The Charity Commission and the Fundraising Regulator have warned charities about their arrangements with fundraising agencies amid concerns that increasing numbers are trying to avoid the statutory requirements in this area.
In a joint statement issued yesterday, the regulators said they had "significant concerns" about charities entering into agreements with fundraising agencies that lacked transparency and were detrimental to them, and warned them to avoid entering into contracts with third-party fundraisers under certain circumstances.
This included where the fees received by the agency would "damage public trust and confidence" and where the charity benefited from the arrangement only at the very end of the contract term or where it was possible that it would not benefit at all.
Other arrangements the regulators urged charities to avoid included medium or long-term contracts that had very limited termination or adjustment provisions and contracts that were structured to avoid legal rules – for example, where a professional fundraiser was described as an "adviser" or "consultant" in the contract despite being in charge of soliciting donations on the charity’s behalf.
"These arrangements can mean it is not clear to the donor that the fundraising is being delivered by, or with the significant involvement of, a third party at a significant cost to the charity," the bodies said.
"The commission and the Fundraising Regulator have significant concerns about a number of cases where trustees have entered into arrangements with third-party fundraisers that are not transparent and are detrimental to the charity and its supporters."
David Holdsworth, chief operating officer at the Charity Commission, said in a statement: "We are aware of and concerned about a growing number of cases where arrangements are in place that appear to be set up in ways that deliberately avoid the statutory regulations."
A spokesman for the Fundraising Regulator declined to say how many of the complaints the regulator was investigating involved agencies, but said it was on track to disclose the findings of its inquiry into the now defunct door-to-door agency Neet Feet by the end of the year.
In the statement, the regulators said trustees had a duty to ensure their charities’ arrangements with fundraising agencies followed the legal rules that applied to them.
"Failure to do this will generally amount to misconduct and mismanagement of the charity’s affairs," they said.
The statement comes after Lord Grade, chair of the Fundraising Regulator, said at the annual charity conference of the Institute of Chartered Accountants in England and Wales last week that several forthcoming cases involving private fundraising organisations were likely to receive high-profile media coverage and heighten the argument in favour of the licensing system for fundraising agencies.
He said that agencies were insufficiently regulated and described their current operating environment as "a wild west".