Legal requirements of charity fundraisers

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Professional fundraisers can produce a valuable source of income for charities. However, as with any commercial arrangement there are risks.

Donations hinge on reputation and profile, any adverse publicity can have long term consequences for both parties. The recent administration of the fundraising company, Tag, following the exposure of its substandard fundraising practices serves as an example of how things can go wrong.

Before entering into a fundraising arrangement the charity should consider how (or whether) such an arrangement sits with its fundraising strategy.   If it does, the charity may wish to tender the service in order to ensure they are receiving best value.  Other investigations into the fundraiser should be considered.  As a minimum a charity should obtain references.  Fundraisers that follow good practice can be identified by checking whether they are members of one of the self-regulatory bodies such as the FRSB.

Once a fundraiser is selected the next key step will be to enter into a written agreement. It is a legal requirement that charities enter into written agreements with fundraisers which contain specified information including, for example, a statement of the principal objectives and the methods of fundraising to be used. A failure to do so will mean that the arrangement will be unenforceable without a court order. If the fundraiser appears to use its own standard form of agreement the charity needs to ensure it takes legal advice to highlight any risks.

To ensure a successful fundraising relationship it essential that appropriate fundraising goals and strategies are agreed.  Setting unrealistic targets may compromise the quality of fundraising and encourage bad practice. Frequent monitoring and spot checks of the practices carried out by the fundraiser’s staff by both the charity and the fundraiser will ensure that any issues are identified early and can be addressed before they escalate.

To protect its interests, the charity should have final approval over any marketing material used by the fundraiser.  Depending on the sums involved and length of the arrangement it may also wish to exercise its powers to examine the fundraiser’s books, documents and other records relating to the charity that are kept for the purposes of the agreement. This provides a useful tool for the charity to assess whether they are obtaining a full and fair return from the arrangement and to ensure that the fundraiser is not receiving an excessive payment. 

Fundraisers can protect themselves against legal and reputational risks by the proper selecting and training of staff. Their staff will be the face of both the fundraiser and the charities they represent and should therefore be positive ambassadors.  Staff should receive in-depth and ongoing training on how to meet their legal requirements and to achieve best practice. Guidance from the Charity Commission confirms that the Code of Fundraising Practice produced by the IoF represents a benchmark of good fundraising practice. Fundraisers may therefore wish to incorporate the Code as part of their staff training programme. 

Finally, fundraisers should ensure all staff are made aware of the legal requirement to provide solicitation statements.  These statements provide transparency on how the fundraising costs of any appeal will be met.  They allow donors to make an informed choice as to whether they wish to make a donation. A failure to provide a solicitation statement has serious implications as the fundraising organisation will be guilty of an offence and liable to a fine of up to £5,000. The failure may also bring adverse publicity which, as seen by the Tag, may be fatal.