Keep it legal: Fundraising contracts

Earlier this year, the Charity Commission advised trustees and fundraisers to seek legal advice before entering into fundraising contracts with commercial companies.

Until clauses governing professional fundraising in the Charities Act 2006 are enacted, charities should refer to the Charities Act 1992 and the Charitable Institutions (Fundraising) Regulations 1994. These laws were enacted to control 'professional fundraisers' and 'commercial participators'.

Professional fundraisers are people whose businesses or professions are concerned with fundraising for gain. They exclude in-house fundraisers, appeals carried out on television or radio and commercial participators. A commercial participator is a person or company, other than a fundraising company, that engages in a promotional venture and claims contributions will be made to a charitable institution.

The law says it is unlawful for professional fundraisers and commercial participators to solicit money or gifts on behalf of charitable institutions unless agreements are in place that satisfy certain statutory requirements.

All agreements between charitable institutions and professional fundraisers and commercial participators must be in writing, signed by all parties and specify details such as the duration of the agreement, arrangements for prior

termination and the principal objectives.

The fundraiser's or participator's entitlement to remuneration and expenses must also be set out. If more than one charitable institution stands to benefit, it should be clearly stated.

The charitable institution has a right to request any documents or records kept for the purposes of the agreement.

Any other person raising funds in the course of a business who says contributions from that fundraising event will be donated to charitable purposes must ensure each representation they make is accompanied by a 'solicitation statement'. When the relevant clauses in the Charities Act 2006 are enacted, slightly different statements will have to be made by charity employees, officers and trustees who raise funds for their organisations. Failure to comply with these statutory requirements will result in all funds raised going to the charitable institution.

- Ros Harwood is partner and head of charities at Dickinson Dees

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