The Fundraising Regulator’s Policy and Development Officer, Heather McLoughlin, looks at how charity annual reports can meet the fundraising reporting requirements under section 13 of the Charities (Protection and Social Investment) Act 2016.
A charity’s annual report is an essential tool that enables donors and the public to understand what a charity does and how they do it. The annual report also allows charities to explain how they are meeting their legal responsibilities when the charity fundraises.
When writing or reviewing annual reports – whether you’re a trustee, employee, or auditor – it is important to assess whether the charity needs to meet the legal requirements on reporting fundraising activities. This is outlined in Section 13 of the Charities (Protection and Social Investment) Act 2016 (the Act).
What are the fundraising reporting requirements?
The Act requires charities registered in England and Wales, with a gross income of more than £1 million, to include specific information in their annual reports on their fundraising practices. This includes:
- how the charity (and any third party working on its behalf) fundraises
- how it monitors fundraising activities carried out by the charity or on its behalf
- whether the charity has signed up to any voluntary fundraising regulation scheme
- the number of fundraising complaints it receives, and
- what the charity is doing to protect people in vulnerable circumstances, among other requirements.
As the independent regulator of charitable fundraising in England, Wales and Northern Ireland, the Fundraising Regulator recommends that charities which don’t need to meet these requirements by law, but who do fundraise, also include this information in their annual reports. Doing so helps all fundraising charities to show that they are transparent and accountable in their fundraising activities.
Researching charity compliance
In 2020, we analysed a sample of annual reports filed with the Charity Commission for England and Wales to see whether charities that must report on their fundraising practice by law had achieved full compliance.
We found that 81% included a statement about their fundraising approach, but only 21% were fully compliant by including a statement on all the Act requirements. Even if a reporting requirement does not apply to a charity, it’s important to state the reason why this is the case, as failure to include this information could mean the charity isn’t compliant with the Act.
Encouragingly, 59% of sampled reports included a statement on the number of complaints about fundraising a charity had received in the last 12 months. We’ve produced resources to help charities understand how they can better handle complaints they might receive. Our Annual Complaints Report, which shares learning from complaints escalated to the Fundraising Regulator and data from some of the UK’s largest fundraising charities, can also help to inform your charity’s fundraising approach.
Identifying areas for improvement
We found only 40% of charities included a statement on what they had done to protect people in vulnerable circumstances and the public whilst fundraising. We expect policies on this to be in place, as a failure to support potentially vulnerable people could result in the charity breaching the Code of Fundraising Practice – which sets the standards for UK fundraising. The Chartered Institute of Fundraising has produced guidance on treating donors fairly and meeting the needs of people in vulnerable circumstances.
We also found it concerning that 41% of charities did not include a statement on monitoring fundraising activities carried out by third parties. The public often don’t understand that not all fundraising is carried out by charity employees. The values and ethos of the charity is on display when any engagement between a donor and third-party fundraiser takes place. It’s important that charities provide training to third party fundraisers and closely monitor these interactions.
Read our good practice guidance
To help charities, we’ve produced guidance on fundraising reporting requirements. You should read this to ensure the requirements set out in the Act are met when preparing your next annual report and accounts.
In 2022, the Fundraising Regulator will be carrying out another review to check whether compliance with the Act has improved. I’ll be talking more about what you can learn from our guidance at the ICAEW Charity Conference in January 2022, so look out for us in the agenda. In the meantime, keep an eye on our Twitter feed or sign up to our monthly newsletter for updates.
*The views expressed are the author’s and not ICAEW’s.
