Charities Act 2016: The new fundraising rules and how they affect you

1st November 2016 saw new rules for charities’ fundraising activities come into effect; these changes were unofficially introduced earlier in the year by the commencement in July the new Charities (Protection and Social Investment) Act 2016. This is all as a result of the recent investigations into charities’ fundraising activities and the need for them to be better regulated following the media interest in the death of Olive Cooke.

Fundraising Agreements
Whilst there is already a legal requirement for charities to have a written agreement with its “professional fund-raisers” or “commercial participators” (together defined as “commercial organisations”) and what those written agreements must include, every such fundraising agreement must now specify all of the following:
• any voluntary fundraising scheme or standard that the commercial organisation undertakes to be bound by for the purposes of the agreement;

• how the commercial organisation will protect vulnerable people and other members of the public from unreasonable intrusion on a person’s privacy, unreasonably persistent approaches for fundraising and undue pressure to donate; and

• details of arrangements enabling the charity to monitor compliance with the requirements in the agreement.

Annual Reports
Those larger charities (gross annual income over £1m) that are required by section 144 of the Charities Act 2011 to have their accounts audited, will now also have to include a statement in their Trustees Annual Report about the following:
• the charity’s approach to fundraising, and in particular whether a commercial organisation was used;

• details of any voluntary fundraising schemes or standards which the charity or anyone fundraising on its behalf has agreed to;

• any failure to comply with a scheme or standard mentioned above;

• whether the charity monitored fundraising activities carried out on its behalf and, if so, how;

• the number of complaints the charity or anyone acting on its behalf has received about fundraising for the charity; and

• what the charity has done to protect vulnerable people and others from unreasonable intrusion on a person’s privacy, unreasonably persistent approaches or undue pressure to give, in the course of or in connection with fundraising for the charity.

Reserve Powers
Also introduced by the Act are the new reserve powers for the Government to control fundraising, which may impose requirements on charities to:
• register with the new fundraising self-regulator,

• comply with its requirements,

• have regard to its guidance, and

• pay fees determined in line with regulations.

The Government may confer this responsibility and additional powers on the Charity Commission, and may also specify fees to be paid to the Charity Commission. These reserve powers may also be extended to charity fundraising by non-charitable institutions in order to ensure there is no loophole. However, these powers are currently stated to be a last resort and will only be used if self-regulation, via the new Fundraising Regulator, fails.

What should you be doing now?
The new Fundraising Regulator has confirmed that it will give charities a “grace period” of five months (giving until 31st March 2017) to amend existing written agreements with commercial organisations to include these new requirements.

The new reporting requirements apply to accounting periods beginning on or after 1st November 2016.

Failure to follow these requirements will mean that your charity will be failing to comply with the Charities Act 2011, the Charities (Protection and Social Investment) Act 2016, and the Code of Fundraising Practice. It will also mean that trustees will not be meeting their duty to ensure that their charity is accountable to the general public, beneficiaries and other interested parties.

For further information, please contact Helen Martinelli on helen.martinelli@bpe.co.uk.

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.