Changes to the Code of Fundraising Practice
3 August 2017
On 31 July, the Fundraising Regulator published a new Code of Fundraising Practice, following consultations earlier this year.
The new code includes new obligations for charity trustees and changes to the rules regarding how charities should monitor compliance by third party fundraisers (including professional fundraisers and commercial participators) with their obligations under fundraising contracts.
A week ahead of the launch of the new Fundraising Preference Service (FPS), the Fundraising Regulator added some new requirements to the Code of Fundraising Practice to support the new service, as an interim measure whilst consultations on the overhaul of the Code continued. For more information about those changes see our article on the launch of the new FPS.
The Code of Fundraising Practice (and the rule books on street fundraising and door-to-door collections) set out the regulatory standards that all charitable fundraising organisations in the UK are expected to meet. In some cases, these standards exceed the strict legal requirements. However, as a result of the increased public scrutiny of charity fundraising activities following Olive Cooke’s death and the subsequent Daily Mail expose, the Charity Commission is likely to view any material or persistent breach of the Code as evidence of mismanagement by the charity trustees. This, in turn, could result in the Commission investigating the charity’s governance, fundraising and operational activities and might lead to enforcement action. Compliance with the Code should be taken very seriously by charity trustees, as poor fundraising practice has the potential to seriously damage a charity’s reputation.
For the first time, the Code now includes a specific duty for charity trustees to “have regard to national guidance in overseeing the fundraising activities of their charity and any third party fundraising on the charity’s behalf”. We have already seen the Charity Commission take action and declare a breach of trust by charity trustees in respect of a contract entered into by the charity that the Commission said could not reasonably be considered to have been in the charity’s best interests. It is quite likely that the charity trustees in that case were not even aware of the fact that the contract had been entered into. For many charities, fundraising activities have been historically treated as a purely operational issue, with little oversight or strategic direction by the board. The PACAC review in 2015 highlighted this as a key concern within the sector, and the new duty on charity trustees in the Code of Fundraising Practice is intended to address this issue.
Charity trustees should consider what changes need to be made to delegated authority in respect of fundraising, and reporting procedures. Policies should also be put in place regarding which types of contracts require prior board approval. This could include, for example, fundraising contracts involving a significant upfront investment of funds or involving major public campaigns (particularly in respect of any face-to-face fundraising and telemarketing). There is no ‘one size fits all’ approach to this, and charity trustees should consider what is appropriate for their particular charity, given its size and the nature of its fundraising activities.
The Code of Fundraising Practice now links directly to the Charity Commission’s fundraising guidance (CC20) and the new Charity Governance Code (read more about the new Charity Governance Code in our recent article), and this change was effective immediately (from 31 July 2017). So, both the Fundraising Regulator and the Charity Commission expect all charities in England and Wales to comply with the Code of Fundraising Practice, the Code of Governance and the Charity Commission guidance in respect of all fundraising activities. Those documents are therefore essential reading for all charity trustees and senior fundraising managers within charities.
Another change that came into force immediately was the supplementary guidance on what is expected of charities and other fundraising organisations to effectively and proportionately monitor compliance by third party fundraisers with the Code of Fundraising Practice, statutory obligations under Fundraising Regulations, and contractual obligations. The Code includes guidance on means that might be employed by charities to provide evidence of their reasonable efforts to ensure effective ongoing compliance by third party fundraisers. Suggestions include: establishing a named individual with lead responsibility for monitoring compliance, developing clear reporting requirements and regularly reviewing progress against pre-agreed performance, quality assurance and compliance targets, and regularly conducting (and documenting the results of) call monitoring, mystery shopping, site visits and/or shadowing with third party fundraisers.
Other changes to the Code include changes to requirements regarding solicitation statements (regardless of the channel of communication used, a solicitation statement must be delivered before money is given or financial details are requested, whichever is sooner), internal policies and procedures for raising concerns about fundraising practice (all charities must have an internal policy that covers the matters set out in the new Code), and the delivery of collection bags (organisations that operate house-to-house clothing collections may not deliver bags to houses displaying a notice stating “no charity bags” or “no clothing bags” or similar). In respect of these changes, the Fundraising Regulator has granted charities and other fundraising organisations a grace period of 2-4 months to become compliant, in light of the operational changes that will need to be implemented, including staff training and changes to policies and procedures.
The Fundraising Regulator has published a summary of the changes made to the Code of Fundraising Practice, and you can read the full Code here.
This article is for general information only. If you require advice or support with implementing any necessary changes to comply with the new requirements under the Code of Fundraising Practice, please get in touch with Liz Brownsell or another member of our Charities Team. We can assist with drafting whistleblowing policies and procedures, reviewing staff training materials, providing internal training to charity trustees, senior managers and staff on compliance with fundraising law and regulation, and drafting/reviewing contracts with third party fundraisers (including professional fundraisers and commercial participators).
Services
Sectors
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at August 2017.