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| Charities warned over commercial activities | Charities warned over commercial activities |
| (about 13 hours later) | |
| The Charity Commission has sent a formal warning to 1,700 charities to alert them to possible harm caused by commercial activities such as street collections and tie-ins with companies, following increased concern about potentially aggressive fundraising efforts. | The Charity Commission has sent a formal warning to 1,700 charities to alert them to possible harm caused by commercial activities such as street collections and tie-ins with companies, following increased concern about potentially aggressive fundraising efforts. |
| The warning, directed at all charities known by the commission to use such measures, urges trustees to make sure all such deals are legal, ethical and not potentially harmful to the charity’s reputation. | The warning, directed at all charities known by the commission to use such measures, urges trustees to make sure all such deals are legal, ethical and not potentially harmful to the charity’s reputation. |
| It has been issued in parallel with a planned speech on Monday by the commission’s chair, William Shawcross, who is expected to say charities must stop “hounding” people. | It has been issued in parallel with a planned speech on Monday by the commission’s chair, William Shawcross, who is expected to say charities must stop “hounding” people. |
| “It cannot be right for vulnerable people, older people, generous people, to be hounded on the telephone, through the letterbox or in the street,” he will say in a speech in Southampton, according to advance extracts. | “It cannot be right for vulnerable people, older people, generous people, to be hounded on the telephone, through the letterbox or in the street,” he will say in a speech in Southampton, according to advance extracts. |
| The warnings follow repeated controversies about the ways some charities raise funds, including the use of “chuggers”, or charity muggers – paid-for staff who seek to sign people up on the street to direct debits. | The warnings follow repeated controversies about the ways some charities raise funds, including the use of “chuggers”, or charity muggers – paid-for staff who seek to sign people up on the street to direct debits. |
| Related: Are chuggers ethical? | Related: Are chuggers ethical? |
| There has also been criticism of charities using trading subsidiaries to raise funds, or lending their names to corporate initiatives. Earlier this month Age UK suspended a tie-in with energy firm E.ON following claims the charity was accepting £6m a year to promote a tariff for older people which was not the cheapest on offer. | There has also been criticism of charities using trading subsidiaries to raise funds, or lending their names to corporate initiatives. Earlier this month Age UK suspended a tie-in with energy firm E.ON following claims the charity was accepting £6m a year to promote a tariff for older people which was not the cheapest on offer. |
| According to a report, Age UK had been recommending a special rate from E.ON costing £1,049 a year, £245 more than the best available rate. The charity reportedly received about £41 for every person who signed up to the deal. The energy secretary, Amber Rudd, asked the energy watchdog Ofgem to launch an inquiry. | According to a report, Age UK had been recommending a special rate from E.ON costing £1,049 a year, £245 more than the best available rate. The charity reportedly received about £41 for every person who signed up to the deal. The energy secretary, Amber Rudd, asked the energy watchdog Ofgem to launch an inquiry. |
| The issue of charities targeting potentially vulnerable people was highlighted in January when a report on the death of a 92-year-old woman who killed herself said she felt “distressed and overwhelmed” by the huge number of requests for donations. | The issue of charities targeting potentially vulnerable people was highlighted in January when a report on the death of a 92-year-old woman who killed herself said she felt “distressed and overwhelmed” by the huge number of requests for donations. |
| Olive Cooke may have received almost 3,000 mailings from charities in a year, the report from the Fundraising Standards Board (pdf) said. Though at her inquest it was found that she had been suffering from depression and no mention was made of the impact of the charities’ communications on her. | |
| In his speech, Shawcross will note upcoming new legal powers allowing it to issue public warnings to charities in breach of the guidance, and ban trustees seen as unfit. | In his speech, Shawcross will note upcoming new legal powers allowing it to issue public warnings to charities in breach of the guidance, and ban trustees seen as unfit. |
| The Charity Commission’s warning stressed that commercial tie-ins may bring valuable income and awareness for charities. It added: “A charity’s name and reputation are valuable assets which trustees must protect.” | The Charity Commission’s warning stressed that commercial tie-ins may bring valuable income and awareness for charities. It added: “A charity’s name and reputation are valuable assets which trustees must protect.” |
| Related: 'Chuggers' are bonafide employees, not the charity sector's dirty little secret | Related: 'Chuggers' are bonafide employees, not the charity sector's dirty little secret |
| Charity trustees must be fully aware of what such deals involve, and make clear any fee or commission received, it said. “This alert is to remind trustees of their duties and to set out to trustees our expectations as the regulator. Recent media reporting of charity partnerships with commercial organisations have highlighted the potential for such arrangements to impact on public trust and confidence which damage a charity’s reputation.” | Charity trustees must be fully aware of what such deals involve, and make clear any fee or commission received, it said. “This alert is to remind trustees of their duties and to set out to trustees our expectations as the regulator. Recent media reporting of charity partnerships with commercial organisations have highlighted the potential for such arrangements to impact on public trust and confidence which damage a charity’s reputation.” |
| The new guidance says trustees are expected to “review any current arrangements to satisfy themselves they remain in the charity’s best interest”. They must additionally be sure all deals are properly documented and reviewed regularly. Charities that fail to take proper action could face regulatory action. | The new guidance says trustees are expected to “review any current arrangements to satisfy themselves they remain in the charity’s best interest”. They must additionally be sure all deals are properly documented and reviewed regularly. Charities that fail to take proper action could face regulatory action. |
| The warning also covers trading subsidiaries owned by charities but managed separately. Even if a commercial partnership with an outside firms is made by the subsidiary rather than the charity directly, trustees must monitor them, it says. | The warning also covers trading subsidiaries owned by charities but managed separately. Even if a commercial partnership with an outside firms is made by the subsidiary rather than the charity directly, trustees must monitor them, it says. |
| Trustees “must be prepared to assert the rights of the parent charity as shareholder and must always put the interests of the parent charity first,” the guidance warns, adding: “The directors of the trading subsidiary are responsible for its management, but other major decisions are for the trustees, as representatives of the parent charity.” | Trustees “must be prepared to assert the rights of the parent charity as shareholder and must always put the interests of the parent charity first,” the guidance warns, adding: “The directors of the trading subsidiary are responsible for its management, but other major decisions are for the trustees, as representatives of the parent charity.” |