The most recent changes affecting governance
What Now For Fundraising?
Did you take part in the ice bucket challenge in the summer of 2014? Even if you didn't, you probably heard it talked about on social media and in the press. The challenge raised both funds and awareness for the MND Association. It was a "good news story" for the charity sector.
Fast-forward less than a year and the media was again focusing on charity fundraising, but in a much less positive way: the word "scandal" was used by a senior MP in connection with fundraising carried out for household name charities; and charities were criticised for: selling on donor's details; the number of times they asked for money; contacting vulnerable people; and not providing donors with an easy way to opt out of future mailings.
This was the background to the Cabinet Office commissioning a review into fundraising regulation (commonly known as the "Etherington Review"). The Etherington Review made a number of recommendations, including:
- The creation of a Fundraising Preference Service to enable members of the public to opt out of unsolicited fundraising calls.
- Moving towards an "opt in" system, whereby fundraisers only communicate with donors who have chosen to be contacted.
- Replacing the FRSB with a new Fundraising Regulator, which would have a universal remit to adjudicate all fundraising complaints (not just those relating to members) and stronger sanctions for non-compliance. The Fundraising Regulator, which will be accountable to Parliament, will take over responsibility for the Code of Practice, which should be clearly aligned with the Charity Commission guidance on charities and fundraising.
- The Institute of Fundraising and Public Fundraising Association should merge as soon as possible.
- The current FRSB "tick" would be replaced with a new "badge" which organisations could use as a sign of their commitment to regulation and high standards (if registered with the Fundraising Regulator).
- Adopting a "three lines of defence" model of regulation: (i) the trustees need to make sure that their charity's fundraising is carried out in compliance with the law and to high ethical standards; (ii) the Fundraising Regulator has the power to intervene when there is malpractice to ensure that the public interest is protected; and (iii) the relevant statutory regulator (e.g. the Charity Commission) acts as the backstop where the malpractice raises regulatory concerns.
- Stronger sanctions for those in breach.
- The Fundraising Regulator to be paid for by a levy on fundraising expenditure. It has been suggested that the levy will apply to any organisation that spends more than £100,000 a year on generating donations from the public, with a sliding scale so that those who spend more on fundraising pay more towards the Fundraising Regulator.
All recommendations have been accepted by the Cabinet Office and are in the process of being implemented: the new Fundraising Regulator will be chaired by Lord Grade initially. He has been tasked with the job of overseeing the setting up of the new Fundraising Regulator and ensuring that the recommendations are implemented by the end of this year. A working group has been set up to look into the Fundraising Preference Service.
What does this mean for small and medium-sized charities? All charities which fundraise are going to need to review their practices to make sure that they comply with the new framework when it is put in place, particularly in relation to contacting donors and potential donors, the use of personal data, and making sure that the trustees take ultimate responsibility for their charity's fundraising practices.
Wrigleys Solicitors LLP
0113 204 5744
Progress Update for Fundraising Regulator
April 2016: the website has been launched www.fundraisingregulator.org.uk together with logo and branding.
7 July 2016: Launch of Fundraising Regulator.
13 March 2017: The Fundraising Regulator’s registration system is now open to Charities registered in England and Wales.
6 July 2017: Fundraising Preference Service launched to the general public
Charities (Protection and Social Investment) Act 2016
The act received Royal assent on the 16th March 2016. You can read the short act in its entirety by going to http://www.legislation.gov.uk/ukpga/2016/4/pdfs/ukpga_20160004_en.pdf
The act is divided into 17 clauses
- Official warnings by the Commission: the Charity Commission will have the power to issue a public warning to a charity trustee or to a charity which it considers to have committed “ a breach of trust or duty or other misconduct or mismanagement”.
- Investigations and power to suspend: Increase the period for which the Charity Commission can suspend a trustee from 12 to 24 months.
- Range of conduct to be considered when exercising powers: in circumstances where misconduct or mismanagement in a charity has been identified and this is linked to a known person the Charity Commission will be able to take into account the person’s conduct not just in relation to that charity but also in relation to any other charity.
- Power to remove trustees etc following an inquiry: the “etc” includes officer, agent or employee of the charity.
- Power to remove disqualified trustee: this will allow tha Charity Commission to remove a disqualified trustee if that trustee continues to remain in their position once disqualified.
- Power to direct specified action not to be taken
- Power to direct winding up
- Power to direct property to be applied to another charity
- Automatic disqualification from being a trustee: the act extends the number of criminal offences to include convictions for serious terrorism offences, money laundering or bribery.
- Power to disqualify from being a trustee: this enables the Charity Commission to disqualify someone it considers to be unfit for trusteeship. For the Commission to begin this process one of six conditions must be met:
- Someone has been cautioned for an offence against a charity or in the administration of a charity for which a conviction would bring automatic disqualification
- Someone has been convicted of an offence in another country that is against, or involves the administration of, a charity or similar body or if it had been committed here would bring automatic disqualification from acting as a trustee
- Someone has been found by HMRC not to be a “fit and proper person” to be manager of a body or trust
- They were the trustee, officer, agent or employee of a charity who was responsible for, contributed to or facilitated misconduct or mismanagement in a charity
- They were an officer or employee of a corporate trustee who was responsible for, contributed to or facilitated misconduct or mismanagement in a charity
- They have done something, whether or not in relation to a charity that is, or is likely to be, damaging to public trust and confidence in a charity or charities
- Records of disqualification and removal: the Charity Commission will maintain a register
The remaining clauses are concerned with fund raising and social investment.
Why trustees should be at least aware and maybe concerned -
NCVO still “ has some concerns around both powers to disqualify trustees and also the official warning powers”.
The Directory of Social Change considers that the act “goes too far”
Many charities are concerned that ex offenders may be affected by the extension of offences that lead to automatic disqualification.
The Charity Commission will consult on implementation of its new powers
The act will be reviewed in three years and there will also be a review of how the Charity Commission is using its new powers.
New rules for charity fundraising from 1 November 2016 —
There are 2 new requirements:
- If a charity, whether registered or unregistered uses a professional fundraiser or any other third party to raise funds the compulsory written agreement must include extra information
- The scheme for regulating fundraising or recognized fundraising standards that will apply in carrying out the agreement
- The way in which the professional fundraiser or third party will protect the public from unreasonable, intrusive or persistent approaches and undue pressure
- The way in which the charity will monitor the situation
- If a registered charity is required by law to have accounts audited the charity has to include additional information about fundraising in the trustees annual report Go to CC15d document available at www.charity.commission.gov.uk
Also read CC20 document available at www.charitycommission.gov.uk
The Small Business, Enterprise and Employment Act 2015
You will find the legislation in full at
The measures that affect companies aim to:
Reduce red tape
Watch out for the following changes currently scheduled for October 2015:
Date of birth of directors and people with significant control
Day element will no longer appear on public register. This will make identity theft more difficult.
Removal of falsely appointed directors from the register
A simpler way to get removal will be implemented
Companies House will write to all newly appointed directors to make them aware that their appointment has been filed on the public register and explain their statutory duties.
Use of registered office without authorisation
There will be a new process to provide a remedy where a company is using an address for its registered office but has never had authorisation.
Speedier strike off
The time it takes to strike companies off the register will be reduced.
Scheduled for January 2016:
People with significant control (PSC)
Companies will need to keep a register of people with significant control. This register not surprisingly will be called ‘PSC register’. This will be in preparation for the need to file this information at Companies House from April 2016.
Scheduled for April 2016:
Check and confirm
This will replace the current obligation to file an annual return. Companies will be required to “check and confirm” company information and notify changes if necessary at least once every 12 months.
People with significant control (PSC)
Companies will be required to keep a ‘PSC register’. This register will be filed at Companies House on incorporation and updated via ‘check and confirm’.
Companies will be able to deliver certain categories of optional information to the registrar.
Private companies will be able to opt to keep certain information on the public register only, instead of statutory registers. The registers that this will apply to are:
Directors’ residential addresses
What this means is that companies can opt out of the requirement to keep the above registers and, instead, keep the information on the public register if that is easier for them.
Misconduct of directors
The disqualified directors regime will be updated and strengthened
Statement of capital
Simplification of capital and consistency throughout the Act.
We realise that these changes will generate many questions because there is not a lot of detail here. However, the Governance Worker will be attending Companies House training in August and this information will be updated following that training.