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Going digital and staying compliant: What charities need to know about online fundraising.

The UK funding landscape has come under increased pressure recently in the wake of economic and political uncertainty, and charities are finding it challenging to maintain public interest in the work they do and generate the desired level of funds to deliver their mission.

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Finding innovative ways to raise funds is only part of the problem charities are facing, with an increasing level of compliance also beginning to have an influence on how efficiently a charity is operating.

Online fundraising on the rise

According to a review undertaken by the Charities Aid Foundation in March 2018, the most common way for charities to raise funds is, rather unsurprisingly, through cash donations. However, there has been an increasing trend of members of the public donating to charities through various cashless mediums such as online platforms, text messages, crowdfunding pages and even crypto-currency. 

The success of online platforms can be seen with Battersea Dogs’ & Cats’ Home who recently engaged in a three-week trial with goDonate and were able to double their online donation income as a result. They have since confirmed that they will use the platform to manage their ‘Sponsor a Kennel’ campaign. 

Charity Digital Code marks a new era

This example is indicative of society moving towards a Digital Age and the introduction of the Charity Digital Code in November 2018, designed as a reference for optimal digital practice, reinforces this idea as a new era for all organisations begins to emerge. It is imperative that the sector embraces this change, as findings from the Charity Digital Code Benchmark Report concluded that 63% of the 150 charities reviewed do not have a codified digital strategy in place and 75% have a shortage of digitally trained staff. These statistics highlight the level of investment the sector needs in order to keep up with the developing universal trend.

Compliance with online fundraising rules

The impact of the compliance requirements of the Digital Age on organisations' operations can be seen through the introduction of GDPR in May 2018. Many organisations have had to review their data and IT infrastructure in light of more stringent guidelines and the Fundraising Regulator, the fundraising sector’s principal regulator, also updated its Code of Fundraising Practice to take the change in law into account for its sector bodies to consider.   

The regulator has also set out a number of specific rules for online fundraising platforms and crowdfunding pages to follow. These only apply to platforms which are not directly linked to a charity’s bank account and platforms which charge on a donation-by-donation basis, so donation pages hosted on a charity’s own website are not bound by these rules.

Charities have a responsibility to be aware of the rules so that donors make informed decisions when making donations online:

  • Disclosure of remuneration for hosting fundraising campaigns – how the remuneration will be calculated and how much they will receive;
  • Responsibilities of fundraising platforms – requirement to publish best practice guidance on their website ensuring donors are informed appropriately about appeals in advance of donating and that funds raised are administered appropriately; and
  • Payment Service Regulations 2017 – prohibiting discounts being offered on one type of payment and not another (for example debit card donations charged at a 5% discount compared to credit card donations).

Any instances of non-compliance with the online fundraising rules should be reported to the Fundraising Regulator.

Registering with the Fundraising Regulator

The Fundraising Regulator also encourages charities and non-charities (such as online fundraising platforms) to register with it to demonstrate public commitment to responsible fundraising, promote best practice, gain access to opportunities to improve fundraising methods and show compliance with the law.

In order to cover its running costs, the Fundraising Regulator applies a voluntary levy of between £150 and £15,000 to charities with fundraising costs in excess of £100,000, with the amount increasing as the size of the charity increases. A flat rate registration fee of £50 per annum is applicable if fundraising costs are under £100,000. The levy for non-charities is based on turnover and ranges between £150 and £12,000.

The Fundraising Regulator’s Chair, Lord Harris of Haringey, has criticised those charities which have not contributed and has commended all entities that have voluntarily paid the levy, stating in an interview with The Times that "The rules are there not only to protect the public but also to protect [charities] and their good name" (The Times).

Reacting to digital change

As global markets adapt to changes in the economic and political climate, charity trustees (and management) are carefully thinking about new and innovative ways of boosting their fundraising income and ensuring they are reaching out to as many beneficiaries as possible. Within the UK, the digital medium is becoming more prominent, as seen first with the introduction of online Gift Aid submissions and more recently with the introduction of Making Tax Digital.

Whilst there are increased compliance requirements, embracing the change and making the most of such digital opportunities will help charities operate more competently.

For further guidance and advice tailored to your specific circumstances, please speak to your usual Buzzacott contact or:

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