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Online Fundraising Platforms, Failed Appeals and the Fundraising Regulator

on Wednesday, 22 June 2022.

Charities fundraising through appeals to the public should be familiar with the role of the Fundraising Regulator and the Code of Fundraising Practice, which applies to charitable institutions, third party fundraisers, and online fundraising platforms.

The Code of Fundraising Practice (the Code) includes requirements that support the law on failed appeals but there is scope for improvement.

The use of crowdfunding appeals and other online platforms to support charitable projects is increasingly popular. We highlighted some of the challenges that can arise in a recent article. It continues to be common to read of online appeals (both charitable and non-charitable) in which the nature of the project funded is uncertain or the appeal attracts complaints that there is a lack of transparency about the way that the funds raised have been spent. Unsurprisingly, commentators have asked whether online fundraising should be more tightly regulated.

In the absence of such regulation, charity trustees should be aware of the risks that arise from the use of online fundraising platforms - and how those risks can be managed. The Fundraising Regulator's web-site includes helpful plain English guidance.

The Code contains specific provisions about responsible use of online fundraising platforms. For example, the Code requires fundraising platforms to publish guidance that highlights (among other things) the need for fundraisers to consider and make clear to potential donors:

  • "whether the money raised is for a specific purpose or for the person receiving it to use as they see fit. If the money is for a charitable institution and will be used for a specific purpose, fundraisers must contact the charitable institution to make sure they are aware and happy to receive the money for this purpose."
  • "what the fundraiser will do with the money if: 
      • they do not raise enough to meet their target
      • they raise more than their target
      • the original purpose for which they are asking for donations is no longer valid for any reason"

The Code also requires that online fundraising platforms:

  • request that users of the platform confirm they have read and understood the guidance for fundraisers (covering the matters set out above) before the donation page is published - this confirmation needs to be a 'clear and positive action' which the Code says can be inserting a tick in an unticked box
  • provide a link to the Regulator's guidance on online fundraising

In our experience, the steps required by the Regulator -  links out to guidance and tick-box confirmations - are not sufficient in practice to ensure that users understand the rules on failed appeals and miss the opportunity to prevent failed appeals from occurring. Just as most of us routinely tick the box to accept online terms and conditions without reading them, fundraisers will often tick the box without reading the guidance in their haste to get a much needed appeal underway. It would be helpful for online fundraising platforms to do more in this area, perhaps redesigning sites to make it impossible to launch an appeal without a clear statement of how funds will be applied where an appeal fails or excess funds are raised.

Beyond failed appeals, there is also a need to help charities, fundraisers and donors to navigate the blurring of boundaries between traditional charitable giving and non-charitable giving as online platforms create more opportunities for organisations and individuals to fundraise directly from the public.

The Fundraising Regulator's draft strategy for 2022-2027 highlights this development, saying "current trends suggest that digital methods will be the dominant mechanism for giving", highlighting the risks which accompany the "huge opportunities" in this area, and suggesting that the Regulator "will need to inform the sector about these risks, as well as anticipate and mitigate against them." It will be interesting to see what form the final strategy takes when it is published shortly (it is due early summer 2022) - and what action follows.

Meanwhile, charity leaders will need to ensure they have in place policies and procedures to ensure that fundraising appeals are properly considered.

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For more information on fundraising or advice on failed appeals, please contact Shivaji Shiva in our Charities team on 07788 313 298, or complete the form below.

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