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The Charities (Protection and Social Investment) Act 2016: Fundraising reporting requirements guidance 

The Charities (Protection and Social Investment) Act 2016 (‘the Act’) requires charities to provide statements on specific areas of their fundraising in their annual report, which is submitted to the Charity Commission for England and Wales (CCEW). 

These statements cover key aspects of charities’ fundraising activity including the approach taken, regulation, complaint numbers and how they ensure vulnerable people are protected. These statements demonstrate that a charity is reporting in-line with requirements and enable charities to be transparent about their processes, which demonstrate that fundraising is being done in a safe way which protects the public. 

Charities have a legal duty to comply with the Act, where gross income is over £1 million. However, we consider it good practice that all charities that produce an annual report address these statements regardless of fundraising spend, as it gives assurance to the reader that key issues, such as protecting vulnerable people, are being addressed. 

What are the requirements of the Act?

The Charities (Protection and Social Investment) Act 2016 section 13 states:

(1) If section 144(2) applies to a financial year of a charity, the annual report in respect of that year must include a statement of each of the following for that year -

(a) the approach taken by the charity to activities by the charity or by any person on behalf of the charity for the purpose of fund-raising, and in particular whether a professional fund-raiser or commercial participator carried on any of those activities;

(b) 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 fund-raising, or any voluntary standard of fund-raising, in respect of activities on behalf of the charity, and, if so, what scheme or standard;

(c) any failure to comply with a scheme or standard mentioned under paragraph (b);

(d) whether the charity monitored activities carried on by any person on behalf of the charity for the purpose of fund-raising, and, if so, how it did so;

(e) 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 fund-raising;

(f) what the charity has done to protect vulnerable people and other members of the public from behaviour within subsection (2) in the course of, or in connection with, such activities.

Why has this guidance been developed?

In June 2020 we conducted a second review of the annual reports of 10% (187/1,756) of charities registered with the Fundraising Regulator and within scope of the levy. We looked at the extent to which each report addressed all of the statements set out in the Act and how they did this. The findings are published in this short report. 

In summary, although we found many instances of good practice, only 21% of reports included a statement on all of the Act’s requirements and 15% reported on none of them. Of concern was that many charities did not report on what they are doing to protect vulnerable people and the public when fundraising. We also found that very few charities reported on how they monitor fundraising carried out on behalf of the charity. By not including these statements, readers could be led to believe these activities are not taking place, when in fact they are.

This demonstrates that there is work to be done to ensure compliance with the fundraising reporting requirements. This guidance has been developed to help charities understand where there are common gaps in reporting, and what they can do to meet the requirements and be compliant with the Act. 

Who is responsible for compliance?

It is ultimately the responsibility of trustees to ensure compliance with the Act. Trustees should be aware that Charity Commission guidance CC20 - Charity Fundraising: a guide to trustee duties states that the Commission expects charities to fully comply with accounting and reporting obligations. Failure to do so might result in regulatory action being taken by the Commission against the charity. Trustees need to be aware of the requirements and understand why they are important and ensure the annual report includes all the necessary information needed to meet the requirements.

Importantly, when considering public trust in fundraising, it is essential that charities communicate how they are fundraising safely and in-line with standards and expected behaviors. 

How can my charity report against the requirements?

There is no one way to report comprehensively on the requirements and most charities will have their own house style when writing reports that appeals to their key audiences. This guidance is not intended to be prescriptive, rather it is to help charities understand the importance of reporting on the requirements alongside meeting their legal duties.

(a)    the approach taken by the charity to activities by the charity or by any person on behalf of the charity for the purpose of fund-raising, and in particular whether a professional fund-raiser or commercial participator carried on any of those activities;

Reporting on this requirement gives charities the opportunity to explain their approach to particular fundraising activities (for example, if you have involved supporters). It is also important to include details of whether the fundraising was carried out by professional fundraisers (for example, those who conduct telephone, face-to-face, private site and door-to-door fundraising or consultants that write fundraising applications) if appropriate. Similarly, it is your duty to report on activity which has involved any commercial participators.  If all your fundraising has been carried out by in-house fundraisers employed directly by the charity it is also essential to set this out, so the reader has an understanding of who carries out your fundraising. 

(b)    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 fund-raising, or any voluntary standard of fund-raising, in respect of activities on behalf of the charity, and, if so, what scheme or standard;

It is a requirement to set out what voluntary schemes or standards for regulating fundraising the charity follows. 

In our review of annual reports, we found that some charities did not mention the Fundraising Regulator, even though they are registered with us, or reference the Code of Fundraising Practice. By committing to the standards of the code in writing, charities do not need to demonstrate that they have created their own ethical fundraising standards, nor explain to their supporters why they do not follow our code. We strongly advise that all charities reference their compliance with the Code of Fundraising Practice in their annual reports as it is applied by the Fundraising Regulator, which is the only regulatory body of fundraising in England, Wales and Northern Ireland.

By providing this information, charities will not only be compliant with the Act but will also give their supporters assurance that they are committed to following best practice in fundraising. For example, it gives additional assurance that the behaviour of professional fundraisers as set out in Section 8 of the code, is being monitored and regulated safely. Although not a requirement of the Act, it is also be useful to include in your statement how you work to be compliant with the code and how the regulatory framework is used to support your charity’s fundraising activities (for example, if the code is used when training and supporting volunteer fundraisers). 

If you are not registered with the Fundraising Regulator, you will still need to state whether your charity or any third-party fundraisers/commercial partners are bound to any other voluntary regulating scheme for fundraising.

(c)    any failure to comply with a scheme or standard mentioned under paragraph (b);

If your charity did not comply with a scheme or standard, including recommendations from an investigation by the Fundraising Regulator, as set out by (b), the annual report should clearly set out the details of what happened, what the scheme or standard was, timescales and any outcomes. If the non-compliance was by a third-party fundraiser acting on behalf of your organisation you should include a statement on what the compliance issue was and what actions you have taken post-investigation.

It is crucial that these statements are clear and explain to your supporters what the compliance issue was and what actions have been put in place to mitigate any future risks. This will demonstrate that your charity is committed to conducting safe, ethical and effective fundraising and it values reflection and learning.

If there were no compliance issues with a scheme or fundraising standard, we advise adding a simple statement to explain this. This will demonstrate you have been fundraising in accordance with the relevant schemes and standards.

(d)    whether the charity monitored activities carried on by any person on behalf of the charity for the purpose of fund-raising, and, if so, how it did so;

‘On behalf of’ fundraising can involve third-party fundraisers, commercial participators and volunteers. It is important that charities report on how they worked with and monitored the activity of these types of fundraisers that they do not employ directly. This statement should include assurances for your supporters that non-professional fundraisers have had the right training and have knowledge of the fundraising standards.

This section should include information on:

  • who fundraises on behalf of your charity;
  • what training and support you provide to these fundraisers;
  • how you monitor the work and what methods do you use to ensure that standards are maintained; and
  • how you manage contracts with external fundraisers.

(e)    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 fund-raising;

It is not enough to simply say that the charity has received complaints in the last financial year. The statement must contain the specific number of complaints received by the charity to meet this requirement. Without stating this number, a charity could be at risk of appearing to not have the appropriate systems in place to record and report on the complaints it has received with regards to fundraising. This could diminish the trust its supporters place in it to listen to their concerns and complaints.

Although not a requirement, this statement also provides an opportunity to explain how a charity listens to supporters and reacts accordingly. Some charities choose to report on the actions that they have taken in response to complaints, which helps build public trust that complaints are taken seriously. 

If you have received no complaints in the past 12 months, then this should be reported. 

(f)    what the charity has done to protect vulnerable people and other members of the public from behaviour within subsection (2) in the course of, or in connection with, such activities.

Having the correct fundraising approach and procedures for people in vulnerable circumstances is crucial for safe and effective fundraising. Although our review of reports found that many charities did not report on what they have done to protect vulnerable people and the public, this does not necessarily mean that charities do not have the correct policies and processes in place. What this might demonstrate is that charities are not aware of the importance of publicly setting this out, or that they had not considered that the types of fundraising they do potentially puts people at risk. 

It is particularly important to set out clearly the charity’s policies and procedures in this area and show an understanding of the relevant sections of the code (as set out in section 1). Any future work on protecting donors could also be included. For example, interactions with people need to ensure that the fundraiser treats people fairly and with respect, explaining the cause in a way which does not mislead people, and being sensitive to people who may be in vulnerable circumstances.

With this in mind, your statement could include:

  • what training you provide for staff and volunteers to consider what vulnerability means and how to recognise and protect vulnerable people;
  • how this translates into fundraising activities; 
  • how you monitor and review these policies and procedures; and
  • how you mitigate the risks of fundraising with vulnerable people.

How should I approach the writing?

It is important that statements are written accessibly. They should be clear and include relevant detail. Based on our review, we have highlighted some points below to consider when writing the statements:

Reporting on requirements in one section:

There is no set place within the annual report that charities have to include their reporting against requirements and our review found that 62% of reports did this all in one section. Keeping them together in one section makes it easier for the reader to understand the information collectively and it tells a story about fundraising. For example, a discussion of the use of the code lends itself to reporting on monitoring of different types of fundraisers in the next statement. It also means you can address all of the requirements at once.  If you do not intend to respond to the requirements in one area of your annual report, you must still ensure that you answer each reporting requirement in the Act. 

Providing enough information:

Statements must include sufficient detail to meet the requirements of the Act. Although you can be compliant with the Act by providing satisfactory information, your annual report is an important opportunity to tell your fundraising story to your supporters. By giving more details about what you are doing and why, the report may help to generate even more support for the important work your charity does. Many supporters will also want to know where you have made mistakes and what you have learnt from them. Being transparent and clear about your fundraising activity will help to build trust in your organisation. 

Report on all requirements:

By not including statements on the reporting requirements, you will fail to meet your legal duty. You may also leave your charity open to doubts from supporters about whether you are following best practice. Failure to report against the requirements might give the impression, for example, that you do not have a policy on protecting vulnerable people.  Meeting these requirements is also an opportunity for your charity to talk about the work you do in a positive manner. You can showcase how your charity is following best practice in complying with a voluntary regulation scheme. 

In summary, reporting on all of the requirements set out in the Act is not only a legal duty for many charities, but is a good way for any charity to explain their fundraising procedures and activity to supporters and other key audiences. If you have questions on the guidance or the findings of our review you can contact us at enquiries@fundraisingregulator.org.uk