Section 2

Responsibilities of those who govern charitable institutions

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Please provide any comments you have on the redrafted code rules below. You can comment on as many rules as are relevant to you. You can also save your responses and return to them later.

You can see how rules in the current code relate to the redrafted code in the Table of Changes.

The supporting documents include Code Compliance Guides which will help you understand how to meet the requirements of the redrafted code, and a Glossary with definitions of specific terms in the redrafted rules. CCG01: Documenting your Fundraising Decisions; CCG02: Due Diligence and Fundraising; and CCG03: Monitoring are relevant to Section 2.

2. Responsibilities of those who govern charitable institutions

Those who govern charitable institutions (such as trustees of a charity) have a responsibility to act in the best interests of their organisation. They are responsible for fundraising.

This section sets out the standards we expect, including risk assessments and effective procedures for complaints handling and for making sure donations are used for the purposes for which they are given.

2.1. General duties

In this section, ‘you’ means the governing body of a charitable institution.

2.1.1

You must act reasonably and carefully in all matters relating to fundraising. This includes:

Taking overall responsibility for fundraising activities, including those you have delegated;

Following codes and guidance from relevant regulators;

Taking appropriate advice;

Considering the effect of controversial fundraising campaigns

Assessing and managing risks that fundraising poses to a charitable institution’s activities, beneficiaries, property, work and reputation; and

Meeting any reporting and accounting requirements that apply to a donation.

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2.1.2

You must take reasonable steps to ensure individuals fundraising on your behalf are protected from harm and harassment and have processes to let them raise and address such issues.

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Guidance on Safeguarding and Fundraising

National Council for Voluntary Organisations (NCVO): People who need safeguarding while fundraising and Safeguarding for fundraising managers

2.1.3

You must engage constructively and in a timely manner with enquiries by the Fundraising Regulator or the Scottish Fundraising Adjudication Panel in relation to compliance with the Code and ensure your fundraising partners do the same.

N.B. This new rule reflects the principle that fundraisers will cooperate with the Fundraising Regulator or the Scottish Fundraising Adjudications Panel in answering questions and providing information about their compliance with the code. It also makes it clear that information must be provided as quickly as reasonably possible to enable the regulatory process to work effectively.

A guidance note will be published with the new code. This will set out the meaning of constructive and timely engagement with the regulator and when that would be expected.

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2.1.4

You must be able to demonstrate that you have acted in the best interest of your charitable institution when fundraising. This includes:

Identifying and addressing potential conflicts of interest;

Following guidance from relevant regulators;

Ensuring donations are used for the purposes for which they are given;

Making clear to people fundraising on your behalf that all donations must be sent to your charitable institution; and

Ensuring that funds are used reasonably and sensibly in the interests of your charitable institution.

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More information on the legal responsibilities of governing bodies can be found here.

2.2 Accepting, Refusing and Returning Donations

In this section, ‘you’ means the governing body of a charitable institution.

2.2.1

You must only refuse or return donations in exceptional circumstances. If you decide to refuse or return a donation you must document your decision appropriately.

You must ensure those fundraising on your behalf are aware that decisions relating to refusing or returning a donation must be made by you or in line with a policy you have set.

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2.2.2

You must carry out appropriate due diligence, proportionate to the size and nature of the donation, on both the financial and reputational dealings of potential donors before accepting their donations.

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2.2.3

You must only refund a donation in line with your charitable institution’s policies or in exceptional circumstances. However, you must refund a donation if a donor correctly exercises their right to one.

Before you refund a donation, you must make sure you have power to do this. If it is unclear whether or not you should refund a donation, consider getting legal advice.

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Guidance on Accepting and Refusing Donations

Charity Commission for England and Wales (CCEW): Accepting, refusing and returning donations to your charity
Chartered Institute of Fundraising (CIoF): Acceptance, refusal and return: A practical guide to dealing with donations

2.3 Complaints and concerns about fundraising

In this section, ‘you’ means the governing body of a charitable institution.

2.3.1

You must have a clear and publicly available fundraising complaints procedure which fundraisers can explain to existing or potential donors.

If your fundraising partners do not have a suitable clear and publicly available complaints procedure of their own, they must agree to follow yours.

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2.3.2

When you or a fundraising partner receive complaints about your fundraising you must:

Investigate thoroughly and fairly;

Respond fairly and proportionally;

Avoid unnecessary delay; and

Regularly review lessons to be learnt from complaints and use relevant learning to develop good fundraising practice in the future.

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2.3.3

You must have a clear, published procedure explaining how staff and volunteers can report any concerns they have about your fundraising practice. You must ensure this includes:

The type of issues that can be raised and the process for doing so;

Following guidance from relevant regulators;

How the person raising a concern will be protected from victimisation and harassment;

What you will do when you receive a concern; and

How to report concerns to the Fundraising Regulator or the Scottish Fundraising Adjudication Panel if it is not possible to consider or resolve them within your charitable institution.

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Guidance on Complaints

Fundraising Regulator: Complaints handling guidance

2.4 Paying Fundraisers

In this section, ‘you’ means the governing body of a charitable institution.

2.4.1

You must give due consideration to the approach you choose for paying fundraisers and whether this fits the ethos and values of your charitable institution.

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Legal Requirements for Paying Fundraisers

Governing bodies of charitable institutions must ensure that directly employed fundraisers are paid in line with relevant legislation, including:

You can only pay charity trustees for fundraising if they meet specific conditions as set out in:

Charity Commission for England and Wales: Payments to charity trustees: what the rules are and Section 185 of the Charities Act 2011
Scottish Charity Regulator (OSCR): Guidance and good practice for charity trustees and Section 67 of the Charities and Trustee Investment (Scotland) Act 2005
Charity Commission for Northern Ireland: Guidance on trustee expenses and payment and Section 88 of the Charities Act (Northern Ireland) 2008

2.5 Solicitation statements for paid employees, officers and trustees of charitable institutions and connected companies

In this section, ‘you’ means the governing body of a charitable institution.

Solicitation statements are statements that some paid employees, officers and trustees of charitable institutions and connected companies must give when fundraising for a charitable institution. They explain how the charitable institution will benefit from the fundraising activity.

More information on solicitation statements appears in Section 7 Fundraising Partnerships and

Fundraising Regulator: Working with Professional Fundraisers
Fundraising Regulator: Working with Commercial Participators

2.5.1

You must ensure solicitation statements are clear, accurate, and up to date.

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2.5.2

You must ensure solicitation statements are made either before a donation is given, or before asking for financial details for a donation (whichever is sooner).

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Legal Requirements for solicitation statements by paid employees, officers and trustees of charitable institutions and connected companies

In England and Wales: Sections 60A and 60B of the Charities Act 1992

In Scotland: Regulation 3 of The Charities and Benevolent Fundraising (Scotland) Regulations 2009

For more information on this rule:

In England and Wales: see Chapter 4 and Annex C Cabinet Office: Guidance on Part 2 of the Charities Act 1992
In Scotland: OSCR: statement A of Technical Guide: Charities and Benevolent Fundraising (Scotland) Regulations 2009

2.6 Using Funds

In this section, ‘you’ means the governing body of a charitable institution.

2.6.1

You must ensure any conditions on accepting a donation, set by you or the donor, are within the purposes of your charitable institution.

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2.6.2

You must keep a record of donations that are given for specific purposes to ensure that you keep to the conditions of the donation.

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Offering Benefits with a Donation

Some organisations provide benefits in return for a donation. These can range from the very small (a newsletter or a branded pen) to the more significant (such as access to exclusive events).

2.6.3

If you encourage someone to donate by offering benefits, you must ensure:

You have the power to give the benefits;

The benefits are appropriate in the circumstances; and

The benefits are proportionate to the size and frequency of the donation

Providing benefits in return for a donation can have tax consequences. In particular, the level of benefit received can impact whether a donation is eligible for Gift Aid. You should consider potential tax consequences as part of ensuring any benefits you provide are appropriate.

More information on this topic is available from:

HM Revenue & Customs: Chapter 3.18 Benefits received by donors and connected persons
Charity Tax Group: Gift Aid donor benefits

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Legal Requirements for Using Funds

The legal obligations of governing bodies of charitable institutions vary depending on where and how they are registered. In general, governing bodies of charitable institutions are legally required to:

only request funds for a purpose that is within the purposes of your charitable institution;
ensure funds raised for a particular cause are used for that cause; and
use funds in line with any conditions you have agreed to or have been set by the donor.

A donation must be used for the purpose for which it was given. If you want to change that purpose you should get advice from legal advisers or the relevant national statutory regulator before changing the purpose, even if the person making the donation has given you permission to do this.

The key legislation for registered charities is:

In England and Wales: Charities Act 2011
In Scotland: Charities and Trustees Investment (Scotland) Act 2005
In Northern Ireland: Charities Act (Northern Ireland) 2008

Community Interest Companies (CICs) are covered by the Companies Act 2006

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