A changing landscape
Robert Nieri and Georgina Farmer discuss the steps charities must take to ensure compliance with new fundraising rules and guidance
While 2015 was noteworthy for scrutiny and censure of charities, 2016 has been the year of increasing regulation to help restore public trust and confidence.
The Etherington report, ‘Regulating fundraising for the future’, concluded the approach to self-regulation was not working. The review panel expressed a desire to reconnect charitable values with fundraising practice and ensure effective oversight by trustees and management. Attention in recent years has focused on the effectiveness of the Charity Commission as regulator of the sector, but Etherington’s report has quickly led to the establishment of the Fundraising Regulator and the imminent Fundraising Preference Service (FPS).
On 1 November, new rules for fundraising came into effect amending section 59 of the Charities Act 1992, requiring agreements with professional fundraisers and commercial participators to set out how those third parties will protect the public, including vulnerable people, from unreasonably intrusive or persistent fundraising approaches and undue pressure to donate, and how charities will monitor compliance.
Under the new section 162A of the 1992 Act, large charities (with an annual turnover of over £1m) must include in their annual report a statement containing specific information: whether the charity has monitored fundraising activities carried on by a third party on its behalf, and if so, how it has done it; the number of complaints received by the charity or third party about its fundraising activity; and what the charity has done to protect vulnerable people and other members of the public.
After consultation in July 2016 the Commission issued its updated CC20 guidance for trustees on charity fundraising. The Charity Law Association had stressed the need for all involved in charity fundraising to appreciate the relevance of the guidance to their work and was concerned the draft revised guidance was pushing trustees towards a more hands-on approach to fundraising, when there is a delicate balance to strike between governance and management. While the updated guidance is still aimed at trustees as those with ultimate responsibility for their charities’ fundraising, other key people involved in charity fundraising are encouraged to be familiar with it, and the emphasis is on trustees not necessarily carrying out day-to-day functions themselves but ensuring systems are in place to allow them to hold others to account for how they perform their role.
Further, since July this year the Fundraising Regulator has been regulating charity fundraising in the UK and will work to protect the public from unacceptable fundraising practices and, in alignment with the Commission, to sustain and enhance public confidence in the charitable sector. It sets and promotes the standards for fundraising practice – in particular the Code of Fundraising Practice – and will operate the FPS to enable individuals to manage their contact with charities.
The FPS Working Group has recommended that charities with an existing fundraising relationship with someone registering on the FPS should have the opportunity to make contact to clarify whether the registration is intended to cover them in light of their direct, existing relationship. People registering with the FPS should be told their registration will be notified to fundraisers and that they might be approached once by those they have donated to in the past to clarify their relationship.
What recent decisions of the Fundraising Standards Board have made clear is that failure to check the various preference services and offering tenuous reasons for justifying unsolicited contact (for example, a previous request for a motor insurance quote from a charity’s trading subsidiary company) will not be acceptable.
The signs now are of a more proactive, co-ordinated approach to regulation. On 8 November the Commission and the Fundraising Regulator issued a joint ‘alert’ about working with third-party fundraisers, warning charities to avoid entering arrangements designed to avoid the legal rules or which could be to their detriment – for example, medium or long-term contracts with very limited termination or adjustment provisions, or where the fees payable to fundraisers could damage public trust and confidence. This follows an agreed memorandum of understanding between the two regulators setting out how they would share information and work together.
All charities have to focus on donors’ needs, treating them as ‘consumers’, nurturing long-term relationships through quality engagement, and highlighting the positive impact they have. All must buy into a culture of respect, openness, and honesty in fundraising practices envisaged by the Fundraising Regulator.
Robert Nieri, pictured, is a senior associate and Georgina Farmer a legal assistant at Freeths