What the Charities Act 2016 means for fundraising
Last week, the Charities (Protection and Social Investment) Act 2016 received Royal Assent. While the provisions in the Act do not take effect immediately, they will be implemented over the coming months and so are important for you to be aware of.
What does the Act mean for fundraising?
Providing more information about how your charity is fundraising
Those larger charities which are required to have their accounts audited (where the gross income exceeds £1 million) will have to include information about their fundraising practice within their annual report submitted to Charity Commission and publicly available. This will need to include details about:
- The charity’s approach to fundraising
- Any use of commercial participators/professional fundraisers
- How the charity has monitored fundraising activities carried out on its behalf to ensure compliance
- How many complaints they have received about fundraising activity
- What the charity does to protect people in vulnerable circumstances and others from unreasonable intrusion to their privacy, unreasonably persistent approaches or undue pressure to donate to the charity
We don’t yet know exactly how this information will be asked for or needed to be submitted – most likely it will be a mix of ‘yes/no’ questions with supporting information given in a statement. The Charity Commission will be giving further clarification in due course.
Fundraising agreements with third parties
There are already legal requirements about what the written agreement between a charity and third parties (professional fundraisers/commercial participators) must include:
- The names and addresses of all the parties to the agreement;
- The date on which each party signed and the duration of the agreement;
- any terms dealing with early termination or variation;
- a statement of the principal objectives of the agreement and the methods to be used to achieve those objectives;
- terms for the payment of fees and expenses to the Professional Fundraiser; and
- if more than one charity is involved, how funds raised will be shared between them
However, under the Act, new terms will need to be added to these written agreements, including:
- Any fundraising standards that the commercial organisation has committed to be bound by
- How the commercial organisation will protect people in vulnerable circumstances and others from unreasonable intrusion to their privacy, unreasonably persistent approaches or undue pressure to donate to the charity
- Any arrangements in place that will enable the charity to monitor compliance with the requirements in the agreement.
It’s currently unclear as to whether these requirements will only apply to agreements entered into after these provisions of the Act come into force, or whether they will also apply to retrospective agreements.
The Act also includes new reserves powers for the Government to intervene in the regulation of fundraising, allowing a statutory regulatory to be set up or for responsibility to be handed to the Charity Commission. It also allows the Government to require charities to register with, and pay fees to, the regulator, as well as comply with standards or guidance set by the regulator. Currently, it has been made clear that these reserve powers are a last resort, and will only be used if self-regulation fails.
Other information about the Charities Act
The Cabinet Office will be required to report on the impact of the legislation at five yearly interval, with the first review being published within four years of the Act being passed.
There will also be changes to Charity Commission powers which, among other things, allows them to give official warnings to charities and disqualify people from serving as trustees. Charities’ powers to make social investments will be confirmed in statute.
While the provisions in the Charities Act do not take effect immediately, it will be important for you to be aware of the imminent changes you may need to make. We will be updating members as soon as we hear more from the Cabinet Office on an implementation plan for the legislation.