Key Legal Points

General Notes

This section sets out general commentary on key legal points. It does not cover all legal matters relating to volunteer fundraising and specific legal advice should be obtained for particular circumstances. If in doubt over any such issues, organisations should seek legal advice.

 

Distinguishing between the 'on behalf of' and 'in aid of' relationships (agency and non-agency relationship)

As mentioned previously, there is a distinction between someone acting 'on behalf of' an organisation and someone acting on his or her own behalf but 'in aid of' that organisation. If an organisation appoints someone to act on its behalf then that person is its agent and the organisation will be responsible for his or her acts when those acts are within the scope of his or her authority. For this reason, it is important to be very clear about what a volunteer may and may not do in the name of the organisation.

A volunteer acting 'in aid of' an organisation should have no authority to act in its name, and it shouldbe clear that the volunteer is simply raising funds for the organisation but acting in his or her own capacity. An organisation will not then generally be responsible for the volunteer's acts. This situation can change if the organisation acts in such a way that it is reasonable for a third party dealing with the volunteer to believe that the volunteer has authority to act on the organisation's behalf.

It is not always easy to distinguish the 'on behalf of' (agency) from the 'in aid of' (non-agency) relationship in particular situations. At each end of the scale, it is clear enough but in between there are grey areas. For example, a branch committee member (in the case of branches which are not themselves separate legal entities) will have actual or ostensible authority to do certain things in the name of the organisation and so will be its agent in relation to those things. On the other hand, someone who, without authority from the organisation, runs a fundraising event in aid of it will not be an agent. However, what if the organisation has given permission for its logo to be used and has told the volunteer fundraiser that it will pay the venue hire costs? If the volunteer fundraiser then books the venue 'for the organisation', did he or she have authority to do that and was it reasonable for the venue hirer to rely on that authority? If so, an 'on behalf of' (agency) relationship has been created. Shades of grey are unhelpful and confusing. It is best for organisations to avoid them by being clear about the scope of a volunteer fundraiser's authority.

This section is a Standard in the Code

If an organisation wants an ‘in aid of’ relationship to exist, it is important that organisations make it clear that the volunteer may not take any action in the name of the organisation or commit the organisation to doing anything but may say that he or she is raising money in aid of that organisation.

A right to use the organisation’s logo might lead some people to conclude that a volunteer acts on behalf of the organisation. If the logo of the organisation is being used then try to agree a statement which must accompany the use of the logo such as “[name of volunteer]: raising funds in aid of [name of organisation]”.

 

Tax and VAT

Certain fundraising events are exempt from income and corporation tax and VAT if organised by a charity or other philanthropic or benevolent institution or its wholly owned subsidiary company. If the event is organised by volunteer fundraisers acting 'on behalf of' an organisation then it can fall within the exemption. If, on the other hand, it is organised by volunteer fundraisers acting 'in aid of' an organisation then the income may be subject to VAT and the profits may be subject to income tax in the hands of the volunteer fundraiser. Contact HM Revenue & Customs (HMRC) for guidance.

It is a good idea for charities to ensure that gift aid is used, where applicable, to recover basic rate tax on donations. Detailed advice on the administration of gift aid can be found on HMRC’s website.

 

Intellectual property

 Intellectual property rights (such as copyright) created by a volunteer fundraiser will belong to the volunteer fundraiser. Copyright will exist if, for example, someone takes photographs or writes any provisional materials for the organisation. If the volunteer fundraiser may be creating valuable intellectual property rights, it is important that he or she is asked to execute an assignment of these rights to the organisation. This should be done before the volunteer fundraiser starts their activities.

 

Trusteeship of funds raised

A volunteer who raises money from others for an organisation is a trustee of the funds raised and it is essential that they ensure that the organisation receives all that money.

It is good practice for organisations to ensure that there is a proper arrangement for money to be transferred to the organisation as soon as practicable; the sooner the money is transferred, the safer it is. Cheques should be made payable to the organisation (this will assist in reclaiming Gift Aid). If money is collected over a long period, it’s reasonable for an organisation to request it be transferred at reasonable intervals. It’s a good idea for the organisation to have a system in place for following up funds raised by volunteers. Decisions not to follow up small amounts raised might be justified on the grounds of cost-effectiveness, but bear in mind the possible impact on the charity’s reputation.

 

Volunteer or Employee?

Volunteers can sometimes be or become employees with employment rights and there have been cases in employment tribunals where people thought to be volunteers have successfully claimed such rights. The characteristics of an employment relationship which give rise to such rights are:

  • a degree of control over how and when the individual works
  • an apparent intention to create legal obligations
  • binding commitments to provide and do work
  • payment

 

It is advisable for organisations to obtain legal advice on the terms of their arrangements with volunteers.

Any written agreements with volunteers should be couched in terms of hopes and expectations about the relationship, not in terms of binding obligations to provide or do work.

It is important not to make payments, such as fixed expenses allowances if one wishes to avoid turning a volunteer relationship into an employment one. The reimbursement of reasonable out of pocket expenses actually incurred does not, however, affect the relationship.

Although most volunteering will not affect the receipt of state benefits, it is a good idea for organisations to tell all volunteers that if they are in receipt of state benefits, they should confirm this with Job Centre Plus or their benefit advisor. More information on volunteering and benefits can be found at GOV UK.

Note also that if an employment relationship exists, the employer is liable for national insurance contributions and PAYE on payments made, the national minimum wage might apply, and other employment rights will come into force e.g. annual leave, sick leave, and maternity leave.

 

Commercial participators and professional fundraisers

The distinctions between commercial participators and professional fundraisers are dealt with in more detail in the Charities Working with Business Code of Fundraising Practice. A commercial participator is someone who is in business and in the course of that business engages in a promotional venture, representing that benefits will accrue to the organisation. Such people are not volunteers for the purposes of this Code of Practice. Professional fundraisers include people who receive more than £10 a day or £1,000 per year (or benefits worth these sums) raising money for charitable, philanthropic or benevolent institutions. The payment of an honorarium or fixed expenses allowance (paid irrespective of actual expenditure), or the availability of other

benefits, might turn a 'volunteer' into a professional fundraiser. It is essential that professional fundraisers and commercial participators have a written agreement with the institution concerned, and they mustmake a statement explaining remuneration whenever seeking funds.

Further information is available in the Payment of Fundraisers guidance.