Working with commercial participators and professional fundraisers is a valuable way for charitable institutions1 to access funding and build relationships with other organisations. Sometimes the legal requirements can feel like a bit of a technical maze, so we were pleased to see that the Fundraising Regulator has published new guidance (on 13 August 2024) for charitable institutions working with commercial participators and professional fundraisers.
The guidance explains when someone is acting as a commercial participator or a professional fundraiser (which is not always straightforward) and the requirements that must be met. In our experience, these regimes can sometimes create confusion, particularly for people who are new to them. The guidance will therefore be an important resource as charitable institutions will be able to share it with the people they are working with, to set the scene and explain why certain legal requirements must be followed.
As a reminder, a commercial participator is (broadly speaking) someone who runs a business (which is not a fundraising business) in which they run a promotion where they represent that they will contribute (e.g. donate) to one or more charitable institutions. A common scenario is where a shop says they will give a charity 10p of the purchase price each time they sell a greetings card. A professional fundraiser is someone who either carries out a fundraising business in return for payment, or who doesn’t run a fundraising business but is paid to ask for money or other property for a charitable institution. For example, a fundraising agency paid by a charity to make calls to encourage people to sign up to a regular gift. There are different legal regimes (though with many similarities) for commercial participators and professional fundraisers. In this blog, we consider some interesting points in the new guidance and some areas which could potentially be made clearer in future.
As noted in the guidance, one key requirement for both professional fundraisers and commercial participators to make a ‘solicitation statement’ which sets out information including which charitable institutions will benefit and how much is being donated (in the case of a commercial participator), or how much is being received for the fundraising services by a professional fundraiser.
We were interested to see that the guidance mentions how solicitation statements should be worded in relation to fundraising carried out on social media. The guidance on working with commercial participators notes when “a representation is made during a radio or television appeal, a person making a payment of more than £100 can cancel their payment by giving notice in writing up to seven days after the date on which the request is made. The commercial participator will then need to refund the payment. The solicitation statement which accompanies the radio or television programme must include details of this right. It is also good practice to extend these rights to any requests for donations which are made via video, e.g. on social media”. There is an equivalent comment in the professional fundraiser guidance.
Extending this refund right to social media is not currently a requirement in law or the Code of Fundraising Practice, but we agree with the Fundraising Regulator that this is a sensible approach to take in practice (though not mandatory). The legislation covering professional fundraisers and commercial participators is originally from 1992 (updated a few times over the years). This means it does not anticipate modern technologies and methods of fundraising, so it is helpful to have guidance which does.
While the new guidance is generally clear and effective, we spotted a few areas which seem somewhat misleading and could be clarified in future versions. For example:
- The guidance provides an overview of what is needed to work lawfully with professional fundraisers and commercial participators, but goes beyond the legal requirements in some cases, including in relation to due diligence and monitoring. For example, the section in each called ‘Carry out monitoring’ says that charitable institutions must carry out monitoring to ensure that professional fundraisers and commercial participators comply with the terms of the written agreement, whereas charity law only requires charities to monitor certain aspects of the agreement e.g. provisions relating to protection of the public and vulnerable people. We agree that monitoring is important, but it would be useful if the guidance distinguished throughout between legal requirements and requirements under the Code of Fundraising Practice.
- The description of a commercial participator could be misleading. It states a commercial participator is “an individual or business which promotes their goods or services on the basis that they will make contributions to one or more charitable institutions”. While this is a helpful summary (and avoids replicating the convoluted language from legislation), we think it could be interpreting the law too narrowly. A business could be promoting themselves generally (and saying they will donate to a charity) without referring expressly to their goods or services and still be caught under the legal definition. The guidance also says businesses “that partner with charitable institutions to sponsor or contribute to their events, or promote their charitable work more generally” are not commercial participators. In our experience, this is not always true. There can be scenarios where a business promotes a charity’s work while making representations about how it contributes to that charity, doing so in a manner and to such an extent that they are a commercial participator.
- The professional fundraiser guidance says “challenge event participants who have their costs covered in return for fundraising a specific amount” are not professional fundraisers. We do not think this is the case in law. There are certain exemptions from being a professional fundraiser, but there is not one for challenge event participants – though they could fall within a general exemption if they receive less than £10 per day or £1,000 per year. To put this into context, if someone takes part in one or multiple challenge events in one year and their participation costs are more than £1,000 and are paid by a charity, they will be a professional fundraiser.
These are just a few examples which demonstrate how complex this area can be, and it is never possible for summary guidance to cover all the legal nuances. When you are considering whether someone is a commercial participator or professional fundraiser, there is no ‘one size fits all’ approach and it must be considered on a case-by-case basis. The guidance is a good starting point and should be considered alongside the legislation itself and wider fundraising resources (such as the Charity Commission’s guidance on Charity fundraising: a guide to trustee duties (CC20) and the Fundraising Regulator’s Code of Fundraising Practice).
At the time of writing, the Fundraising Regulator is carrying out its final consultation on a new draft of the Code of Fundraising Practice. It is moving to a more streamlined and ‘principles-based’ approach, meaning there may be less detail in some areas of the new Code. It is therefore helpful that the Fundraising Regulator is publishing guidance like this, as the additional details will be useful for organisations when using the new version of the Code (which is likely to be brought in early next year).
We look forward to seeing how this guidance is used across the sector.
- “Charitable institution” has a wider meaning than “charity”. It means “a charity or an institution (other than a charity) which is established for charitable, benevolent or philanthropic purposes” (section 58(1) Charities Act 1992). ↩︎