Trustees reporting on fundraising standards
Being a charity trustee is a life of dichotomy. On one hand a trustee is giving up their time and volunteering to assist those in need and on the other they are heavily regulated and required to meet exacting standards. Recently, several proposals have been made to change the regulation of charities and seek less reliance on volunteer trustees. However, such a seismic shift in position is unlikely.
This means that there is a tremendous amount of regulation that trustees need to understand. It is also important to remember that there could be several areas of regulation which need to be understood. These include: charity legislation; guidance from the Charity Commission; requirements of other regulators, e.g. the Fundraising Regulator or Ofsted; and legislation covering the specific activities of the charity.
In small charities without paid employees the trustees are solely responsible for ensuring that they are on top of all their duties. In larger charities with employees, the trustees are still responsible, but need to ensure that they have appointed someone to ensure compliance is achieved, otherwise this action, as well as the responsibility, remains with the trustees. After all, the buck stops with the trustees, not the employees.
There is so much information which is needed by trustees that it is often not possible for everything to be absorbed by a single trustee.
Low compliance
Therefore, it is not surprising that a recent study found that only 21% of trustee annual reports submitted to the Charity Commission complied with all six of the fundraising reporting standards. A separate study found acceptable compliance by 40% of charities. However, this needs to be considered in the full context of reports, where many assessed annual reports do not include all the information required by the Charities Statement of Recommended Practice (SORP).
Turning to fundraising, the reporting requirements were introduced by the Charities (Protection and Social Investment) Act 2016, which added section 162A to the Charities Act 2011. It is titled “Annual reports: fund-raising standards information” and came into force on 1 November 2016. This means that the information set out in the 2016 Act was required to be included in all relevant charity annual reports for financial years ending after this date.
A charity is required to include a fundraising standards statement in its annual report if its gross income exceeds £500,000, or if its gross income exceeds £250,000 and the aggregate value of its assets at the end of the year (before deduction of liabilities) exceeds £3.26 million.
Before looking at the items to be reported on it is worth noting that not all copies of the 2011 Act available online are updated. Therefore, when you are looking at the legislation it is important to check that you have the latest version, for example, if you copy does not have section 162A it is out of date and you will need to get a new copy.
Required statements
According to section 162A of the 2011 Act in respect of the reporting of fundraising standards, there should be a statement of the following:
- The approach taken by the charity to activities 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 on behalf of the charity, and, if so, what 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 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 from behaviour in the course of, or in connection with, such activities involving unreasonable intrusion, unreasonable persistency or undue pressure).
- Unreasonable intrusion on a person’s privacy.
- Unreasonably persistent approaches for the purpose of soliciting or otherwise procuring money or other property on behalf of the charity.
- Placing undue pressure on a person to give money or other property.
- Review the annual report against a SORP checklist to ensure that everything required is included.
- Delegate the first draft and approval of the report to a small number of people who will need to check the regulations and ensure that all is included.
- Listen to professional advisers when they propose additional information be included.
- Ensure that the fundraising regulations are understood, that policies and monitoring of those polices are in place, and that the report accurately reflect the procedures adopted.
It is relatively easy to comply with some of the requirements, for example, a simple response showing compliance with (b) above would be: “The charity is a member of the Institute of Fundraising and is bound by the Code of Conduct of the Fundraising Regulator, the Fundraising Code.”
It is also easy to comply with (c) and (e) above. Thus the response could be: “The charity was not held to have failed to comply with the Fundraising Code in the reporting year” or “The charity was held to have filed to comply with the Fundraising Code on one occasion in the reporting year”. “The charity received no complaints in relation to its fundraising activities in the reporting year.” Alternatively, “The charity received two complaints in relation to fundraising activities undertaken on its behalf by [a person] [people] acting on behalf of the charity in the reporting year”.
Greater detail required
It is more complicated to report on the other three matters. These require much more detail, and for a charity which undertakes a number of different types of fundraising, the report is likely to increase considerably in length as a result of the information required. While it is only necessary to outline the approach, a reasonable amount of detail is required to ensure that the statement complies with the requirements in (a) above.
The charity should be monitoring the activities of those fundraising on its behalf (d) above, whether employees or professional fundraisers, so a statement that the charity has not undertaken any monitoring shows that there is a matter for improvement. Hopefully, trustees of each charity are monitoring the fundraising activities which are undertaken for the charity.
As set out in the guidance from the Charity Commission and OSCR, the trustees do have overall responsibility for fundraising and should ensure that the activities are being monitored and those monitoring reports should be sent to the trustees for review.
Behaviour which is considered to be unacceptable in fundraising is set out in section 162A(2) of the Charities Act 2011 and is:
Therefore, trustees need to ensure that they work with volunteers or employees engaged in fundraising to ensure that there is a clear policy setting out the above behaviors are unacceptable. There also needs to be monitoring in place to ensure that if unacceptable behaviour takes place that it is caught, and appropriate action taken. Finally, these steps need to be included in the annual report to meet the requirements of (f) above.
Helpline for vulnerable people
Simply having a policy may not be sufficient to protect the vulnerable. It may also be necessary to have a helpline that vulnerable people can call to report pressure or simply to be supported in cancelling a donation. Steps may also be necessary to train fundraiser to understand signs of confusion so that they so not seek donations from someone who does not understand exactly what they are doing in relation to the fundraising ask.
A decision not to seek donation from people based on age would not be appropriate as this would not be treating people equally. However, some protections should be considered.
Looking at a number of reports on the requirement to include a fundraising standards compliance statement in the accounts of a charity, one can understand why there is confusion. The information available for trustees is often not clearly set out; it is confusing; and it is also unclear where the requirements sit as there is confusion as to the actual legislation. (To make it clear, the 2016 Act introduced a change to the 2011 Act, so the legal requirements are in the 2011 Act. The 2011 Act also contains the information to show if there is a reporting requirement for the charity.)
Issues are complex
In summary, there are many reasons why the statements are not included in the annual reports of many charities. These range from not being known through to the issues being complex and not fully reported. However, there are easy ways to ensure that these can be included in future:
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