Earlier this month, the Charity Commission published a significantly revised version of its guidance on charity fundraising. The new guidance contains some helpful clarifications but also introduces some new areas of confusion, because certain sections lack clarity or could be interpreted in misleading ways. We suggest that you treat the new guidance as a broad overview of fundraising requirements, but not a comprehensive guide. You can refer to the Code of Fundraising Practice for more practical guidance on what is expected of your charity when fundraising.
The guidance is framed as ‘a guide to trustee duties’ and includes some helpful content explaining trustees’ responsibility to have strategic oversight of their charity’s fundraising activities. In practice, though, many of the steps explained in the guidance will actually be the responsibility of staff teams, not the trustees. For charities with staff, it’s the staff that should be writing detailed fundraising plans and preparing risk assessments, not the trustees. Rather, trustees should be setting and reviewing a fundraising strategy and budget, with operational planning delegated appropriately. The guidance says that trustees should have a ‘fundraising plan’ – in practice, we would expect charities to have a fundraising strategy and budget, supported by operational fundraising policies (e.g. on protecting vulnerable people, face-to-face fundraising practice, lotteries, etc.).
The Commission has helpfully confirmed that there is “no set amount that a charity should spend on its fundraising”, making clear that trustees have flexibility to decide what is best for their charity. This is useful to charities in challenging simplistic narratives around fundraising overheads. However, the new guidance also says that charity fundraising materials should say “whether any of the funds raised will be used for fundraising costs, and if so how much or what proportion”. This seems impractical, and we expect that many charities will not be able to follow this part of the guidance.
There is a small amount of information in the guidance about professional fundraisers, commercial participators and solicitation statements. This is helpful signposting, but the legal rules in this area (which are set out in legislation) are complicated, so it is not possible to explain them fully in a few paragraphs – for example, the information about when charity employees need to make solicitation statements is misleading. The Commission has, though, helpfully confirmed that a charity’s trading subsidiary does not need to comply with the rules for professional fundraisers and commercial participators. This is a welcome reversal of the Commission’s approach in the previous version of this guidance, which suggested that trading subsidiaries should comply with the rules (e.g. by making solicitation statements).
The new guidance includes some helpful pointers about how to word your fundraising appeals to avoid creating a restricted fund. This is a really important point, and we do see charities ending up in difficulty because they haven’t thought about what might happen if they can’t use donations in the way they expected to. If you are involved in writing appeal wording, we suggest that you read the Charity Commission’s separate guidance on failed appeals.
The Commission also acknowledges that it is not realistic for charities to include detailed clarifications, terms and disclaimers in social media posts, and strongly implies that it will be acceptable for charities to make this information accessible to people somewhere else (e.g. via a link). Charities will still need to ensure this doesn’t result in social media posts being misleading to donors (the Code of Fundraising Practice expects transparency when fundraising) but it is helpful that the Commission does not expect all information to be included within the post itself.
There are some key omissions from the guidance. It does not talk about special rules that apply to certain types of fundraising activities, such as lotteries, public collections and fundraising events. In addition, as experienced fundraisers will know, tax and VAT are really important considerations for many kinds of fundraising activities – tax and VAT aren’t covered in the new guidance, but they shouldn’t be overlooked because there can be significant financial consequences if your charity gets this wrong.
What’s next?
Charities should:
- Bring the new guidance to the attention of the trustees and schedule some time to discuss it at a trustee meeting;
- Review their fundraising policies and procedures to consider whether any changes should be made;
- Consider whether this might be a good time to do some training for trustees and fundraising staff, in light of this new guidance from the Charity Commission and the new Code of Fundraising Practice published last year.
If you are unsure about how the guidance applies to your charity’s fundraising activities, or how to go about implementing it, our fundraising specialists will be happy to point you in the right direction. We can also support you with your policies and training.
The material in this article is provided for guidance and general information only and is not intended to constitute legal or other professional advice upon which you should rely. In particular, the information should not be used as a substitute for a full and proper consultation with a suitably qualified professional. Please do contact the Bates Wells team if you require further information.