As first published in Civil Society Media (15 August).
Scrutiny on charity fundraising has never been more rigorous. Four years have passed since Olive Cooke’s death, and its sad legacy is having a lasting effect on the sector.
Further high-profile scandals did not help. Seven charities came under fire in November 2016 from the Fundraising Regulator for using fundraising tactics that it found had "deliberately intimidated, misled and targeted the vulnerable", by way of the now-defunct fundraising agency, Neet Feet. In 2017, the regulator published a report on the total number of complaints received in the prior year, in total 42,781 complaints were made against charities, the majority relating to direct mail.
More than bad publicity, these and other controversies have dented fundraising activities, with the UK charity giving population shrinking by four per cent last year.
Charity Commission and Fundraising Regulator response
A response from the Charity Commission and the Fundraising Regulator has been inevitable, with both organisations facing pressure to instil positive change. By releasing a new version of its Code of Fundraising Practice earlier this year, the regulator has sent a clear message to the sector, reaffirming its expectations of fundraisers, charities and third-party organisations when fundraising.
The changes, which are set to come into effect from October 2019 (though the new Code is already published and available to read), sees the regulator consolidate its former code, rulebook and legal appendices into one code. Its standards are restructured into three parts, allowing users to more easily identify which may apply to the type of fundraising they are carrying out via a useful breakdown according to fundraising method (e.g. collection, digital, events, etc.).
While according to the Fundraising Regulator, the main reason for this updated code is to improve clarity, further sector scrutiny is to be expected.
In an evolving regulatory environment, it’s important that charities are aware of the tools available to help them navigate the changes, beginning with sound legal advice. While large charities with in-house counsel may be familiar with the benefits of legal support, small to medium-sized organisations do not always mirror this.
By providing guidance, legal partners can ensure charities remain compliant, for example, by developing a scheme of delegation. This critical component in charity compliance demonstrates clearly what a board has delegated and, importantly, reserved to them. This clarity ensures that trustees can fulfil their legal and constitutional duties, reducing reputational risk.
Corporate social responsibility: 'These partnerships can bring their own risk'
Another trend is that businesses are now placing a higher priority on corporate social responsibility, increasing the opportunities available to charities looking to enter into corporate partnerships. These partnerships can bring their own risk.
Before rushing into a partnership, charities must ensure that it is both viable and beneficial. A legal partner can support this by carrying out due diligence on the proposed arrangements and developing parameters to maintain compliance.
Legal support is not limited to compliance. It can also be used to maximise commercial effectiveness. One technique charities can explore is setting up a trading company. This enables charities to isolate the funds raised through a commercial partnership to avoid paying large sums through corporation tax.
The recent agreement between mental health charity Mind and McVitie’s demonstrates how a commercial partnership can be structured to suit both parties.
Supported by robust legal advice, the partnership has seen Mind provide the rights to its logo for use on a national advertisement campaign. In exchange, McVitie’s is working with the charity on setting up six new ‘Time to Change’ hubs and training 400 ‘champions’ to encourage more open conversations around mental health. McVitie’s is also making a wider financial investment in Mind’s charitable activities.
Today’s fundraising landscape is a complex one. As more charities embark on corporate partnerships and other fundraising techniques, guidance will be needed. A legal partner can help minimise interruptions and maximise commercial results while avoiding regulatory headaches or the media in search of another scandal.
For more information, please contact Natalie Barbosa.
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Impact of the Supreme Court’s judgment in Bresco Services Limited v Michael J Lonsdale [2020].
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