This page contains information that has appeared on Sandy Adirondack's legal update website for voluntary organisations at www.sandy-a.co.uk/legal.htm. For current updates, including potential changes that are in the pipeline, see the legal update website.

These websites for each chapter update the 3rd edition of The Russell-Cooke Voluntary Sector Legal Handbook by James Sinclair Taylor and the Charity Team at Russell-Cooke Solicitors, edited by Sandy Adirondack (Directory of Social Change, 2009). The websites are not intended as a comprehensive update and should not be treated as such.

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Chapter 48
FUNDING AND FUNDRAISING: GENERAL RULES

HODGSON RECOMMENDATIONS ON SELF-REGULATION OF FUNDRAISING

Updated 18/8/13. This information updates s.48.1 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
In his review of the Charities Act presented to Parliament on 16 July 2012, Lord Hodgson made the following recommendations in relation to self-regulation of fundraising, and the government commented on some of them in its interim response on 3 November 2013. The government's full response will include consideration of the Public Administration Select Committee's report on its inquiry into the Charities Act 2006 and the regulation of charities, which was published on 6 June 2013.

• The Fundraising Standards Board (FRSB) and sector umbrella bodies, assisted by the Cabinet Office and Charity Commission, need to address the confused self-regulatory landscape, and agree a division of responsibilities which provides clarity and simplicity to the public, and removes duplication. This is a key challenge for the sector, which within six months of the acceptance of this recommendation should work up and agree firm proposals to deliver the next stage of a sector-funded, public-facing, central self-regulatory body covering all aspects of fundraising. [Chapter 8 recommendation i)1]
  Sandy's comment: This recommendation is about clarifying the roles and remits of the FRSB, Institute of Fundraising and Public Fundraising Regulatory Association (PFRA).


• The Charity Commission should do more to support self-regulation — for example including the FRSB tick logo on member charities' public register pages, asking at registration whether organisations are members of the FRSB, promoting the FRSB in communications to charities, and publicising for the public the FRSB as the complaints handler in relation to fundraising. [Chapter 8 recommendation i)2]


• The FRSB tick logo and branding should be retained. Members of the self-regulatory scheme must use the tick logo on fundraising materials — there should be a "comply or explain" approach to this. Sector umbrella bodies also need to do much more to support and promote the FRSB and self-regulation among their membership. [Chapter 8 recommendation i)3]


• Government, the regulator, umbrella bodies and the FRSB should work together on levers that would promote membership of the FRSB. For example: explore the potential for waivers from certain regulatory requirements on the grounds that FRSB members are following best practice and are properly self-regulated; encourage grant funders to consider membership of the FRSB as a sign the organisation is committed to best practice and good complaints handling, and include it in their risk indicators or funding criteria. [Chapter 8 recommendation i)4]


• More should be done to promote the rulings of the FRSB in relation to both members and non-members. Where members persistently fail to meet the standards they should be ejected from the scheme. Where non-members persistently follow poor or illegal practices, the FRSB should develop formal referral mechanisms to the relevant statutory regulators or enforcement agencies including a commitment to take action on such referrals. [Chapter 8 recommendation i)5]


• As it grows, the FRSB should audit its members' compliance, moving away from a system that relies on self-certification. New members should be given a transitional or probationary period during which they can develop their compliance with the codes, but could have complaints judged solely against the fundraising promise. Likewise the FRSB should consider how to regulate fundraising by small (£25,000) member charities, who may struggle to meet all aspects of the IoF's codes. Instead, small charities should have their complaints assessed only against the fundraising promise. [Chapter 8 recommendation i)6]


• Membership of the FRSB should not be compulsory at this stage — neither the sector nor the FRSB would be ready for such a significant shift. Instead, there should be an initial "expectation" that all fundraising charities with an income over £1 million ("large" charities) should be members of the FRSB. Over time this expectation should expand to capture more charities. [Chapter 8 recommendation i)7]


• The government should review the progress of the FRSB in another five years' time to determine whether it has made the step change required in terms of coverage, and public awareness. The reserve power for Government to regulate or require membership of the self-regulatory scheme should remain a serious option if self-regulation stalls or fails to make sufficient progress. [Chapter 8 recommendation i)8]. The Public Administration Select Committee supported this recommendation..


• A standing committee should be formed to drive forward these changes and monitor progress. Initially this should be chaired by the Cabinet Office and its core membership should include the Charity Commission, FRSB, and Institute of Fundraising. Wider membership should be brought in for public charitable collections. [Chapter 8 recommendation iii)1]

HODGSON RECOMMENDATIONS ON CY PRÈS USE OF RESTRICTED FUNDS AND PROPERTY

Added 21/8/12. This information updates s.48.2.3 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
If funds (including property of any type) raised for a charity or for charitable purposes cannot be used as originally intended, because too much or too little was received by the charity or because the purpose is no longer necessary or realistic, the original appeal, donation or purpose is said to have failed. Unless donors or funders give consent for an alternative use, the Charity Commission has to authorise alternative use through a cy près scheme. Cy près means for another purpose close to the original.

In his review of the Charities Act presented to Parliament on 16 July 2012, Lord Hodgson made the following recommendations in relation to cy près, and the government commented on some of them in its interim response on 3 November 2013. The government's full response will include consideration of the Public Administration Select Committee's report on its inquiry into the Charities Act 2006 and the regulation of charities, which was published on 6 June 2013.

• Charities themselves should be able to apply property cy près in most cases without the need for Charity Commission approval. [Appendix A recommendation 3]


• Proceeds of a failed appeal should be applied for the charity's general purposes unless the donor expressly requests otherwise or, where the appeal is not for a specific charity, proceeds should be applied cy près. [Appendix A recommendation 4]
  Sandy's comment: These proposals could make it too easy for charities to override a donor's intentions, and could deter donors from giving to a particular appeal if they fear their donations could end up being used for something else.

WHO OWNS GOODS LEFT OUTSIDE A CHARITY SHOP?

Added 21/11/10. This information adds to s.48.3 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
Most charity shops discourage goods being left outside the shop. But if goods are left, do they belong to the donor or to the shop, or have they been abandoned?

This was considered in the high court in July 2010, in an application for judicial review by a man who had taken goods left in front of a British Heart Foundation (BHF) shop, as well as goods from bins at the back of an Oxfam shop, with the intention of selling them at a boot fair.

Theft involves dishonestly taking property belonging to someone else with the intention of permanently depriving that person of it. Under the Theft Act 1968, property belongs to a person if they have possession or control of it, or have a proprietary right or interest in it.

The high court found that although it was possible to infer that the goods would in due course belong to BHF, they did not belong to BHF at the time of the theft. But neither had they been abandoned, because it could be inferred that the donor had intended to give them to BHF, and delivery would be complete only when BHF took possession of them. So although the donor no longer possessed the items, he or she had not abandoned the items and still owned them.

In relation to goods taken from bins behind the Oxfam shop, the judge said that if the bins belonged to Oxfam — which was not disputed — it could be inferred either that a donor had put the goods in Oxfam's bins for Oxfam to receive [seems to me a weird place to leave donated goods], or that Oxfam had received the goods and put them in the bins for disposal. In either case, Oxfam was in possession of the goods at the time they had been taken.

The application for judicial review was dismissed.

The decision in Rickets v Basildon Magistrates' Court is at www.bailii.org/ew/cases/EWHC/Admin/2010/2358.html.

For summaries and articles about cases, do a Google search on key words in the case name or content.

SANDY ADIRONDACK
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for the voluntary sector
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