In July 2016 the Fundraising Standards Board was replaced by the Fundraising Regulator following a government-commissioned report into the self-regulation of charity fundraising by Sir Stuart Etherington, Chair of the National Council for Voluntary Organisations.
Sir Stuart’s report, published in September 2015, made a number of recommendations, which were accepted in full by the government, including:
- a new single regulator should be established to investigate poor fundraising practice and assume the role of setting standards (the 'Code of Fundraising Practice');
- the new regulator should have strong links with the Charity Commission, and with the Information Commissioner’s Office in order to ensure that charities followed its rules;
- a new Fundraising Preference Service ('FPS') should be created that would enable the public to opt out of fundraising communications.
As part of the mounting regulation on the sector, the Charities (Protection and Social Investment) Act 2016 requires that all larger charities (those with income in excess of £500,000 or assets in excess of £3.26million) comply with the new rules for charity fundraising with effect from 1 November 2016.
The new fundraising rules require additional transparency over a charity’s fundraising practices to be included in their annual Trustees’ report. The Charity Commission has published the following two new requirements:
1. The first requirement applies where a charity, registered or unregistered, uses a professional fundraiser or commercial participator to raise funds. Broadly, it says that the compulsory written agreements between charities and these third parties must include extra information covering:
- the scheme for regulating fundraising or recognised fundraising standards that will apply to the professional fundraiser or commercial participator in carrying out the agreement;
- how the professional fundraiser or commercial participator will protect the public, including vulnerable people, from unreasonably intrusive or persistent fundraising approaches and undue pressure to donate;
- how charities will monitor the professional fundraiser or commercial participator’s compliance with these requirements.
2. The second requirement applies to registered charities that, by law, must have their accounts audited. It says that these charities have to include extra information about fundraising in their trustees’ annual report. Broadly, the extra annual statements are about the charity’s:
approach to fundraising:
- work with, and oversight of, any commercial participators/professional fundraisers;
- fundraising conforming to recognised standards;
- monitoring of fundraising carried out on its behalf;
- fundraising complaints;
- protection of the public, including vulnerable people, from unreasonably intrusive or persistent fundraising approaches, and undue pressure to donate.
Following the de-linking of the audit threshold from the size threshold for charities as published in Update Bulletin 1 to the SORP in February earlier this year, there could be some confusion as to which charities should comply with the above. We would recommend that all charities, no matter their size, should include the above information within their Trustees’ reports as a matter of best practice. However, we would also assume that the statutory requirement would apply to all charities considered to be large or who fall below this threshold but still choose to have their annual accounts audited.
Charities may be affected by either, or both of the above requirements.
As a result of the new rules, the Charity Commission has updated its publications, “Charity Fundraising: A guide to Trustees duties” (CC20)
and “Charity reporting and accounting, the essentials - November 2016” (CC15d)
, to reflect the new requirements.
If you wish to discuss any of this further, please contact your usual Moore Stephens representative