specified behaviours. These may also, depending upon the circumstances, make reference to an appropriate policy/code of conduct setting a marker for the standards expected (eg they will terminate conversations when a person clearly indicates that they do not want to be engaged).

In all cases, charities should ensure they are able to monitor the activities of their fundraisers to their satisfaction, to protect the charity's reputation and its relationship with its supporters, and that arrangements are in place to enable the charity to be notified of any concerns which arise from the third party's activities. Fundraising charities should also review their vulnerable persons policy (or, if they do not have one, consider whether they should put one in place).

This process should be considered within the charity's overall fundraising strategy and overseen and agreed by the charity's board. In this respect, charity trustees should be aware that, although, technically, liability for failing to comply with the new requirements falls on the professional fundraiser/commercial participator (with breach of the legal requirements being a criminal offence), the Charity Commission regards a breach of the regulations as a breach by the charity trustees of their charity law duties which may amount to misconduct or mismanagement in the affairs of the charity.

Reporting Obligations

New fundraising reporting provisions were also brought in last year which apply to all auditable charities for accounting periods commencing on or after 1 November 2016. Charities subject to the new obligation will need to include various additional statements in their trustees' annual report including; their approach to fundraising, how they monitor arrangements with any fundraisers, and the number of complaints the charity or fundraiser received about its fundraising activities.

In order to be able to comply with the reporting requirement, charity trustees should ensure that they are collecting the necessary data now.

Consultation on the Code of Fundraising Practice

The Fundraising Regulator, having taken on responsibility for the Code from the Institute of Fundraising, has now launched its first consultation on proposed changes to the Code. The consultation is open until 28th April 2017.

The consultation is not (at this stage) a root and branch review of the Code, but rather concentrates on proposing changes in some specific areas; including oversight by the trustees, the fundraising ask, solicitation (disclosure) statements and people in vulnerable circumstances. There is also an opportunity to highlight any issues or practices that are not covered by the consultation or the existing Code at the end of the consultation response form.

The consultation does not cover the new Fundraising Preference Service (which was the subject of separate consultations during 2016), or data and consent. Further consultations are expected on these aspects later in 2017.

More information on the consultation and how to respond using the Regulator's online portal can be found here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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