At the beginning of 2023, the Fundraising Regulator published new research and updated guidance to help charities comply with the fundraising requirements in the Charities (Protection and Social Investment) Act 2016 (“The Act”). Here is a reminder of the fundraising statements that must be included in your annual report, as well as an overview of the research and new updated guidance.
The Fundraising Regulator (“the regulator”) is the independent regulator of charitable fundraising in England, Wales and Northern Ireland. It was set up in 2016 as a result of media exposure of unacceptable fundraising techniques and seeks to build public trust and maintain high fundraising standards across the UK.
Any organisation that undertakes fundraising can apply to register with the regulator. If a charity spends over £100K on fundraising each year, they are invited to make a voluntary contribution to support the costs of the regulator through the annual fundraising levy (the levy amount varies based on fundraising expenditure). Registration is also open to charities who spend less than £100K a year.
Fundraising statements
The Act requires all charities who are subject to a statutory audit in England and Wales (those with income over £1 million, or gross assets over £3.26m and income over £250K) to provide statements in their annual report in relation to their fundraising, which is submitted to the Charity Commission annually within their financial statements.
These statements cover key aspects of a charity’s fundraising activity and fall into the following requirements:
- the approach taken by the charity to activities undertaken by the charity or by any person on behalf of the charity for the purpose of fundraising, and in particular whether a professional fundraiser or commercial participator carried on any of those activities;
- whether the charity or any person acting on behalf of the charity was subject to an undertaking to be bound by any voluntary scheme for regulating fundraising, or any voluntary standard of fundraising, in respect of activities undertaken on behalf of the charity, and, if so, details of the scheme or standard;
- any failure to comply with a scheme or standard mentioned under paragraph (b);
- whether the charity monitored activities carried on by any person on behalf of the charity for the purpose of fundraising, and, if so, how it did so;
- the number of complaints received by the charity or a person acting on its behalf about activities run by the charity or by a person on behalf of the charity for the purpose of fundraising;
- what the charity has done to protect vulnerable people and other members of the public in the course of, or in connection with, such activities.
As we are now almost halfway through the year and many charities are likely to be in full swing of preparing their annual report for inclusion in their financial statements. It will therefore be worthwhile referring to the research and guidance summarised below to ensure you comply with the requirements of the Act.
Research conducted by the regulator
In July 2022, the regulator reviewed the annual reports of 198 charities. The research sought to highlight good practice and identify areas for improvement in the reporting of fundraising activities within annual reports. This research built on previous research conducted in 2019 and 2020.
Following their research, the regulator found that there are signs of improvement in reporting, but overall, more action is needed by charities to fully meet the requirements.
The research also found that those charities that did not pay the voluntary fundraising levy were less likely to meet the requirements in comparison to those who did.
The findings of the research found that for levy paying charities:
- an increasing number reported on fundraising approaches (88%), voluntary regulations and schemes (80%), and complaints (69%) compared to previous years;
- only 40% provided information about how they monitor fundraising activities carried out ‘on behalf of’ the charity, and only 48% stated what they do to protect vulnerable people and other members of the public while fundraising;
- only 33% (47 of 144 reports) included a statement on each of the requirements a, b, d, e and f; and
- 9% (13 of the 144) reported on none of the requirements.
For non-levy paying charities:
- only 13% (5 of 38 reports) reported on all the requirements; and
- 32% (12 of 38) reported on none of the requirements.
For more detailed explanations of the findings, please refer to the link below:
https://www.fundraisingregulator.org.uk/more-from-us/resources/charities-act-2016-analysis-july-2022
Room for improvement
The results of the research from the regulator shows that, whilst compliance is improving, the sector still has a long way to go to improve the reporting on the requirements of the Act within their annual reports. Indeed, it was noted by the regulator that “even when these fundraising statements were included (in the annual reports), they typically lacked sufficient detail.”
When preparing your annual report for 2023, it is well worth referring to the updated guidance from the regulator to understand the reporting requirements and your legal duties. Even where your charity is not subject to a statutory audit, it is considered good practice to include narrative on your fundraising practices to provide openness and transparency and help to build public trust in your processes.
The updated guidance can be found at the link below:
