Standards

The Charities Act 2006 contained several provisions that would have introduced a unified licensing regime for collections of cash and Direct Debits on the street, although it would also have removed all types of doorstep collections from the licensing regime.

However, the relevant sections – ss45-66 in Part 3 – were never brought into force and it now seems highly unlikely they ever will be.

For the sake of the record, the proposed measures and how they would have affected face-to-face fundraising can be found here.

The Charities Act 2011 came into effect on 14 March 2012. It sets out how all charities in England and Wales are registered and regulated, and replaces the Charities Act 2006, as well as most of the Charities Acts 1992 and 1993. Its primary objective was to consolidate and simplify previously existing charity legislation.

The Act did not include the following provisions relating to fundraising, which were reconsidered as part of Lord Hodgson’s 2012 review of the Charities Act 2006:

• Part III of the Charities Act 2006, which would require street and door-to-door fundraisers to be regulated by, and obtain public collection certificates from, the Charity Commission. These provisions have never been brought into force.
• Parts II and IV of the Charities Act 1992, which govern the relationships between charities and commercial participators and professional fundraisers. The provisions set out requirements for fundraising statements and give the government reserve power to regulate fundraising.

The following toolkit is intended to provide a starting point for Heads of Individual Giving within charities considering using external suppliers to carry out face-to-face fundraising activities on their behalf. These resources are neither designed to be comprehensive nor mandatory, but as good practice tools to support the internal assessment and monitoring process.

It is recognised that members may wish to apply additional checks and tailor questions to their own campaign needs and organisational requirements.

Employers or contractors of fundraisers accrue penalty points if a rule is broken. Each point accrued has an equivalent value of £1. A monetary bill will be issued when an organisation’s annual points total equals or exceeds 1000 points. Revenue incurred from penalty point fines at the end of each financial year is re-invested into training and development to improve standards within public fundraising.

Rules

Every rule contained in the Rule Book for street and private site fundraising carries a penalty of 200, 100, or 50 points. These rules are grouped into two types:

• Rules for Fundraisers – relating to the conduct of fundraisers engaging with the public (prefixed “Fr”)
• Rules for Operational Staff – relating to wider organisational practices, the operations of diaries and Site Management Agreements with local authorities (prefixed “Op”)

Compliance visit

A compliance visit is a mystery shop by one of the Chartered Institute's official contractors or a site check by a member of the Chartered Institute’s Compliance Directorate. Points awarded as a result of breaches reported by council officers at local authorities that have a Site Management Agreement or as observed by a member of the Chartered Institute's compliance team are not included in the benchmark. This is because official compliance visits run through a formal checklist of potential rule breaches, whereas ad hoc reports are one-offs that would artificially lower the benchmark were they included.

The benchmark

Each year, the Compliance Directorate compiles a benchmark of the penalties issued during the proceeding 12 months, which is based on the average number of penalty points issued per compliance visit.

Relevant Chartered Institute members (fundraising agencies and charities running in-house teams) are given their own individual average compliance scores, plus their average scores for fundraiser and operational rules.

The Chartered Institute's Organisational Members (charities) will also be given details of the penalty points issued by their provider agencies while working on their campaigns.

To ensure F2F fundraisers comply with the Code of Fundraising Practice and fundraising Rule Books the Chartered Institute's Compliance Directorate manages dedicated mystery shopping programmes for street based and private site fundraisers.

Mystery shopping is carried out by agents employed directly and by professional mystery shopping companies that have been contracted to pose as ordinary members of the public, interact with fundraisers and observe the fundraising team. They then record the results using a questionnaire constructed by the Chartered Institute's Compliance Directorate to test that the fundraiser has complied with the relevant rules and code. Penalties are imposed on those organisations whose fundraisers are found to be in breach of the code and/or rules. 

The programmes are managed Nick Henry.

The Mystery Shopping Terms of Reference can be found below.

Public Fundraising Certification Programme

The mystery shopping programme forms a key pillar of the PFCS, along with training observations, which are carried out to ensure key compliance elements are included (e.g. solicitation statements, vulnerability and the rule books) and detailed questioning regarding operational structure and policies. The PFCS helps PFO’s ensure that their fundraising operations are responsible, respectful and compliant.

Many councils have designated certain areas as ‘Cold Calling Control Zones’ (CCCZs) or ‘No Cold Calling Zones’ (NCCZs).

NCCZs are initiatives that are intended to protect residents from bogus doorstep callers and doorstep crimes (such as distraction burglaries). The Chartered Trading Standards Institute (CTSI) has published guidelines on how NCCZs should be set up. This guidance includes:

• NCCZs should only be considered when supported by a “real” local need to stop sellers/callers – such as to prevent distraction burglaries, protect the elderly from bogus callers etc.
• The size of an NCCZ should be “relatively small” and “easily defined by its boundaries”, such as a cul-de-sac, small estate or neighbourhood watch area.
• The NCCZs must have the “wholesale support” of local residents. Consultation with residents is the first step.

The Fundraising Regulator’s rulebook prohibits Fundraisers from entering Cold Call Control Zones (CCCZs) that have been set up according to these guidelines.

No Cold-Calling Stickers

The Fundraising Regulator’s rulebook prohibits Fundraisers from knocking on a door which clearly displays a sticker that explicitly states “no cold calling” “no cold callers”, “no charities”, “no charity canvassers” or “no charity fundraisers”.

Public charitable collections that are carried house-to-house are controlled by the House to House Collections Act 1939 and the House to House Collections Regulations 1947, which established a central licensing regime for such collections. Both statutes are available for download as PDFs on this page, but you are advised to check for any updates or amendments.

As with the Police, Factories etc (Miscellaneous Provisions) Act 1916, which regulates street collections, licences were issued by the police until the Local Government Act 1972, which transferred the licensing role to councils (except in London, where licences are still issued by the police) available here.

Unlike 1916, the 1939 Act specifically states (s11) that a licence is required in order to stage a collection for “money or other property” so there is no ambiguity about whether Direct Debits are covered.

Charities fundraising door-to-door can apply for a ‘National Exemption Order’, which allows them to fundraise without the need to obtain a licence, though they do have to notify a council when they are going to fundraise.

The Office of Civil Society, part of the Cabinet Office, operates the National Exemption Order scheme.

Part 3 of the Charities Act 2006 would have removed the requirement for house-to-house collections (both cash and Direct Debit) to be covered by a local authority licence, but this section was never implemented.

The Police, Factories etc (Miscellaneous Provisions) Act 1916 is the act that requires a charity to obtain a licence for charitable collections in public places – to all intents and purposes, this means those carried out on the street. A model of local regulations is contained in the Charitable Collections Order 1974 (Transitional Provisions), though local authorities are not obliged to introduce such a system of licensing in their area.

The issuing of licences was the responsibility of the police until the Local Government Act 1972 transferred the licensing role to councils (except in London, where licences are still issued by the police).

The 1916 Act (section 5 – the only bit that is still in force) very clearly states a licence is required for a collection of money. The Act says that a licence is required in order to “collect money or sell articles for the benefit of charitable or other purposes” (s5.1).

Why is a Site Management Agreement required for direct debit fundraising?

Direct Debit sign-ups are not ‘money’; they are “promises of money at a later date” – in legal terms, a ‘choice in action’.

This means that the 1916 Act does not apply to the solicitation of Direct Debits or personal contact details (unlike the equivalent act that authorises councils to issue licences for doorstep charitable collections – the House-to-House Collections Act 1939 – which refers to “money and other property”.) F2F fundraising for Direct Debits does not require a collection licence under the 1916 Act.

The licensing provisions in the Police, Factories etc (Miscellaneous Provisions) Act 1916 were due to be replaced by a new unified licensing regime for cash and Direct Debit fundraising contained in Part 3 of the Charities Act 2006. However, the relevant sections were never brought into force and it is now very unlikely they ever will be.

Scotland and Northern Ireland have different charity laws to England and Wales and therefore require a different treatment of their issues and concerns.

Scotland

The charity laws in Scotland that concern street and door-to-door fundraising collections currently consist of the Civic Government (Scotland) Act 1982 and the Public Charitable Collections (Scotland) Regulations 1984, which are due to be replaced by the Charities and Trustee Investment (Scotland) Act 2005 (still awaiting implementation).

The Charities and Benevolent Fundraising (Scotland) Regulations 2009 mean that arrangements between benevolent bodies and professional fundraisers and/or commercial participators must be governed by a written agreement. Statements must also be made which indicate how much of supporters’ money will reach the intended organisation.

All these statutes allow for significantly different licensing regimes and ‘disclosure’ procedures than in England & Wales – the Institute of Fundraising has produced an extremely useful guide to the main differences between Scottish and English charity law as it affects public fundraising. There is also a separate statutory regulator – the Office of the Scottish Charity Regulator (OSCR).

The Civic Government (Scotland) Act requires collections of “money” to be licensed and so contains the same ambiguity as the Police, Factories etc (Miscellaneous Provisions) Act 1916 in England and Wales. As with the Charities Act 2006 in England, the Trustee Investment (Scotland) Act 2005 (Part 2) is likely to give councils the power to licence F2F (ss84-90), and more detail is expected when the Scottish government publishes regulations on implementing the relevant sections on public charitable collections. However, this section of the Act is not yet in force.

Northern Ireland

Charity street collections are covered by the same act the governs collections in England and Wales – the Police, Factories etc (Miscellaneous Provisions) Act 1916 – but there is separate guidance that means that permits for cash collections are issued by the police and not councils. The ambiguity surrounding collections of direct debits applies.

Door collections are governed by the House-to-House Charitable Collections Act (NI) 1952, which stipulate that a licence must be obtained from the police or that an exemption order to cover the whole of Northern Ireland, can be obtained from the Department for Social Development. Like the equivalent act in England and Wales, this encompasses cash and direct debits.

Until very recently Northern Ireland had no dedicated charity law as such. This situation has changed with the passage by the NI Assembly of the Charities Act (NI) 2008 which is being implemented in stages. The Charity Commission for Northern Ireland (CCNI) was set up in June 2009. And a public fundraising licensing regime is expected to be exactly the same as that contained in the Charities Act 2006 for England and Wales. This is expected to be in force by 2011. However, unlike England and Wales, the CCNI will issue permits for a time before transferring this duty to local authorities.

Solicitation statements were introduced in the Charities Act 1992, stipulating that legally, before any donation is completed, fundraisers are required to make what is known in law as a ‘solicitation statement’ (commonly referred to as a ‘disclosure’) –an explanation of their relationship to the charity. This can be done verbally or in writing.

In-house fundraiser solicitation statements

Charity representatives working in-house are required only to inform potential donors that they work for charity x and that they are paid to fundraise. No further information is required.

Agency fundraiser solicitation statements

Agencies, or ‘professional fundraisers’ are required to tell donors that they were contracted and would receive a fee, but did not oblige them to divulge how much. ‘Professional fundraiser’ refers to the fundraising company, which is the ultimate employer, and not to the individual fundraiser standing on the street or knocking at a front door.

The Charities Act 2006 changed the law and, from April 1, 2008, professional fundraisers have been required to divulge what is called the ‘notifiable amount’.

The notifiable amount

The notifiable amount must show:

• The actual amount that is being paid to the fundraising company for carrying out this particular piece of fundraising (or best estimate if the actual figure is not known), and the law requires that this is calculated as accurately as possible.

The Charities Act 2006 also requires that the solicitation statement must explain:

• How the notifiable amount has been determined.

The 2006 act, like its predecessor, takes ‘professional fundraiser’ to mean the fundraising agency, not the individual fundraiser asking for the donation. So the notifiable amount refers to how much the charity is paying the agency, not how much the individual fundraiser is paid. Fundraisers do not have to reveal their wages.

Examples of agency solicitation statements that comply with the requirements of the Charities Act 2006 are:

The method most often used by F2F agencies is to agree a fixed fee per new donor recruited.
If a solicitation statement does not include these two components – notifiable amount and the method by which it was determined – it might not be compliant with the Charities Act 2006.

The penalty for non-compliance is a fine, upon conviction, of up to £5,000. The IoF’s mystery shopping procedures check whether the solicitation statement is made by fundraisers.

It is quite common for fundraisers to include as part of their disclosure statement additional information about how much they expect the campaign will raise or what they expect the return on investment to be over the time that donors remain supporters of the charity.

This is not part of the legal requirement, but information that fundraisers choose to give because it helps to put the notifiable amount into context (after all, you can’t tell how effective money spent on fundraising is until you have an idea how much it will bring in).

When must the solicitation statement be given?

The law requires the solicitation statement must be made some time between the fundraiser asking a person to make a gift and the donor confirming that they will give – what in law is called the ‘perfection of the gift’, or in other words, the point at which they sign on the dotted line.

The Code of Fundraising Practice, however, goes further than that and requires that the disclosure (or solicitation) statement 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).

If a fundraiser never gets round to asking for a donation, or a person declines to make a gift, or if a person agrees but the gift is never ‘perfected’ (they change their mind before they sign the mandate), a solicitation statement does not have to be given.

However, some fundraisers choose to make their disclosures at other points during an engagement and some actually start a conversation with the disclosure. The only legal requirement is that it comes prior to the perfection of the gift.

Who must give a solicitation statement?

All fundraisers who make a personal ask for money are required to make some form of solicitation statement. Those who are not directly employed by the charity must include the notifiable amount in their solicitation statements, so this relates to not just F2F fundraisers but also telephone fundraisers and, in certain circumstance, consultants. Staff who are directly employed by a charity only have to say that they are paid but do not have to give the notifiable amount.

This means that F2F fundraisers working directly for the charity as part of an in-house fundraising team are not obliged to give the notifiable amount in their solicitation statements.

Because some charities use a mixture of agency and in-house teams, some fundraisers working for such a charity will be required to give the notifiable amount but others will not.

No solicitation statement is required for any form of fundraising (either outsourced or in-house) where the fundraiser does not make a one-to-one personal ask, such as direct mail, television or press advertising, and digital fundraising (email, SMS etc). Trustees, if they are fundraising, also have to give a solicitation statement. Only volunteers are exempt.

The Office of the Third Sector (OTS) used to have detailed guidance on the various forms of solicitation statement posted on its website. When the OTS was replaced by the Office of Civil Society and Innovation following the 2010 general election, this information was removed and has not yet been put back. However, more information on the solicitation statement can be found in the downloadable Cabinet Office guidance on the Charities Act 1992, as amended by the Charities Act 2006.

To recap:

• All F2F fundraisers making a personal ask (other than volunteers) must make a solicitation statement.
• Those employed by a third party must disclose the ‘notifiable amount’ in their statements; those employed directly by the charity need not (but they must at least say that they are paid).
• The notifiable amount is the actual amount of remuneration the fundraising company receives from a charity in connection with an appeal or the best estimate if the actual amount is not known. It is not the pay an individual fundraiser receives.
• The method by which the notifiable amount is determined must also be included in the solicitation statement.
• The solicitation statement has to be made at some point prior to the ‘perfection of the gift’ – the point that a donor agrees to sign a Direct Debit mandate.

Because some charities use a mixture of agency and in-house teams, some fundraisers working for such a charity will be required to give the notifiable amount but others will not.

The Department for Culture, Media and Sport is responsible for the national exemption order scheme for house-to-house (or ‘doorstep’) collections under the House Collections Act 1939 (as amended).

National exemption orders are generally available to charitable organisations that have obtained house to house collection licences in at least 70-100 local authority licensing areas for the preceding two years, and are able to provide evidence of licences and collections returns.

Details of the application process are available from charity-neo@culture.gov.uk

Applicants should state ‘Exemption Orders’ in the email subject line.

More information, including operational guidance for the scheme, can be found on the Government website.