Making your fundraising legal and compliant

14 June 2024
Governance and Compliance
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This is part of our collection of resources aimed at small fundraising teams, individual fundraisers and small charities. Produced by the Chartered Institute and our expert partners.

Hannah Lyons
Hannah Lyons
Partner, Bates Wells

Fundraising is an integral part of a charity’s ability to further its charitable purposes. But fundraising can also be fraught with regulatory obstacles and challenges, especially for small charities.

For small charities who lack the resources of their larger counterparts, effective and compliant fundraising can be even more challenging.

Below we explore some of the key areas of difficulty in fundraising for small charities, and how these can be navigated, as well as some of the opportunities for small charities to fundraise effectively and safely.

Doing due diligence

The majority of donations will not require due diligence to be conducted. But where the size, nature, or characteristics of a donation raises concerns, it can be useful to ask what you know about the donor and their donation, to help ensure that all donations can be safely used by the charity.

Section 2.3 of the Code of Fundraising Practice (the Code) provides that due diligence must be conducted where needed, and such due diligence must be adequate and proportionate to the donation and the circumstances of the donation. Full due diligence guidance is available from the Charity Commission.

Don’t forget that trustees can refuse and return donations assessed to not be in the best interests of the charity, though this power should be used sparingly so as to maximise income for the charity.

If you need to create a policy about accepting and refusing donations, here's a guide for doing that. 

Treating donors fairly

Your charity should ensure that no undue pressure is put on prospective donors, that fundraising does not unreasonably intrude on a person’s privacy and should be aware of the signs of people with potential vulnerabilities.

All interactions with vulnerable or potentially vulnerable individuals or groups must be in line with part 1.3 of the Code and the Chartered Institute of Fundraising’s ‘Treating Donors Fairly’ guidance. If you intend to do a lot of fundraising with the public, then we would advise having a Vulnerable Person’s Policy in place.

Don’t forget that there is a statutory obligation to return donations where the donor lacked the capacity to donate. If in doubt, you should follow the statutory test for capacity in the Mental Capacity Act 2005.

Working with partners

Consider teaming up with other organisations who can help you raise funds. This can provide the charity with new sources of funding and increase public awareness of the charity’s brand and work.

Resources permitting, you may consider contracting out your fundraising services. Before doing so, it is worth considering the findings of a recent Fundraising Regulator market inquiry into sub-contracting in face-to-face fundraising. Above all, charities should ensure that any contractors behave in accordance with the charity’s values and the Code, remembering that trustees remain ultimately responsible for fundraising done in the charity’s name.

You may also consider establishing commercial partnerships, which can be a great way to raise funds and promote the charity’s aims. There are however benefits to the commercial partner in using the charity’s brand for commercial gain, and you should ensure that these relationships do not undermine the charity’s values or risk bringing the charity into disrepute.

Where the commercial partner is acting as a ‘commercial participator’ (under the definition in the Charities Act 1992 ( a compliant commercial participation agreement will need to be signed, and the partner must make a compliant ‘solicitation statement’ setting out the amount that is being donated to the charity.

Making online fundraising compliant

Your charity can make use of online fundraising platforms and social media, both to make it easier for people to donate, and to reach new demographics of donors and supporters.

Remember that all online fundraising must be clear and transparent (for example, you shouldn’t say that donations will be used for a particular campaign or activity when in fact they will be used for the charity’s general purposes) and be conducted in compliance with the Code.

Lotteries and prize draws

Usually, a charity will need a licence from its Local Authority or the Gambling Commission to run a lottery or raffle. There are however some exemptions to the requirement to have a licence, for example where a lottery or raffle is held at an event, provided the lottery is ‘incidental’ –i.e. it is not the main reason for holding the event.

For further information, and to find out whether your fundraising lottery requires a licence, you can view the Gambling Commission’s guidance here- Fundraising, raffles and lotteries (

Free prize draws and competitions can be a good way of driving engagement and encouraging donations. Your organisation will not need a licence to run a prize draw or competition, as long as they are run in accordance with relevant law and regulation. The Advertising Standards Agency regulates these types of draws. Further information can be found on the ASA’s website - Promotional marketing: Prize draws - ASA | CAP.

Managing complaints and creating a complaints policy

All charities will receive complaints from time to time. Minimising complaints and handling complaints properly are essential parts of managing the charity’s reputation in the eyes of prospective donors.

As well as following the Fundraising Regulator's guidance, we encourage charities to have a consistent policy for dealing with fundraising complaints, and to consider publishing this online, including timeframes for responding to and handling complaints.

In conculsion

As well as the above, it is important to remember that relevant guidance should be followed at all times. In particular, you and your charity and its trustees should pay close attention to guidance issued by the Charity Commission, including the CC20 trustee guide to fundraising, the Fundraising Regulator (including its Code of Fundraising Practice), and the Chartered Institute of Fundraising.

Finally, consider registering with the Fundraising Regulator to demonstrate your commitment to the Code of Fundraising Practice – prospective donors are increasingly looking for the Fundraising Regulator badge before deciding whether to donate to a charity.

For more information contact Hannah Lyons at Bates Wells.

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