REPEATED INQUIRIES INTO CHARITY PROMPTS STATEMENTS FROM REGULATORS

THE CHARITY COMMISSION issued a statement following the conclusion of its second inquiry into the charity Hospice Aid UK. The inquiry led to a conclusion of serious misconduct and/or mismanagement.

Hospice Aid UK was founded in 2002 with aims that included facilitating and promoting the relief, care and treatment of the sick, especially of the dying, and the support and care of their families and carers and of the bereaved.

As part of the second inquiry the regulator issued the charity with an Official Warning after finding misconduct and/ or mismanagement by its trustees. That included trustees’ failure to fully comply with a previous action plan – issued in 2016, following the first inquiry – which had required them to significantly increase the proportion of the charity’s income spent on supporting hospices.

The Commission found that the substantial funds generated were consumed almost entirely by the direct costs and fees of running the fundraising activity. Between March 2013 and July 2020 the charity raised over £3.2m, but the direct costs and fees of that fundraising came to just over £3m – leaving less than 6% for charitable activities.

A review of the charity’s 2018 accounts found that the trustees had renewed a costly direct mailing agreement with a specialist direct marketing and fundraising agency, despite the Charity Commission’s earlier findings that this was not an effective use of charitable funds.

Amy Spiller, head of investigations at the Charity Commission, said: “The public expects trustees to ensure that the money they donate goes towards delivering the charity’s objectives and is carefully managed in the best interests of the charity. In this case, a woefully small proportion of funds generously donated by the public in support of hospices reached the intended cause. This was a direct result of the trustees’ misconduct and mismanagement.

“Cases like this risk seriously undermining public trust and confidence as well as people’s willingness to donate to the thousands of well-run charities doing great work across the country.”

The case prompted Catherine Orr, head of casework at the Fundraising Regulator, to issue a statement on the implications of using third-party agencies and possible effects on donor confidence.

She wrote: “We have followed this inquiry closely and have serious concerns about the agreement described between the charity and third-party agency. Now that the statutory inquiry has concluded, we will consider any appropriate action for the Fundraising Regulator to take.

“I don’t think that what happened in this case would align with the reasonable expectations of donors giving to the cause. This case highlights important issues for the wider sector to consider when working with third parties to fundraise.

“Trustees are ultimately responsible for their charity’s fundraising activities and must act in the charity’s best interest, including when making agreements with third parties. Trustees must also take reasonable steps to assess and manage any risks. If donors are not given a fair indication of the costs involved in fundraising, this may pose a reputational risk and impact more widely on public trust and confidence.

“As a regulator, we would generally expect that the greater portion of money raised through these arrangements is transferred to the charity, with the understanding that a third party can cover legitimate costs and generate reasonable profit.

“We expect charities and third-party fundraisers to take all reasonable steps so donors can make an informed decision to donate. Some of these steps will be informed by the law, and some by best practice. Charities should be open and honest about how fundraising by third parties will be of benefit to them. This could include sharing relevant information in annual reports or checking solicitation statements are used appropriately and are designed to protect donors through being sufficiently transparent.” q