Is the fundraising statement in your annual report compliant with the law?

It goes without saying that it is absolutely critical that fundraising carried out in the UK has to be compliant with charity law and best practice. This is in all our interests, as high levels of compliance result in better standards of fundraising and an improved donor experience – principles that are at the very heart of the Fundraising Regulator’s remit.

With this in mind, earlier this year the Fundraising Regulator carried out its first review into charities’ compliance with the requirements of The Charities (Protection and Social Investment) Act 2016 on fundraising reporting. The Act is designed to reinforce responsibility and accountability for fundraising and encourages charities to demonstrate their commitment to protecting donors and the public, including vulnerable people, from poor fundraising practices.

Under the Act, registered charities which have their accounts audited (where gross income is over £1 million), are required to provide a statement on fundraising in their annual reports. For the review, 106 annual accounts filed with the Charity Commission were randomly selected by the Fundraising Regulator to represent a cross section of different size charities that pay the Fundraising Levy. We then reviewed each statement, evaluating their strengths and weaknesses based on how well they met the criteria of The Charities Act 2016.

Our review found that most charities were not compliant with the requirements, with only 40% of the sample including an adequate fundraising statement in their annual reports. Yet this is a promising start given that it is the first year charities have had to report in this manner. Many did not sufficiently cover all the requirements of the Act, including omitting important details about complaints received and how fundraising campaigns are run; failure to demonstrate how the Code of Fundraising Practice is used to guide their work; a lack of thorough description about fundraising carried out on behalf of the organisation and limited explanation of how vulnerable people are protected in the organisations’ fundraising work.

Although we might have hoped that our review found higher levels of compliance, we also want to be clear that we recognise that any changes to reporting requirements may take some time to come through in reports. The common issues our review identified demonstrate that this is not a problem unique to a couple of charities, but that providing accurate, compliant fundraising statements is an area where most charities must improve.

To address these challenges and help charities navigate reporting for the future, we have updated our guidance to support greater compliance in meeting the fundraising reporting requirements. Our guidance includes an exemplar report, which addresses the key areas of the Act. It can be found on our website here.

Some key points that should be included in a statement are as follows:

• Your statement should describe how your fundraising campaigns are run, not just what they are and how successful they have been. This should include which teams, or third parties undertake the work, the methods used and how the public are asked to participate.
• The statement should set out clearly that your organisation is registered with the Fundraising Regulator and works in a way that is compliant with the Code of Fundraising Practice. If you’re not registered but adhere to the code, you need to set out any equivalent approach and how it meets the standards required in law and reflects best practice.
• Your statement should set out how you manage and monitor the fundraising work undertaken by others. This should include how you work to maintain standards, whether this be through training and support, checking work or by managing the contracts. This is typically going to be third-party organisations and businesses, as well as commercial participators.
• Your statement should contain a speci?c number of complaints received about your fundraising work. Stating that you have received a 'small number of complaints' is not adequate. This requirement asks your organisation to demonstrate that you have systems in place to record and report on complaints you have received.
• Your statement should set out the practical activities in relation to how you protect vulnerable people. This might include training for fundraising staff or specific guidelines which you implement around different types of fundraising.

By publishing this guidance, we hope to make fundraising organisations more aware of what is expected of them when reporting on fundraising activity. Our aim is to help make reports more transparent and the process of reporting more efficient, while maintaining a high level of compliance. Going forward, we will be reviewing fundraising statements again to measure improvements in reporting and identify where we can support charities in complying.

We are committed to working with charities, especially those with lower fundraising budgets, to promote better practice in reporting and raise awareness of the importance of providing a comprehensive statement.

The Fundraising Regulator regulates all charitable fundraising in England, Wales and Northern Ireland.