Changes to the Fundraising Code of Practice

In February 2017, the Fundraising Regulator (the Regulator) opened a consultation on proposed amendments to the Fundraising Code of Practice (the Code). As we wrote in an article published in March, the Regulator was not proposing a comprehensive overhaul of the Code; rather, it was consulting on specific issues that had arisen during investigations into concerns about certain fundraising practices.

The Regulator sought views on suggested changes in the following areas:

• the position of charity trustees;
• the fundraising "ask";
• solicitation statements;
• raising concerns about fundraising practice (i.e. whistleblowing);
• people in vulnerable circumstances;
• charity collection bags; and
• working with third parties.

The consultation closed at the end of April. The Regulator has now responded to the consultation, and amended the Code accordingly .

Terminology in the Code

The Code uses various terms to identify to readers whether different provisions are a legal requirement or a requirement of the Code (with the latter meaning that non-compliance, while not unlawful, will constitute a breach of the Code, potentially resulting in the Regulator taking remedial action). Currently, the Code uses the following terms:

• MUST* and MUST NOT* (with an asterisk) denote a legal requirement;
• MUST and MUST NOT (without an asterisk) denote requirements of the Code.

The position of charity trustees

Section 1.2 of the Code (General Principles) now states that trustees "MUST have regard to national guidance in overseeing the fundraising activities of their Charity and any third parties fundraising on the charity's behalf".

For charities in England and Wales, this refers not only to Commission guidance CC3 (The essential trustee: what you need to know, what you need to do) and CC20 (Charity fundraising: a guide to trustee duties), but also to the Charity Governance Code. For more about the Charity Governance Code, please see Rachel Holmes's article, also published in this month's briefing.

Charities in Scotland and Northern Ireland are referred to guidance issued by their respective regulators.

The fundraising "ask"

The Regulator has decided that the general rule on not continuing to ask for support should expressly address vulnerable people. Two sections of the Code have been changed:

• Section 1.2 (General Principles) states that fundraisers "MUST NOT" continue asking for support if (1) a person clearly indicates that they do not want to continue to engage, or (2) the fundraiser has reasonable grounds for believing that the person is in vulnerable circumstances that mean they are unable to make an informed decision to donate;
• Section 8.3 (During a fundraising call): the requirement not to ask for a donation more than three times is set within the context of the following broader principle – "Fundraisers MUST NOT, at any point in a telephone call, be unreasonably persistent or place undue pressure on the recipient to donate". Note that the "maximum three asks" rule only applies to fundraising telephone calls.

Solicitation statements

Charity legislation requires professional fundraisers to make "solicitation statements", informing potential donors of certain matters. In headline terms, these are the name of the charity (or charities) for which they are raising funds (and if they are fundraising for more than one charity, how the proceeds will be divided between them), and the amount they are being paid to raise funds. In practice the rules are somewhat more detailed than this: please see the relevant section of the Code for more information.

In the previous version of the Code, it was not clear at what stage fundraisers should make the statement, and there was evidence that some fundraisers were making them after individuals had donated.

Section 4.2(e) (Working with third parties) has been amended to clarify that solicitation statements "MUST be made either before money is given by the donor or before any financial details relevant to the transaction are requested by the fundraiser (whichever is the sooner)".

Raising concerns about fundraising practice (whistleblowing)

Section 1.9 (Complaints and concerns) now states that "fundraising organisations" (i.e. charities and other not-for-profit bodies benefiting from fundraising activity) "MUST have a clear and published internal procedure for members of staff and volunteers to report any concerns they may have regarding their organisation's fundraising practice". This may be a standalone policy or part of a broader whistleblowing policy. Either way, the policy "MUST include:

i) the type of issues that can be raised and the process for doing so;
ii) how the person raising a concern will be protected from victimisation and harassment;
iii) how and what the organisation will do in response to receiving such information; and
iv) how an individual can escalate their concerns on fundraising practice to the Fundraising Regulator or the Independent Fundraising Standards and Adjudication Panel for Scotland in the event that internal consideration is not possible".

People in vulnerable circumstances

Most respondents to the consultation thought the Code adequately recognised the needs of people in vulnerable circumstances and that, coupled with supplementary guidance, it gave fundraisers sufficient clarity on how to deal with such people. As a result, the Regulator has not made any changes to the Code on this subject. However, the response document addresses the vagueness of the term "vulnerability", acknowledging that there is no "one size fits all" definition. It also recommends that fundraising organisations keep records of dealings with vulnerable people and regularly review their guidance and training on this matter.

Charity collection bags

In the consultation, the Regulator proposed amending the Code to prohibit fundraising organisations from delivering collection bags to properties displaying "no junk mail" signs. In response to evidence that most people who objected to junk mail would be willing to fill a charity bag, it has decided not to include this. However, section 16.10 of the Code (Conduct of Collections) now states that fundraising organisations "MUST NOT" deliver bags to properties with signs that include "the words 'no charity bags', 'no clothing bags' or any other words which clearly indicate that the householder does not wish to donate through this method".

Working with third parties

This was the part that, arguably, was most in need of change. Section 4.2b of the previous version of the Code – part of Working with Third Parties – required fundraising organisations to make "reasonable efforts" to ensure the compliance of third parties (including professional fundraising agencies). As reports from the FRSB and the Regulator demonstrated, it was unclear what this meant in practice.

In the consultation, the Regulator proposed a list of practical steps that charities could take to show they had made reasonable efforts. The sentence before the list said: "Means of evidencing reasonable efforts to ensure effective ongoing compliance include (but are not limited to):".

Respondents to the consultation were concerned that doing everything on the list could be disproportionate for smaller organisations. The Regulator has accepted this, and amended the sentence to clarify that making reasonable efforts "may include" the matters on the list. The wording added to section 4.2b now reads:

"Reasonableness for the purpose of this Code requires the organisation to deliver effective and proportionate monitoring. Means of evidencing reasonable efforts to ensure effective ongoing compliance may include (but are not limited to):

• ensuring the values of the organisation are reflected in the policies, performance objectives, indicators and, where applicable, the incentives of the third party fundraising organisation;
• establishing a named individual with lead responsibility for monitoring compliance;
• developing clear reporting requirements with the third party fundraising organisation and regularly reviewing progress against pre-agreed performance, quality assurance and compliance targets;
• defining how monitoring will be carried out, including establishing an appropriate frequency for monitoring based on an assessment of the risk posed by the fundraising activity;
• approving and regularly reviewing agency compliance training, including frequently observing the delivery of this training onsite;
• authorising content and materials for training;
• regularly conducting (and documenting the results of) call monitoring, mystery shopping, site visits and/or shadowing with third party fundraisers;
• setting out a clear policy for handling complaints and feedback, including the time frames, procedure for escalating and raising internally, and the transfer of information between the charity and the third- party fundraising organisation;
• setting out a clear internal procedure for members of staff and volunteers to report any concerns they may have regarding their organisation's fundraising practice; and
• agreeing an action plan with the third party fundraising organisation to address any concerns, where these are identified."

This is followed by links to other guidance on risk assessment and monitoring.

The wording in section 4.2b is reflected in section 4.5 (Contracts/ Written Agreements), which has been updated to require contracts with professional fundraisers to specify how the charity will monitor the fundraiser's compliance with the contract, as prescribed by s.13 of the Charities (Protection and Social Investment) Act 2016. The Code states:

"Means of evidencing this requirement may include (but are not limited to) the compliance monitoring measures set out in 4.2b above. The agreement should have adequate provision for the charity to read and, where necessary, review any relevant policies and procedures that the third party has in place which are relevant for the protection of the public. This may include (but is not limited to): policies on people in vulnerable circumstances; complaints handling and whistleblowing; training materials; and the staff code of conduct."

The future?

The paper ends with a discussion of other issues respondents would like to see included (or clarified) in the Code. For instance, some felt the Code has been written with large charities in mind and does not adequately address the position of small and medium-sized charities. Others believed that the Code should be expanded to cover matters such as the use of personal data and social media advertising. The report does not say whether the Regulator intends to act on any of these ideas.

The amendments already give charities and fundraisers quite a lot to incorporate into their practice, and the updated guidance on what it means to make "reasonable efforts" is likely to be particularly useful to charities in gauging what they need to do to comply with the Code. According to the Regulator's announcement, fundraising organisations will have a grace period of two to four months to implement the changes. The Regulator has published a timetable for implementation, which sets out details on the transitional period applicable to each change.

If you would like to read the consultation materials – including the Regulator's response and conclusions and the timetable for implementation – you can find them here. You can read the revised Code here.

If you require further information on anything covered in this briefing please contact James Maloney or Rachel Holmes at the firm on 020 3375 7000.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, October 2017