Note: MUST* and MUST NOT* (with asterisk) denotes legal requirement
MUST and MUST NOT (without asterisk) denotes requirement of the Code of Fundraising Practice
19.1 Legal References for this Section
- General principles of charity law
- Employment Rights Act 1996
- Data Protection Act 2018
- Charities Act 1992
- Charities Act 2006
- HMRC Gift Aid Rules
- House to House Collections Act 1939
- House to House Collections Regulations 1947
- Charitable Collections (Transitional Provisions) Order 1974 (contain model local regulations)
- National Minimum Wage Act 1998
- House to House Charitable Collections Act (NI) 1952 and 1953
- Police, Factories, etc. (Miscellaneous Provisions) Act 1916
The following Legal Appendices MUST be read in conjunction with this section of the Code of Fundraising Practice
This section applies to all organisations engaged in paying fundraisers, no matter what the specific fundraising technique involves or who they are employed by, for example, be it the fundraising organisation themselves or another professional organisation.
19.3 Overarching Principle
a) All funds MUST* be used reasonably and prudently in the interest of the fundraising organisation. This involves ensuring that remuneration of fundraisers is proportionate to the benefit reasonably expected to be obtained.
19.4 Choosing the Appropriate Payment Mechanism
a) Practices and controls MUST be in place to ensure that payment methods do not leave the fundraiser or organisation out of pocket.
19.5 Excessive Remuneration
a) Payments to fundraisers MUST NOT* be excessive. For the purposes of this code, an excessive payment should be regarded as one which is considerably more than an ordinary, well-informed person would consider reasonable.
b) Where appropriate, maximum caps or reducing sliding scales MUST be used to avoid excessive remuneration.
a) Organisations MUST NOT use commission payments unless the following conditions are met:
- other sources of fundraising investment have been explored and exhausted;
- payments are subject to approval by the fundraising organisation’s trustees, or senior executives when power has been delegated; and
- safeguards are in place to ensure excessive remuneration is not permitted.
19.7 Performance Management Systems
a) Robust performance management systems MUST be in place, recognising the impact of the payment method on the fundraiser, the fundraising organisation, the beneficiaries and the public at large.
b) Remuneration systems MUST be monitored to ensure that they continue to strike a balance between allocating risk and incentivising fundraisers effectively.
19.8 Individuals’ Requirements
a) Where an employment relationship exists, the employer MUST* ensure that their chosen method of remuneration meets the Employment Rights Act 1996 in Northern Ireland The Employment Rights (Northern Ireland) Order 1996, and MUST* comply with the minimum wage rules in the National Minimum Wage Act 1998. Further information is available from the Department for Business Innovation and Skills.
19.8.2 Professional Fundraisers
a) Those freelance fundraisers and consultants who fall within the legal definition of a professional fundraiser MUST* comply with the applicable legal requirements (see Legal Appendices L8).
a) Volunteers MUST only have their out-of-pocket expenses reimbursed.
a) Trustees MUST NOT* be paid for fundraising on behalf of the organisation unless specific criteria are met (which differ according to jurisdiction) (see Legal Appendices L3).
There is more information about the payment of fundraising in the Institute of Fundraising’s Payment of Fundraisers guidance.