Our page on Running a Charity: Fundraising sets out the duties of trustees related to fundraising. It explains that they must always act in the charity’s best interests, and that there are six principles that trustees should follow. These include planning effectively, supervising the charity’s fundraisers, protecting the charity’s reputation, resources and other assets, complying with both the law, and any standards relating to charity fundraising, and being open and accountable.

These principles therefore explain how trustees should behave in relation to fundraising. This page explains some of the methods that trustees might consider using, as they plan the charity’s fundraising efforts. In each case, it explains the method, describes some of the advantages and disadvantages, and sets out any areas of particular concern.

The Purpose of Fundraising

The key to deciding on a method of fundraising is the purpose of your fundraising.

You should, in particular, consider:

• Whether you have a target amount of money in mind, and if there is a particular project that you need to raise money to deliver;

• The timescale of your fundraising, because a specific project will have a start and end date; and

• Who will do the work for your fundraising, for example, will you use volunteers or professional fundraisers?

Methods of Fundraising

This section describes the main methods of fundraising that a charity can plan and deliver itself. It does not cover spontaneous and unsolicited donations, such as those made by individuals or organisations following their own fundraising efforts.

1. Charity collections and events

Charity collections involve volunteers going out with collecting boxes to solicit donations from members of the public.

This may be door-to-door, by standing in shopping centres, or by doing some activity for which people may donate money, such as carol singing. Goods may also be exchanged for donations, and collecting boxes may be left in other shops on an ongoing basis.

Examples of this kind of collection include the Royal British Legion’s annual Poppy Appeal in the UK, where supporters make a donation and receive a plastic poppy to wear leading up to Remembrance Day.

You can also hold events to raise funds.

This is probably most often used by small independent charities. Examples of this kind of fundraising include church fetes, school Parent–Teacher Association events, and youth organisation fundraising.

The advantages to both charity collections and events include low costs, because most of the work is done by volunteers. However, there are also some important issues for charities to bear in mind. For example, to avoid fraud or losing money, collection boxes should be sealed and only opened, counted and the total recorded, in the presence of two volunteers. Charity boxes should also be opened and counted regularly, and the money banked immediately, without deducting expenses. Expenses should be handled separately, as part of the charity’s operating expenses.

2. Charity appeals for particular causes or in general

Charities may also make appeals for money, either to support their general work, or for a particular cause or purpose.

Appeals might be made by post or email to registered supporters, on the television or other mass media, or through sponsored posts on social media platforms. The big advantage of an appeal is that you can reach a large audience relatively quickly and easily, and—depending on the method you use—at a relatively low cost. This may therefore be useful in an emergency, such as an appeal for funding to support people who have experienced a flood, earthquake or other natural disaster.

There are some issues to consider, however, especially when raising funds for a specific cause. In particular, you need to be clear about what you will do if you do not raise enough funds, or if you cannot spend the money for some reason. Under these circumstances, the wording of the appeal is crucial (see box).

3. Grants and government money

The government and some other bodies, such as the National Lottery Community Fund in the UK, have the power to provide grants or direct funding to charities.

This process generally requires an application, which can be quite an onerous process. Grant-giving bodies are generally required to assure themselves that the money will be well-spent, and that there are systems in place to prevent fraud. However, if your charity has someone who is capable of preparing grant applications—or is prepared to pay someone to do so—this can be a good source of resources.

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4. ‘Professional’ fundraising

Charities may also choose to pay other companies to do their fundraising.

These ‘professional fundraisers’ may include telemarketing companies paid to fundraise by telephone, consultants paid to apply for grants, fundraising agencies who collect money door-to-door, and companies that are paid to sell lottery or raffle tickets on behalf of a charity.

Using professional fundraisers can provide the charity with new or necessary expertise—for example, in making grant applications.

However, charities must also take care when working with professional fundraisers to ensure that doing so does not harm the charity’s reputation (see box).

Partly because of concerns about practices, the Fundraising Regulator for England and Wales has provided guidance for charities and professional fundraisers.

This sets out the importance to both of having a written agreement, monitoring activities carefully, and being able to report on activities. The charity must also carry out due diligence in its choice of fundraising partner.

5. Gift Aid and other government schemes

In the UK, charities can reclaim the tax on donations made by UK taxpayers who make a Gift Aid declaration.

Taxpayers must make a declaration for each charity they support, or for each platform that they use, but only have to make it once. For example, once a declaration is made on the JustGiving platform, it can generally be applied to any charity supported via the platform.

Charities can ask their supporters to complete Gift Aid declarations, and make the process easier by supplying Gift Aid forms.

The big advantage of this method is that it is relatively simple, but a reliable source of money.

Donations can be increased by 25%, which is well worth while. There is a certain amount of administration required, which means that you need systems in place to track donations. However, once you have set those up, the process is relatively straightforward. There is also plenty of guidance available about how to set up the systems, and claim the money back from the government.

6. Charity shops and other trading methods

Many charities run some form of trading arm, such as a charity shop, mail order catalogues or online shops.

In the UK, the Charity Retail Association estimates that there are over 11,000 charity shops—and that doesn’t necessarily include gift shops at locations managed by charities such as the National Trust. Charity shops are often helpful in raising awareness of smaller and more local charities, such as hospices. They also tend to run largely on donations and volunteer labour, so can at first glance seem relatively cheap forms of fundraising.

However, there are also some important challenges. Charity shops are often classed as commercial trading, and therefore need to comply with regulations on this as well as charitable activities. They may find it challenging to find volunteers, and will need paid managers to run the shops. Finally, there are administrative requirements to accepting and using donations, such as record keeping, managing personal data of donors, and Gift Aid issues.

7. Wills and legacies

Many people choose to leave legacies to charities in their wills.

It can be a way for them to feel that they are able to do some good, even after their own death. Where this happens spontaneously, charities can simply accept the legacy (provided of course that they are confident that the money has not arisen from any criminal activity—and there is more about why a charity might refuse a donation in our page on Running a Charity – Fundraising).

However, some charities choose to make active appeals to supporters to leave a legacy in their wills. Some even offer help with will-writing, or with the costs of preparing a will. This is perfectly legitimate—but it may raise some ethical issues.

These include:

• The potential for families of those involved to feel that their relative may have been put under pressure to leave money to the charity;

• Concerns that older people may not have the capacity to make a will or leave a legacy;

• The potential for the cost to the charity of supporting the will writing to be greater than the legacy itself; and

• The risk that a particular charity worker may become the beneficiary rather than the charity itself.

It is therefore important that charities have rules in places to govern how they support people asking for help with wills, or leaving a legacy to the charity. These should include that an independent solicitor is involved, that the charity does not recommend any particular solicitor, and that the solicitor is working for the donor, not the charity, even if the charity is paying their fee.

Charities should also understand and have policies in place to manage relationships with donors and their families. In particular, it is important that staff appreciate that they are likely to be discussing difficult issues—and our page on Talking about Death may be helpful here—and the importance of being sensitive, including when making arrangements to collect the legacy in due course.

8. Lotteries and raffles

Lotteries are defined as games that you pay to enter, where there is at least one prize, and winning only depends on chance.

They include tombolas, raffles and sweepstakes. Lotteries are a useful method of fundraising because even non-supporters of a charity may engage if there is a prize available. However, they are also a form of gambling, and therefore may be subject to additional regulation. For example, in England and Wales, they are regulated by the Gambling Commission. Charities therefore need to be confident that they are operating within the rules set out by all the necessary regulators, both for charities and for gambling.

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In Conclusion

There are many different ways that charities can choose to raise funds.

The decisions of charity trustees will depend on issues such as the charity’s purpose, size, resources and availability of expertise. As with any other decision about how a charity is run, it will need to be carefully considered in the light of the charity’s own best interests.

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