New guidance issued for charities on legal requirements for fundraising statements in annual reports

An analysis by the Fundraising Regulator of the annual reports of 106 charities of varying size, but all of which spent more than £100,000 on fundraising in the year, revealed that only 40 per cent of those charities’ reports contained statements on fundraising that complied with the legal requirements set out in section 13 of the Charities (Protection and Social Investment) Act 2016 (the “Act”) - prompting action by the regulator to try to improve compliance in this area.

What does the Act require?

For accounting periods beginning on or after 1 November 2016, charities that have their accounts audited have been required to include statements on certain fundraising matters in their annual reports.

The statements must cover:

  • The charity’s approach to fundraising activity, and in particular whether a professional fundraiser or commercial participator carried on any of that activity.
  • Whether the charity or anyone fundraising on behalf of the charity has agreed to be bound by any voluntary fundraising schemes or standards (such as the Code of Fundraising Practice), and, if so, details of that scheme or standard.
  • Details of any failure to comply with any such scheme or standard.
  • Whether and how the charity monitored fundraising activities carried out on its behalf.
  • The number of complaints the charity or anyone acting on its behalf has received about fundraising for the charity.
  • What the charity has done to protect vulnerable people and others from unreasonable intrusion on a person’s privacy, unreasonably persistent approaches or undue pressure to give, in the course of or in connection with fundraising for the charity.

Common issues identified by the analysis

The analysis, as well as containing an example of a fully compliant report and a partially compliant report, also revealed common issues charities should to seek to avoid, including:

  • a lack of detail about how fundraising campaigns were run, including who carries out the work;
  • failure to demonstrate how the Code of Fundraising Practice was used to guide the charity’s work, although registration with the Fundraising Regulator was mostly highlighted; 
  • only limited information about fundraising carried out on behalf of the charity, particularly in relation to how it is supervised and managed;
  • failing to provide details of the number of complaints received by the charity; and 
  • often limited explanation as to how vulnerable people are protected as part of the charity’s fundraising work.

Of the 106 annual reports reviewed, 28 contained no reporting information in relation to fundraising.

New guidance

To help more charities to prepare annual reports that do comply with the legal requirements of the Act, the Fundraising Regulator has issued new guidance on best practice in reporting on fundraising.

This contains information on what is required in a fundraising statement, including a further example of a fully compliant report. It also sets out the expectations of the Charity Commission in relation to fundraising statements, and what charities should expect from auditors and independent examiners.

What do charity trustees need to do now?

The Fundraising Regulator’s analysis suggests that, following the first year of such reporting, many charities subject to the fundraising reporting provisions of the Act still have at least some work to do in this area to ensure compliance, and some have a lot of work to do.

Charity trustees should remember that they retain ultimate responsibility for ensuring that the annual report complies with the legal requirements relating to fundraising statements, familiarise themselves with the new guidance in preparation for this year’s reporting, and make sure their charity is compliant in its reporting this year.

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