Since 1 November 2016, charities registered in England and Wales which have their accounts audited (where they have a gross income of more than £1 million) have been required under Section 13 of the Charities (Protection and Social Investment) Act 2016 to include specific information in their annual reports on their fundraising practice.
However, recent analysis from the Fundraising Regulator has shown that charities are not yet achieving full compliance and are therefore missing an opportunity to communicate with their supporters about their fundraising approach.
The Act requires charities to report on:
- their approach to fundraising;
- the scheme of voluntary regulation they adhere to;
- and any failure to comply with a scheme or standard;
- numbers of complaints received about fundraising;
- how third-party fundraising is monitored; and,
- how they ensure vulnerable people are protected.
At the Fundraising Regulator, we consider it good practice for all charities that produce an annual report to address the requirements in the Act, regardless of fundraising spend. By doing so, charities can give assurances to their supporters and the wider public that they are considering key fundraising issues in their activity.
How are charities currently reporting on their fundraising practice?
Although the charitable sector has shown commitment to improving their fundraising practices, some charities are not using their annual report to evidence this. Our recent analysis of 187 annual reports filed with the Charity Commission for England and Wales found many that have to report on their fundraising practice by law, are not yet achieving full compliance with the fundraising reporting requirements of the Act.
Our analysis found that 81% of charities included a statement about their fundraising approach. However, we identified that most organisations are not providing enough information on how they monitor fundraising activities carried out on behalf of the charity; the numbers of complaints received; and, crucially, what they are doing to protect vulnerable people and other members of the public while fundraising. This is a missed opportunity for charities to show compliance with regulation, and to tell supporters their fundraising story.
Why should charities meet the fundraising reporting requirements?
For many charities it is a legal obligation to meet the fundraising reporting requirements set out in the Act. But this is not the only motivation to comply.
At the Fundraising Regulator, charities frequently tell us that transparency and accountability with donors is important and a key part of their fundraising strategy. Your annual report is an opportunity to tell the story of your organisation’s impact and to inform your donors and supporters on how and why you fundraise the way you do.
If you fail to include detail in your annual reports on aspects such as how you monitor third parties or protect vulnerable people, you may leave your charity open to doubts about whether you are following best practice, and give the impression that you do not have the relevant policies and procedures in place.
By contrast, detailed reporting gives evidence to supporters about your fundraising activities, which helps to build trust in your charity’s brand, and the sector more broadly. This is why we consider it best practice for all charities to include statements in their annual report on their fundraising practice.
How should charities present information about their fundraising?
We know that annual reports need to contain a lot of important information about all aspects of your charity. However, it is essential to view the fundraising reporting requirements as necessary as the rest of the content. The Act doesn’t prescribe exactly how and where this should be done, but it is important that your reporting is easily understood, transparent and accurate.
You should also consider that this year, with the impact of COVID-19 on the economy and the public facing a squeeze on their household budgets, those who are able and willing to donate are more likely to be selective about which charities they support. Charities that can demonstrate they are maintaining standards and are open about how their fundraising practices protect their donors, can develop better relationships that can result in more fundraising opportunities.
Where can I find support to meet the requirements?
To help charities improve their reporting on their fundraising activities we have published updated guidance for the sector, which includes information on how to write clear and detailed statements. The guidance sets out each of the requirements in the Act and explains how charities can report on these in a way that is compliant, but also informative and helpful to the reader.
By following our guidance, you will be in a stronger position to not only meet the requirements of the Act, but also to improve communication with your supporters and donors about your fundraising. I encourage you to take the time to read our guidance before you start preparing your next annual report.
By Heather McLoughlin, Policy Development Officer at Fundraising Regulator.
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