The Regulator for Charities in England and Wales

Memorandum of understanding between the Charity Commission and the Fundraising Standards Board

(16 March 2007)

If preferred, a full copy PDF (283kb) of this document and associated annexes is available.

Contents

Annexes

1. Introduction

1.1 Purpose

To set out the powers and responsibilities of, and the relationship between, the Charity Commission (the Commission) and the Fundraising Standards Board (FSBoard) in relation to charitable fundraising in England and Wales.

1.2 Context

The Commission is established under the Charities Act 19931. Without prejudice to its specific powers and duties, the Commission’s general function is to promote the effective use of charitable resources by encouraging the development of better methods of charity administration, by giving charity trustees information or advice on any matter affecting their charities and by investigating and checking abuse.

Under section 3 of the 1993 Act, the Commission maintains a register of charities. The Commission’s regulatory jurisdiction extends to all registered charities established in England and Wales, and all unregistered charities other than exempt charities. The term “charities” includes charitable collections and funds managed on an informal basis for charitable purposes by any person or organisation.

The FSBoard was set up to enable the self-regulation of fundraising, an initiative borne out of the recommendations of the Strategy Unit report ‘Private Action, Public Benefit’ and the work of the Buse Commission. The Charities Act 2006 includes a reserve power for the Secretary of State to make secondary legislation to regulate fundraising should the scheme not meet the Government’s stated success factors. The FSBoard operates a scheme open to charities and all other bodies raising charitable funds.

This memorandum of understanding sets out how the two organisations have agreed to work together to help the sector to achieve the highest standards in fundraising and to help to make the self-regulation of fundraising a success.

2. Roles

The Charity Commission is responsible for regulating the conduct of all charities in England and Wales and has a regulatory remit over all charitable funds raised, to promote their effective use and proper administration. It provides advice and support to charities and helps to resolve difficulties that have arisen within charities. In most cases this can be done by providing remedial support, but in more serious cases it may be necessary to intervene by using protective legal powers.

The FSBoard is established to promote high fundraising standards by its members (who join on a voluntary basis) throughout the UK. Members agree to adhere to the highest standards of good practice in fundraising by signing up to the Fundraising Promise (see Annex E), agreeing to follow the Institute of Fundraising’s Codes of Practice (which can be found through: http://www.institute-of-fundraising.org.uk), having a robust complaints procedure and accepting the authority of the FSBoard to make the final decision on a fundraising related complaint. Where complaints about fundraising are not resolved directly with the organisation concerned, members of the public can complain to the FSBoard about organisations which are members of the FSBoard. The FSBoard will attempt to resolve any issues through recommended remedial action and if necessary will adjudicate and impose sanctions, which for the most serious cases, will include withdrawal of FSBoard membership.

3. Complaints handling and compliance

3.1 Complaints the Commission deals with

The Commission does not investigate complaints about a charity unless there is a serious risk of significant harm or abuse to the charity, its assets, beneficiaries or reputation; where use of its powers are necessary to protect them and where this represents a proportionate response to the issues in the case. If there is evidence of mis-management (falling short of deliberate and continuing abuse) but the trustees are willing to work with the Commission to resolve the problems, the Commission will, through a mainstream case, provide supervision and guidance to ensure that the trustees adhere to best practice. In the most severe cases a formal inquiry will be opened. Commission intervention is specifically designed for use in circumstances where there is some grave, general risk to a charity’s interests and is principally about protecting a charity and its assets.

Where the Commission does take forward a case or opens an inquiry relating to fundraising it usually relates to cases:

  1. Where significant charitable assets are at risk, for example where it appears that there is bogus fundraising activity taking place, where the organisers are unlikely to give the proceeds to a charitable cause;
  2. Where fundraising or administration costs are excessive. Abuse of this kind is only likely to warrant an inquiry if exacerbating circumstances exist, for example the sheer level of loss or expenditure, persuasive evidence and/or previous warnings by the Commission; or
  3. Where fundraising material is seriously misleading to the public, where funds raised are not used for the stated purpose and where the public statement requirements of the Charities Act 1992 Part II are persistently not met.

The Commission will continue to tackle these serious regulatory issues.

3.2 Complaints the Commission does not deal with

The Commission does not take up cases where the complaint is about policies pursued or actions taken by the trustees of a charity, acting reasonably within the law and the provisions of the charity’s governing document. Such decisions are for trustees to take (and justify), and they often have very wide freedom to do so. The Commission is precluded from acting in the administration of any charity under section 1(4) of the Charities Act 1993.

The majority of complaints about fundraising which fall into this category relate to the fundraising methods a charity has used. For example the Commission receives complaints from members of the public who have received unsolicited ‘gifts’ from charities or complaints from members of the public who feel that fundraisers have used aggressive or otherwise offensive fundraising techniques. Although some people question whether particular fundraising methods are ethical, the Commission has no general power to tell charities to stop using a legal method of fundraising, but it would be concerned if a method caused such widespread concern or offence as to undermine public confidence in a charity or the sector as a whole.

Linked to this are the legitimate decisions taken by trustees about how much to spend on fundraising ventures as part of their fundraising strategy. There is no legal or recommended limit for fundraising costs, because costs can vary depending on the size of the charity, its line of work and its current and future plans. As mentioned above (paragraph 3.1) only in exceptional cases does the Commission pursue enquiries in cases of exceptionally high or disproportionate fundraising or administration costs. The Commission does however look for opportunities to endorse work carried out by other organisations which highlights best practice in relation to fundraising costs; the Institute of Fundraising's Code of Practice on ‘Accountability and Transparency in Fundraising’ is a good example.

3.3 Complaints the FSBoard deals with

Charities, other organisations and individuals that are members of the FSBoard scheme have agreed to the FSBoard’s membership conditions and must therefore:

  1. Adhere to and promote the FSBoard’s Fundraising Promise (see Annex E), which is a promise made to the public by members of the FSBoard scheme, committing to the highest standards of best practice;
  2. Adhere to the Institute of Fundraising’s Codes of Practice (which can be found through: http://www.institute-of-fundraising.org.uk) which represent the standards set for fundraisers in the UK. Each Code covers a separate fundraising technique, and provides information on areas of the law and guidance on the techniques themselves;
  3. Use the FSBoard scheme logo on all fundraising communications and specified company literature (unless it is impractical to do so);
  4. Ensure the organisation has a robust complaints procedure in place for dealing with fundraising complaints from members of the public;
  5. Select a complaints co-ordinator who will act as the primary point of contact with the FSBoard; and
  6. Accept the authority of the FSBoard to make the final decision on a fundraising-related complaint

The FSBoard aims to improve standards in fundraising and expects its members to adhere to best practice. It deals with complaints against its members’ fundraising methods and practice and will judge these against the Fundraising Promise and the Institute of Fundraising’s Codes of Practice. The FSBoard deals with complaints against its members in line with its published complaints procedure (see Annex C).

3.4 Complaints the FSBoard does not deal with

The FSBoard does not deal with the following types of complaints:

  1. Complaints against non-members;
  2. Complaints alleging fraud or any other criminal offence (although the outcome of the investigation of such complaints by another body will be monitored and sanctions may be applied against the member as a result); and
  3. Complaints about member charities that do not relate to fundraising.

3.5 Process for dealing with complaints

The starting principle for both organisations is that on receiving a complaint they will usually ask the complainant to try to resolve the issue with the charity directly, only where this has not been successful will the organisations consider whether to take further action.

The further action that the Commission or the FSBoard take when dealing with complaints from this stage will depend on the nature of the case, and each organisation has its own procedures it must follow.

Annex A gives an overview of how the Commission deals with complaints it receives about fundraising and in what circumstances and at what stage it may share information with the FSBoard.

Annex B (this is in two parts) gives an overview of how the FSBoard deals with complaints it receives about fundraising and in what circumstances and at what stage it may share information with the Commission

Annex C is the FSBoard’s published complaints process that members agree to when they become members of the scheme.

3.6 Resolving issues of jurisdiction and ‘grey areas’

There will be occasions when the Commission or the FSBoard receives a complaint which the complainant has not been able to resolve directly with the charity and where it is not instantly clear which organisation should lead further work to resolve the complaint.

There is a particular need to share information about these types of complaints and it is likely that a number of these will be discussed by representatives of the two organisations on a case by case basis initially. This may result in the FSBoard assisting complainants to get in contact with the Commission or vice versa.

Section 4.3 below explains that each organisation will have single points of contact (‘SPOCs’). They will be the liaison points in any ambiguous situations, and will refer to the role descriptions set out in sections 3.1-3.4 in this MoU to assist this discussion.

Each organisation will keep a record of advice received from or information shared with the other. When discussing cases, the Operations SPOCs may identify issues or trends which may warrant further policy input. In such cases they will alert the Policy SPOCs who will consider what further action could be taken to resolve the issues.

4. Sharing information

4.1 Legal basis

Under section 10 of the Charities Act 1993, the Charity Commission is permitted to share information with any person or organisation discharging functions of a public nature where the disclosure is made for any purpose connected with the discharge of that person or organisation’s functions. It does not however impose a duty upon either the Commission or other person or organisation to disclose information. The regulatory function carried out by the FSBoard has sufficient public nature to enable it to be considered a public body for these purposes and the Commission is therefore entitled to share information with the FSBoard.

Similarly, the FSBoard can share information regarding non-members with public bodies where the disclosure is made for a purpose connected with the function of such a body and can do so in the case of members where it is in the public interest to do so. It may also assist complainants to get in touch with other regulators, which may involve sharing information directly with the Commission. The FSBoard is therefore able to share relevant information with the Commission.

The Commission and the FSBoard will encourage the exchange of information between them where appropriate in order to maximise the efficiency of their respective functions. Any information disclosed to the other is strictly confidential unless otherwise explicitly advised or with the consent of the disclosed party. Where information is disclosed about an ongoing investigation, the organisation which is made party to it will not pre-judge the outcome of the investigation or take action on that basis.

Both organisations will ensure that any disclosure of information under the terms of this memorandum of understanding is carried out in a manner that is efficient, proportionate and fully in compliance with the Human Rights Act 1998 and the Data Protection Act 1998.

4.2 Information that may be disclosed

The Commission may provide information about its work in relation to members and prospective members of the FSBoard on a strictly confidential basis and where it would not jeopardise the successful resolution of a case. This will be considered on a case by case basis and may include the following:

  1. Notification that a formal inquiry under section 8 of the 1993 Act has been opened about an FSBoard member, together with a brief note of the cause for concern;
  2. Notification of the outcome of a formal inquiry about an FSBoard member prior to publication of the report on the inquiry;
  3. Information on the register of removed trustees kept in accordance with s72(6) of the 1993 Act (as requested in relation to existing or prospective members);
  4. Details of charities which have been removed from the register of charities (as requested in relation to existing or prospective FSBoard members); and
  5. Notification of the intention to remove an FSBoard member from the register of charities before making this information public.

The FSBoard may provide the Commission with information about its work on a strictly confidential basis. This will be considered on a case by case basis and following a consideration of whether disclosure is in the public interest. This may include:

  1. Information to be provided in response to specific requests from the Commission about ongoing cases in stage 2 of the FSBoard complaints process where it will assist in an ongoing Commission investigation and, in the case of FSBoard members, it is in the public interest to disclose such information.
  2. Notification that a complaint is being referred to the FSBoard as part of stage 3 of the FSBoard complaints process (see Annex C);
  3. Notification of the outcome of a case before it is made public on those cases that reach stage 3 of the FSBoard complaints process (see Annex C); and
  4. Details of those charities whose applications for membership of the FSBoard have been refused and a brief note of the reasons; and

Each organisation will also endeavour to provide information in response to reasonable ad hoc requests for other information.

4.3 Ongoing liaison

The Commission and the FSBoard have links on both operational and policy issues. Each organisation has therefore designated two main liaison points:

1. Single point of contact on all operational matters (Operations SPOC):
Commission – Compliance Manager
FSBoard – Compliance Manager

2. Single point of contact on policy issues (Policy SPOC):
Commission – Senior Policy Advisor with fundraising remit
FSBoard – Director

These four individuals will meet on a regular basis for update meetings, together with the Head of Policy from the Commission. Initially these meetings are scheduled quarterly but the frequency and attendees may be reviewed as the relationship develops.

The Commission will be invited to attend FSBoard meetings with observer status and will receive copies of all Board papers and minutes of these meetings. One of the Commission’s SPOCs will endeavour to attend on a regular basis.

4.4 External communications

Where there is a matter of mutual interest and it is considered appropriate the Commission and the FSBoard will collaborate on external communications.

5. Interpretation

Any disagreement arising from the interpretation of this memorandum of understanding will be referred to the Executive Director of Policy and Effectiveness of the Commission and the Director of the FSBoard, who will endeavour to resolve it within the spirit implicit in the co-operation arrangements.

6. Review and amendment

The developing relationship and this memorandum of understanding will be kept under review and will be amended if necessary and as agreed by the Executive Director of Policy and Effectiveness of the Commission and the Director of the FSBoard. In particular, it will be reviewed after the first six months of operation.

7. Special handling

Whilst it is intended that the arrangements in this memorandum of understanding should apply generally, it is recognised that some circumstances will require special handling. Nothing in this memorandum of understanding prevents the making of arrangements to meet specific exceptional needs.

 Rosie Chapman Signature  Jon Scourse Signature
Rosie Chapman
Executive Director Policy and Effectiveness
Charity Commission		 Jon Scourse
Director
Fundraising Standards Board

 

1. This will be superseded by the Charities Act 2006 when the relevant provisions take effect