Fundraising appeals that do not raise enough or raise too much

Certain parts of the new Charities Act 2022 have now come into force, including rules around fundraising appeals. So what do we need to know?

A lot of charities depend on public donations to fund their charitable activities. These can be raised through fundraising appeals when the charity has a specific project in mind. Due to the unpredictable nature of fundraising, sometimes appeals do not raise the amount needed to fund the project the charity wished to implement, raise too much so that there are funds leftover, or circumstances change, and the charity cannot use the donations as the trustees intended.

The rules under the Charities Act 2011 were cumbersome and caused delay in using the funds for charitable activities. Previously, if the charity did not raise enough but wanted to use the funds for something else, the trustees needed to establish a “general charitable intention” on the part of the donor in order to be able to apply to the Charity Commission for a Scheme called a ‘cy-près’ scheme. A charity would also have to wait three months after prescribed adverts were published and enquiries made to try to return the donations before they could be used for the wider purposes. These have been simplified by Charities Act 2022 to remove some red tape for charities and the Commission and to give trustees more flexibility.

The Charities Act 2022 reduces complexity surrounding what trustees need to do in these situations, for example:

• the strict six month time limit has been replaced by the charity being required to take reasonable steps, as agreed in advance with the Commission;
• there will be a simpler process for obtaining the Charity Commission’s authority;
• if the donations raised as part of the “failed” fundraising appeal are less than £1000, trustees can spend these donations on wider purposes without obtaining the Commission’s authority, provided they comply with the new legal requirements.

The Commission’s new guidance helpfully sets out the steps trustees should take.

If you are thinking about setting up a fundraising appeal and would like advice on this, or advice on “failed” fundraising appeals, please get in touch with a member of the Charities Team.