5 top tips for charity fundraising

Whether running a local fundraising event or launching a nationwide appeal, charities need to ensure that their fundraising activities comply with legal and regulatory requirements and reflect best practice.

Fundraising is about more than generating income. Done well, it can raise awareness of your charity's work, strengthen relationships with supporters and help deliver a lasting impact in the communities you serve. However, successful fundraising depends on more than a good idea. Trustees and charity leaders should understand the legal and regulatory framework that underpins fundraising activity and ensure that appropriate safeguards are in place.

Trustees are responsible for ensuring that all fundraising activities comply with the legal requirements set out in the Charities and Trustee Investment (Scotland) Act 2005 and the Code of Fundraising Practice (the Code). As the Code is principles-based, it is designed to be applied flexibly according to a charity’s individual circumstances, making it a practical framework for organisations to follow.

Fundraising regulation and its obligations vary slightly across the UK. The Code highlights these differences in an accessible way and is a comprehensive piece of guidance setting out what charities need to be aware of when fundraising on a UK-wide basis.

When undertaken properly, fundraising can provide charities with essential funding and resources, strengthen support, and enhance their reputation. However, poor fundraising practices may have serious consequences, including damaging a charity’s reputation and undermining the public’s confidence, and may trigger an investigation and legal penalties.

Whether your charity is planning a one-off fundraising event or developing a longer-term fundraising strategy, here are five ‘top tips’ to consider:

1: Focus on your charity’s objectives

Fundraising activities must support and be clearly connected to your charity’s objectives. All funds raised must be used to further your charity's charitable purpose. Trustees should consider whether proposed fundraising aligns with the charity’s governing document, as well as its aims and values. There should be a clear and demonstrable link between the fundraising activity and the outcomes your charity is seeking to achieve.

Additionally, where funds are raised for a specific project, those funds must be used only for that purpose, unless an alternative use has been officially authorised.

Trustees should ensure that fundraising income and expenditure are appropriately recorded and monitored so that funds are being used in line with donors’ expectations, thereby safeguarding public trust and the charity’s reputation.

2: Ensure fundraising activities are ethical and transparent

Fundraising must be conducted in a way that is legal, open, honest and respectful. Trustees should ensure that all fundraising activities are conducted reasonably and with regard for the interests of the public. This means avoiding practices that could be perceived as intrusive, aggressive or unduly pressurising. For example, fundraisers must not place undue pressure on individuals to make a donation or encourage them to cancel an existing commitment to another charitable organisation.

Fundraising communications should also be clear, accurate and transparent. Charities should take care not to mislead donors by omitting relevant information, providing false or ambiguous statements, or exaggerating the impact of a donation. Being open about how funds will be used can help build trust and confidence among supporters.

3: Have a written agreement in place when partnering with third parties

If your charity is partnering with a professional fundraiser or commercial participator, trustees must carry out appropriate due diligence before entering into an arrangement. A written agreement should be put in place, and the trustees should monitor the third party’s activities to ensure compliance with the agreement. If partnering with a commercial participator, the trustees must also ensure that the organisation complies with the Code.

The agreement must be put in place before any fundraising takes place and must be signed by both your charity and the third party. At a minimum, the agreement should contain:

Details of your charity and the third party;
The date of the agreement and its duration;
Details of how the agreement may be amended or terminated;
A statement of the agreement’s objectives and the methods that will be used to achieve them;
Details of how the donations will be shared, if more than one charity is involved; and
Details of the remuneration payable to the professional fundraiser, or the amount that the charity will receive from the commercial participator, including how that amount will be calculated.

4: Have a procedure in place for processing donations

A clear procedure for processing donations must be put in place to ensure that all funds are counted, recorded and banked as soon as reasonably practicable. This reduces the risk of funds being misused and ensures that cash is not left unattended or unbanked for longer than necessary.

It is important to maintain accurate records to provide financial oversight and ensure appropriate checks and balances are in place. The procedure should include:

Who is responsible for each stage of the process;
When each stage should be actioned and completed; and
How compliance with the procedure will be monitored and reviewed.

Having a robust procedure in place promotes accountability and transparency and reassures donors that funds are being handled responsibly.

5: Ensure your charity adheres to standards set out in the Code for each specific fundraising method

The Code sets out specific standards for a range of fundraising methods. Your charity must ensure that the requirements relevant to your chosen fundraising activities are understood and followed, and that appropriate policies and procedures are in place to support compliance. This ensures that all methods of fundraising are conducted in a respectful and non-intrusive manner.

For example, the Code details requirements for face-to-face fundraising in public and specifies that fundraisers should not approach people who are in a queue, seated, or working. The Code includes a ‘three-step’ rule, meaning that a fundraiser must not walk alongside a member of the public for more than three steps, unless that person shows a clear willingness to engage in conversation.

Conclusion

Trustees have a duty to act in the charity's best interests and are ultimately responsible for ensuring that all fundraising activities are conducted in compliance with the relevant legal and regulatory requirements. This includes maintaining appropriate oversight, having effective policies and procedures in place, and taking reasonable steps to identify and manage any associated risks. Failure to do so may expose the charity to regulatory scrutiny, reputational damage and potential financial loss.

Fundraising can be a powerful tool for advancing your charity's mission, but it is most effective when supported by strong governance and careful planning. Before undertaking any fundraising activity, trustees should familiarise themselves with the Code and ensure that everyone involved understands and complies with its requirements.

Where there is any uncertainty regarding the legal or regulatory requirements, professional advice should be sought at an early stage to help ensure fundraising activities are both effective and compliant.

If you would like to speak to a member of the Charities and Third Sector team at Lindsays in relation to charity law or any other matter, please get in touch.