Many charities rely on donations from the public or from grant-giving bodies to fund their activities. The process of seeking funds from donations is known as fundraising. It is often an important part of charities’ operations—and it comes with some important obligations for the charities, and for their trustees or directors.

The Charity Commission is explicit that it expects charities in England and Wales to behave in a way that will not risk the charity’s reputation. It also expects them to ensure that what they do will not harm public trust and confidence in either that specific charity, or the sector more generally—and there is considerable potential for harm if charities get their fundraising wrong. The responsibility for this rests on the shoulders of the charity’s trustees.

Fundraising: The Role of Trustees

Charity trustees or directors are responsible for how a charity is run. This includes how it raises funds, as well as how it spends money and delivers services.

Our page on Being a Charity Trustee or Director explains that trustees and directors have six key responsibilities in England and Wales. These are:

• To ensure that the charity is carrying out its purposes for the public benefit;
• To comply with charity law and the charity’s governing document;
• To act in the charity’s best interests;
• To manage the charity’s resources responsibly;
• To act with “reasonable care and skill”; and
• To ensure that the charity is accountable.

When talking about fundraising, three of those are particularly important: acting in the best interests of the charity, managing the charity’s resources responsibly (which includes its reputation) and acting with reasonable care and skill.

In practice, this means that trustees need to ensure that there are systems in place to hold people to account for their part in the way that the charity raises funds. Trustees must also be confident that they have access to the information that they need, so that they can be sure that the charity’s fundraising is consistent with the approach that they have set out, the law, and best practice in the sector.

Six Principles for Fundraising

The Charity Commission sets out six principles for charity fundraising. It states that these principles should be followed by trustees or directors to ensure that they meet their responsibilities in relation to fundraising. The principles are:

1. Planning effectively

Trustees are responsible for planning the charity’s overall approach to fundraising.

This includes setting targets for fundraising, and the expectations. Trustees are also expected to monitor what is happening within the charity to ensure that this fits with the overall approach that they have set out. Plans should include the methods to be used for fundraising, the resources this will require, any risks that arise, and how these will be managed and mitigated.

You may find it helpful to read our page on Risk Management to understand more about this issue.

2. Supervising your fundraisers

Trustees need to be confident that all fundraising is in the charity’s best interests.

This means that they need to have systems in place to monitor what is being done by others who are raising money on the charity’s behalf. This may include paid staff, volunteers, or commercial companies (for example, so-called ‘charity muggers’ or ‘chuggers’). It is particularly important that trustees are confident that all fundraising is consistent with the overall approach that they have set out.

3. Protecting your charity’s reputation, money and other assets

Trustees are expected to protect their charity from excessive risk, which includes to its reputation as well as its finances.

They therefore need to have systems in place to consider the impact of fundraising on donors, supporters and the wider public. For example, they need to consider the cost of fundraising and the impact of this on the charity’s reputation.

The use of ‘charity muggers’ or ‘chuggers’ (people paid to accost people in the street and persuade them to sign up for a direct debit donation) was widely criticised in the mid-2010s. This was partly because people hated it, but also because of the cost to the charities concerned, and the fact that only a small proportion of the donation went to the charity itself.

Trustees must also make sure that the charity receives all money to which it is entitled (from bequests, for example), and that they have tried to reduce the risk of fraud. This means, for example, having systems in place to ensure that cash donations are only ever counted by two people together, and that expenses are covered and accounted for separately from income from donations.

4. Identifying and complying with laws that relate to your charity’s fundraising

Trustees are responsible for ensuring that their charity complies with all relevant legislation.

There is a wide range of laws that may apply to fundraising, including data protection and licencing laws. There are, for example, laws governing the use of professional fundraisers, collecting money in the street, and holding lotteries or raffles.

Being aware of all the relevant laws may require trustees to obtain professional advice from time to time. However, there is also plenty of guidance online, including from sources such as the gambling regulator in the UK as well as the Charity Commission.

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5. Identifying and following any standards that apply to your charity’s fundraising

The Charity Commission and its fellow regulator, the Fundraising Regulator, set out standards that apply to charities that raise funds.

As with laws, there is a wide range of standards that apply to charity fundraising. For example, there are standards about sharing personal information, banking donations quickly, training face-to-face fundraisers and dealing with requests to ‘unsubscribe’. Trustees must ensure that they are aware of all the necessary standards, and that their charity is complying with them.

6. Being open and accountable

Trustees need to ensure that their work, and the work of the charity, is transparent.

This means that the charity can, and does, explain what it is doing to those who have an interest in knowing. This will mean reporting on fundraising, including through accounts and public statements, when required. However, it also means sharing information about fundraising with donors, supporters and the wider public, to ensure that everyone who wishes to do so can understand the charity’s approach.

Charities also need to have a complaints procedure, and trustees should be clear how complaints are managed.

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Some Special Cases

There are two particular issues that may be worth touching on separately. These are charity appeals and refusing donations.

1. Charity appeals

A charity appeal is any request to the public to give money (or other donations) to the charity, where the funds raised will be used for charitable purposes (or other ‘good works’).

Charity appeals may be general, to support the overall work of the charity. They may also be specific, for example, to raise money for a new roof for a church hall, or to support the survivors of a particular natural disaster.

The wording of the appeal is very important.

Our page on Running a Charity: Financial Issues explains that funds can only be used for the purposes for which they were raised. This means that it is important to word appeals very carefully, and to include a ‘secondary purpose’. This will ensure that you can avoid having to return donations if your appeal is unsuccessful (that is, you don’t raise enough money, or you cannot do what you planned) or you raise too much money.

2. Refusing donations

As a principle, clearly no charity wishes to turn down donations. They need funds to operate and support those in need.

However, there are times when a donation can—and sometimes should—be refused. These include:

• Where the donation is from an illegal source (for example, criminal activity);

• Where the donor does not have the power to make the donation (for example, if they do not own something that they are trying to donate); or

• Where the donor does not have the mental capacity to understand what they are doing in making the donation.

Trustees should not be tempted to turn a blind eye to any of these in the interests of getting more money. That is not in the charity’s best interests, because doing so could damage the charity’s reputation.

Trustees are also required to refuse grants where they cannot spend the money on the purpose for which it is being given, or within the time specified.

They should also consider refusing donations that come with unacceptable conditions. For example, this might include if the donor wishes to agree the purposes for which the money is going to be used on a case-by-case basis, or if the donation is a property and the donor wishes to retain too many rights to it.

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In Conclusion...

Fundraising is an important part of the work of many, if not most, charities. It supports the charity’s work with people in need, and ensures that it can continue to operate. Getting fundraising wrong can therefore be crippling to the charity’s operations, but can also affect its reputation.

It is therefore essential that charity trustees understand and deliver on their responsibilities for fundraising.

It may not be as interesting as service provision, but in its way, it is at least as important.

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