What does the fundraising review mean for trustees?

One of the recurring themes that came up throughout the fundraising review was the role of trustees with regards to the fundraising activities of their charity. In particular, many spoke to the review panel about an insufficient involvement of trustees in the planning of fundraising campaigns, with too much focus on the ‘how much’ and not enough on the ‘how’. Some also raised concerns about the fact that there has been an abdication of values by trustees when it comes to fundraising, allowing a disconnect between the charity’s general ethos and its fundraising.

A key part of the report therefore aims to address this issue, and advises trustees on how they can take more ownership of their charity’s fundraising and ensure it is carried out to high standards while avoiding disproportionate burdens.

Existing guidance

Trustees have an overriding duty to act in the interests of the charity. In doing so, they must act prudently, balancing issues of resourcing and potential risks to the charity. Trustees’ duty of care requires that they exercise reasonable care and skill in carrying out their responsibilities.

The Charity Commission’s guidance on Charities and Fundraising (CC20) makes it clear that these duties also apply to fundraising, trustees must therefore ensure their charity complies with the law relating to fundraising on all aspects, including:

• fundraising methods
• the costs involved
• the financial risk
• how the money raised is spent.

Furthermore, where members of the public or volunteers are fundraising on behalf of the charity or where the charity employs a professional fundraiser, trustees should ensure that they have proper and appropriate control of the funds. It is important that trustees bear in mind that even when the day-to-day management of fundraising has been delegated to staff or volunteers, trustees still carry the ultimate responsibility.

Lastly, but most importantly, the guidance states that trustees should be aware of whether the proposed fundraising activities correspond with the charity’s values, and it highlights the importance of carefully considering the reputational risks and ethical implications of any method of fundraising.

The Charity Commission has announced that it will be revising and strengthening its fundraising guidance – a draft version is likely to be published for consultation later this month.

New requirements for trustees

Several Government amendments to the Charities (Protection and Social Investment) Bill currently going through Parliament will place new requirements on trustees in relation to their charity’s fundraising.

In particular, trustees will be required to make a statement in their Annual Report each year setting out their approach to fundraising. This should include whether they use commercial fundraisers, and what the charity has done to protect vulnerable people and other members of the public from undue pressure in their fundraising.

It is expected that, by obliging trustees to record their policies in their reports, they will be better informed about fundraising and ensure they have appropriate oversight. This in turn should raise standards and boost a culture of transparency.

Furthermore, Government has announced that it will strengthen its own powers to intervene in fundraising regulation, if malpractice continues to occur and the current system is deemed to have failed.

Fundraising review recommendations

The review has structured its recommendations on a new regulatory regime of fundraising to reflect a ‘three lines of defence’ model. Here, trustees are the first line of accountability for the charity’s fundraising activities and have the responsibility to ensure fundraising is carried out in compliance with the law and adhering to high ethical standards.

Furthermore, the review concluded that fundraising should be regarded as a critical governance issue. This means that trustees should have a strong governance framework in place so that they have strategic oversight of all fundraising activities, including when they are using a professional agency to raise funds on the charity’s behalf.

The report sets out a number of practical steps that trustees should make, including:

• making a statement in the annual report on whether the charity is registered with the new Fundraising Regulator and pays the fundraising levy
• regularly reviewing their charity’s fundraising processes and compliance with the Code of Fundraising Practice, and not simply whether targets have been met
• including fundraising activity on the risk register and managing it accordingly
• regularly inviting their director of fundraising or other responsible staff to attend board meetings and report on activities.

For more recommendations see the full report ‘Regulating fundraising for the future: trust in charities, confidence in fundraising regulation’.

Further support and information

To help you further understand your role as a trustee and ensure the effective governance of your organisation, we’re holding a Trustee Conference on 2 November 2015. With the latest legal and regulatory updates from Charity Commission included, you can remind yourself of your obligations as a trustee and get tools and advice to help in your role.