• Contact Us

The Fundraising Regulator’s First Year

on Monday, 23 October 2017.

The Fundraising Regulator has been with us for a year. This article provides a recap of fundraising regulation, the way the Fundraising Regulator regulates, new fundraising rules and the funding model.

The Regulatory Regime

The Fundraising Regulator has no statutory powers to dictate fundraising practice or to fund itself. It is a voluntary regulator within a framework of self-regulation. But it sits within a matrix of expectation and legal framework ready to impose mandatory regulation at any time.

Agreements with fundraisers must state the fundraiser's "voluntary scheme for regulating fund-raising, or any voluntary standard of fund-raising".  It must explain how people are protected from intrusion, persistence and pressure. Charities must ensure they are meeting this requirement and should review their agreements with fundraisers if they have not already.

Charities which meet the audit threshold must also cover fundraising in their annual reports including whether it is part of a voluntary scheme and how it protects people from intrusion, persistence and pressure. Because the reporting regime is retrospective, charities need to have their policies and procedures in place now in order to report on them.

The Fundraising Regulator is the available voluntary scheme. It took-over the Code of Fundraising Practice which is the available voluntary standard. It seeks to resolve issues between members of the public and fundraisers under the Code by investigating and taking remedial action whether or not the fundraiser is registered. But it relies on co-operation.

The Charities Protection and Social Investment Act 2016 provides government with the legal framework if it wants to establish a mandatory statutory regime.

Fundraising Preference Service

This is a platform allowing members of the public to say they don't want fundraising contact from specific charities. It is administered by the Fundraising Regulator who will inform charities of requests it receives. As a request takes away the legal basis for making contact in data protection law, enforcement is a matter of data protection regulation.

Style of Regulation

At the time of writing, there is one adjudication. The investigation into Neet Feet and eight charities identified improper practices carried on by Neet Feet's staff, generally in contravention of its written policies. That these were failings is uncontroversial. What is noteworthy is the Fundraising Regulator's approach to the charities that employed Neet Feet.

The Fundraising Code said "organisations MUST check, and make all reasonable efforts to ensure, the on-going compliance of third parties with the Code and their legal requirements."  Something had gone wrong on the ground and the question was whether the employing charities had made "all reasonable efforts". 

A clear regulatory expectation emerged that a specific, extensive and in-depth suite of on-going due diligence be carried out by charities employing fundraisers. These specific expectations had never before been expressly set-out, but the Fundraising Regulator was willing to find that charities had failed to comply with the code. Where the Code sets standards like 'reasonable,' the Fundraising Regulator showed itself to have the latitude to develop best practice standards in its adjudications and to hold charities to account on retrospectively identified specifics.

Given legislation is already in place to impose a statutory regulator, the voluntary Fundraising Regulator was always going to have to demonstrate its credibility and teeth to the public.

Those Standards Include:

  • checking policies, performance measures and incentives;

  • a lead individual to monitor compliance;

  • clear reporting for performance, quality and compliance;

  • qssessing risk and specifying type and frequency of monitoring accordingly;

  • qpproving, reviewing and (in the case of compliance matters) observing training;

  • call monitoring, mystery shopping, site visits and shadowing;

  • policies for complaints and whistleblowing; and

  • agreeing action plans for concerns.

New rules in The Fundraising Code

The Fundraising Regulator does update the Code. Amongst other changes, the due diligence standards from the 24 November neet feet decision became part of the Code on 31 July 2017 with immediate effect, the Fundraising Regulator saying "organisations should already be making 'reasonable efforts". 

Funding

The Fundraising Regulator is funded by a system of levies and registration charges. There is a fixed levy exempt charities and a sliding scale levy for registered charities spending more than £100,000 on fundraising. Small charities can register for £50 and fundraising businesses can register for a sliding scale fee based on fundraising turnover.

There is no strict legal obligation to register or pay the levy, but in June 2017, the Fundraising Regulator reported that 75% of charities within the levy had paid.

Conclusion

Charities need to ensure that their agreements with professional fundraisers comply with the updated statutory requirements. If they meet the audit threshold, they will need to ensure they are in a position to include a comprehensive report on fundraising in the trustees' annual report.

The reality of voluntary regulation is that the Fundraising Regulator will adjudicate on any charity. It is establishing itself as a credible regulator with the media and public.  The legal framework presses charities to subscribe to the Code and there is the looming threat of a compulsory levy if it isn't paid on a voluntarily. The regulation of charity fundraising is a compelling reality even if it is not (yet) all on a statutory footing. 


For further information, please contact Rachel Tonkin in our Charity Law team on 0117 314 5397.

Leave a comment

You are commenting as guest.