Learning from Tag's downfall

Charities that fail to meet legal requirements will not survive in today's market, writes legal expert Christopher Williams

Christopher Williams
Christopher Williams

Reports that Tag Campaigns has been placed into voluntary administration by its directors should serve as a warning that fundraisers who fail to meet legal requirements and maintain professional standards will not survive in today’s market. 

Tag raised funds on behalf of a number of charities using a text message donation system. In June of last year an undercover reporter from the Sunday Telegraph highlighted a number of concerns indicating misconduct and substandard fundraising by Tag. The Fundraising Standards Board (FRSB) subsequently initiated an investigation and concluded that Tag had breached the Institute of Fundraising’s Face to Face Activity Code in a number of key areas.

One of the failings highlighted by the FRSB was Tag’s failure to provide a solicitation statement to donors. It is a legal requirement that where fundraisers solicit money or other property for the benefit of a charity they must notify the donor that they will be paid and the amount of remuneration they will receive. Solicitation statements are important as they provide transparency on how the fundraising costs of the appeal will be met; allowing donor’s to make an informed choice as to whether they wish to make a donation. A failure to provide a solicitation statement has serious legal implications as the fundraiser will be guilty of an offence and liable to a fine of up to £5,000.

In the current economic climate charities are finding it increasingly difficult to raise funds. This situation is compounded when public confidence is damaged as a result of substandard fundraising practices. In order for fundraisers to survive it is essential that they maintain close working relationships with the charities they represent and work collaboratively on fundraising goals and strategies. At the outset of an arrangement, fundraisers should ensure that they have written agreements in place with the charity which contains specified information, including a statement of its principal objectives and the methods to be used in pursuit of those objectives. A failure to do so will mean that the arrangement is unenforceable without a court order.

Fundraisers should ensure that they make a sufficient investment in staff and only recruit those who will be positive role models for their organisation and the charities they represent. Staff should be provided with training on to how to meet legal requirements and best practice, which can be achieved by following the Institute of Fundraising’s Code of Practice. In particular, fundraisers must ensure that their solicitation statement is legally compliant and their staff are fully aware of the need to provide the statement and the consequences of failing to do so. It may assist if staff are provided with written copies of the statement which can be used as an aide-memoire when fundraising. Spot checks and monitoring should be implemented in order to ensure staff comply with the requirement to provide solicitation statements and any non-compliance should be dealt with immediately.

Fundraisers should also review the strategies they have in place in order to secure donations. The investigative report prepared by the FRSB in respect of Tag recommends that the performance of fundraisers and fundraising campaigns must be measured against realistic targets that do not compromise the quality of fundraising. Alternative incentive models should be explored that encourage fundraisers to not only secure donations but to recognise the importance of maintaining standards.

Christopher Williams specialises in commercial law and is a partner at law firm Morgan Cole

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