"Fundraising for Charities â€“ legal aspects"
Fundraising for Charities – legal aspects Fundraising for Charities – Legal Aspects Derek Hogg Partner 19 February 2010 Overview / General issues / Legislative provisions General Issues General issues / Benevolent body should have an appropriate constitution – assures funders that it is a responsible organisation / Trusts and companies limited by guarantee are familiar to funders and are therefore more attractive from a funding point of view / Charitable status is desirable: – some funders are also charities and may find it easier to make grants for charitable purposes – increases credibility with other donors, as they know you are complying with a minimum standard of accountability and governance – need to satisfy the charity test: • charitable purpose(s); and • public benefit General issues / General duty of charity trustees to comply with charities legislation and to act in a manner that is in the interests of the charity and, in particular: – to seek, in good faith, to ensure that the charity acts in a manner that is consistent with its purposes; – to act with the care and diligence that it is reasonable to expect of a person who is managing the affairs of another person; and – where there is a conflict of interest between the interests of the charity and those of a person responsible for the appointment of the charity trustee: • to put the interests of the charity before those of the other person; or • to disclose the conflict to the charity and refrain from participating in deliberations relating to the matter / These duties will also apply with respect to any fundraising activities in which the charity trustees are involved Charities and Trustee Investment (Scotland) Act 2005 Fundraising / Fundraising provisions contained in sections 79 to 92 / Applies to fundraising undertaken by all benevolent bodies established for charitable, benevolent and philanthropic purposes, irrespective of whether they are charities Control of fundraising / 2 key concepts: 1. Commercial participator –a person who carries on a business for profit (other than a fundraising business) and engages in a promotion whereby benevolent contributions are to be made to particular benevolent bodies or applied for charitable, benevolent or philanthropic purposes Control of fundraising 2. Professional fundraiser: a) a person (other than a benevolent body or company connected with it) who carries on a fundraising business; or b) any other person who seeks (in return for a reward) money or property for the benefit of a benevolent body or for charitable, benevolent or philanthropic purposes but is not involved in a fundraising business Control of fundraising / Professional fundraisers and commercial participators must have an agreement with a benevolent body before fundraising on its behalf / Regulations set out the specifics to be included in an agreement / Benevolent bodies and OSCR (for charities) may seek interdict preventing a professional fundraiser or commercial participator fundraising on a body’s behalf without an agreement or outwith an agreement in the prescribed format Control of fundraising / Benevolent bodies can also seek interdict preventing anyone other than a professional fundraiser or commercial participator from fundraising on their behalf if the person is not fit and proper or if the body objects to the method of fundraising / If written agreement is not in the proper form or contain required information, then the agreement is not enforceable by the professional fundraiser or commercial participator against the benevolent body except with the permission of the Sheriff Court Public benevolent collections / Local authority-led system for public benevolent collections / Organisers of public collections must apply to local authority for permission unless the organisers are exempt / Local authority must carry out checks before deciding whether to grant permission – appeals against local authority decisions are possible / “Public” covers door-to-door collections, or street collections or public areas of stations, airports, shopping precincts – doesn’t cover activities inside a building (eg. a shopping mall) Public benevolent collections / Organisers are only exempt if: – organiser is a designated national collector – collection is in a public meeting – collection takes place on land occupied by collector and to which public has access – collection is by unattended receptacle in a public place / Organising a public collection without consent is an offence Public benevolent collections / OSCR may designate charities who meet certain criteria as designated national collectors – OSCR to determine this criteria / Designated national collectors must still notify the local authority, who may prohibit the collection if it is likely to cause undue public inconvenience The Charities and Benevolent Fundraising (Scotland) Regulations 2009 Overview / The Regulations came into force on 1 July 2009 / Set out the information that must be supplied when funds are sought on behalf of benevolent bodies / Different levels of information require to be provided to donors, depending on whether solicitations are made by a benevolent fundraiser (person associated with the benevolent body or its associated companies), professional fundraiser or commercial participator Benevolent fundraisers / Need to inform the potential donor of: – name of the benevolent body(ies) – details of the proportion that each benevolent body is to receive – where funds are sought for general charitable purposes then specify this and how distribution of funds will be determined – if receive remuneration then need to specify e.g. “I work for X charity” Professional fundraisers / As per benevolent fundraisers, except need to indicate: – manner in which remuneration will be determined – actual / estimated amount of remuneration Commercial participators / As per professional fundraisers, except need to provide the actual / estimated amount of the following: – amount received in payment for goods or services provided by the commercial participator – proceeds received from a professional venture undertaken by the commercial participator – the level of donations by the commercial participator to the benevolent body in relation to the goods and services provided Offences / Failure to provide the required information is an offence / Where funds are solicited during radio or TV programmes, video e-mails or telephone calls, then professional fundraisers and commercial participators must give potential donors information regarding their right to receive refunds – failure to do so is an offence Right to cancel / Regulations also set out the rules with regard to the right of a person to seek refund of payments made to benevolent bodies and to cancel future payments Conclusion / Charitable status is desirable to ensure improved access to funds / The legal aspects of fundraising are complex / Need to ensure appropriate permissions are in place and that staff are aware of the information requirements of the Regulations – training is essential / Failure to comply could have significant financial, as well as reputational, consequences for the charity both from the public’s as well as funders’ perspectives (actual and potential) Contact Derek Hogg Partner 19 February 2010 t/ 0141 227 9297 e/ email@example.com