Charity fundraising: a guide to trustee duties

You may be aware that current Charity Commission guidance “Charities and fundraising” (CC20) is being re-written.

While the existing guidance does highlight that trustees must ensure their charity complies with the law relating to fundraising and follows best practice, and strongly advises trustees to be aware of the legal, good practice and ethical considerations of their chosen fundraising methods prior to authorising a fundraising appeal, clearly not every board of trustees has been following this advice, in the wake of press headlines which have brought to the public’s attention unacceptable fundraising practice undertaken in the name of charities.

On 3 December the Charity Commission launched a consultation on its new draft guidance:

https://www.gov.uk/government/news/trustees-must-take-responsibility-for-fundraising-says-revised-charity-commission-guidance

This is shorter and harder-hitting than the Commission’s existing guidance, making it absolutely clear that trustees are in their driving seat of their charity’s approach to fundraising, and while this does not mean the regulator expects charity trustees to become expert fundraisers themselves, the buck really does stop with them.

At the Fundraising Summit held on 4 December, the Minister for Civil Society told charity fundraisers that during the summer the charity sector came extremely close to having statutory regulations imposed upon it. But at least for now, a form of self-regulation remains, with a new Fundraising Regulator being established and to be open for business at some point in 2016.

The new draft guidance identifies 6 key principles to help charity trustees fulfil their responsibilities for their charity’s fundraising:

1. plan effectively;
2. supervise your fundraisers;
3. protect your charity’s reputation and other assets;
4. comply with fundraising law;
5. follow recognised standards; and
6. be open and accountable.

Plan effectively

The Commission explains that all trustees should be directly involved in the setting and monitoring of their charity’s overall approach to fundraising and, where senior staff or others take the lead on planning of fundraising, trustees should always question, challenge and robustly discuss the proposals.

This is in line with the Commission’s guidance, The Essential Trustee (CC3), which was revised earlier this year and which highlights that part of a trustee’s role is critically and objectively to review proposals and challenge assumptions in making decisions. Gone are the days when trustees could turn up every few months for a plate of free sandwiches and nod sagely in approval as the chief executive and his team explained what they proposed to do to raise the necessary funds for the charity’s next key project.

The draft revised guidance recommends that in setting their charity’s fundraising strategy, trustees should address the financial, reputational and other risks the charity will face and how those should be avoided or managed and how their fundraising will reflect the charity’s values. It requires trustees to regularly monitor progress against those plans, looking carefully and critically at the areas of highest risk.

Supervise your fundraisers

The Commission recognises that in bigger charities trustees are likely to delegate fundraising to staff or to third party contractors. If so, trustees should ensfreeure that any delegation is clearly documented and understood, that clear reporting procedures are put in place and that the board receives back regular and fully documented reports on agreed matters.

At the same time, trustees should avoid becoming over-involved in day-to-day fundraising activity (at any rate, in the larger charities where others are responsible on a daily basis for it). It is all about putting in place policies to maintain scrutiny and control.

Much of this year’s adverse press coverage of charities has arisen through inadequate trustee control of professional fundraisers or direct marketing organisations and the Commission’s revised guidance highlights that trustees should carry out proper due diligence on those organisations that are to work closely with their charity, to satisfy themselves about the solvency, integrity and reputation of the proposed partner and their ability to deliver to an acceptable standard.

Not only must any working arrangement be cost-effective but it must maintain and enhance the reputation of the charity. The Commission expects boards to have systems in place to review and control any fundraising communications to be used, such as scripts, written marketing material, advertisements and packaging.

It is for the trustees to ensure that no legal document is signed unless they are satisfied that the terms are in the best interests of their charity, because to do otherwise would be in breach of the trustees’ duty.

Protect your charity’s reputation

Again, the Commission highlights that trustees must ensure that their charity’s fundraising practice reflects its values and that fundraising activities are developed with donor, supporter and public perception in mind, as well as income expectations and other goals.

The Commission recognises that any effective charity will need to spend funds on both its general administration and on fundraising. Equally, in order to maintain and enhance public trust and confidence in charities, it is critical that boards of trustees can explain to donors, supporters and the public how their charity works and why its costs are necessary.

Comply with fundraising law

The revised guidance tells trustees to ensure or to put in place systems to satisfy themselves that their charity fully complies with any legal rules which apply to its fundraising. While the Commission points out to charity trustees that they can always take appropriate advice from a suitably qualified person if they need to, practically this will not always be possible, especially for charities of limited means and perhaps the finalised guidance should give more assistance to charity trustees in signposting them to applicable legislation, in a similar way existing CC20 guidance already does, listing relevant legislation and self-regulatory codes (at section H1).

Follow recognised standards

As well as complying with the law, all fundraising charities should comply with recognised standards and the draft revised guidance explains that the Fundraising Regulator will regulate charities’ compliance with recognised standards. The final version of the revised guidance will describe the role of the Fundraising Regulator once all the detail has been worked out.

Be open and accountable

The revised guidance provides that charity trustees should put in place systems to ensure that their charity’s fundraising is open, transparent and is clearly explained. The guidance touches upon managing the expectations of members of the public, which is clearly a key issue for charities and one which the Understanding Charities Group has been addressing since before the furore this summer over the sad cases of Olive Cooke and Samuel Rae.

One part of the revised guidance which may be of particular practical assistance to charity trustees is a tick box checklist at Section 13 which is designed to help charity trustees evaluate their organisation’s performance against legal requirements and good practice recommendations.

Annex 1 to the draft revised guidance also highlights those legal requirements which will be introduced if the Charities (Protection and Social Investment) Bill becomes law in 2016, in particular requiring trustees to explain how their charity will ensure that a professional fundraiser or commercial participator will protect vulnerable people and other members of the public from behaviour which is an unreasonable intrusion on a person’s privacy, which is unreasonably persistent and which places undue pressure on them to give money and how the charity will monitor compliance with the written agreement it has in place with such commercial partners.

The Charity Commission is very keen to engage with charities over this draft revised guidance and its consultation closes on 11 February 2016. The Commission will consider publishing a more detailed update on the draft guidance and comments received will shape the final version of the guidance which is to be published in spring 2016.

At that time, we will hold a series of workshops around the country for charity trustees, in order to distil the essence of the finalised guidance and to suggest practical steps all trustee boards can take to embed best practice and to enhance the confidence of members of the public, funders and the regulator in their charity.

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The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.