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Finance and funding for charities - England and Wales

There is separate and detailed legislation covering:

* House to house collections


* Street and public place collections


* Professional fundraisers and commercial participators and representation statements

 

House to house collections

Collections for charitable purposes which are conducted from house to house are regulated under the House to House Collections Act 1939 (‘HHCA’) and the House to House Collections Regulations 1947, which established a central licensing regime for such collections. Licences are issued by local authorities, except in the London Boroughs (except the City of London) where licences are issued by the Metropolitan Police.

It is important to note that 'charitable purpose' means any charitable, benevolent or philanthropic purpose, whether or not charitable within the meaning of any rule of law (HHCA  s 11(1)). A collection is deemed to be made for a particular purpose where the appeal is made in association with a representation that the money or other property appealed for, or part of it, will be applied for that purpose (HHCA: s 11). Therefore a collection of clothing or other articles purportedly for disadvantaged people is likely to be caught by the HHCA.

'Collection' means an appeal to the public, made by means of visits from house to house, to give, whether for consideration or not, money or other property; and 'collector' means, in relation to a collection, a person who makes the appeal in the course of such visits.
Case example: in Carasu Ltd v Smith [1968] 2 QB 383, [1968] 2 All ER 529, DC, a 'collection' was held to include a case where a person is induced to purchase an article on the representation that part of the proceeds will go to charity);

'House' includes place of business: House to House Collections Act 1939 s.11(1). A public house has been held to be a place of business within the House to House Collections Act 1939:

A 'collection…to give, whether for consideration or not, money or other property’ is generally interpreted to include collections for clothing and direct debits.

Licences and exemptions

A person promoting or proposing to promote a collection in any locality for a charitable purpose may apply to the licensing authority for the area comprising that locality an application in the prescribed form. In the London Boroughs other than the City of London, the granting authority is the Metropolitan Police rather than the Borough council.

Many local authorities provide a means of applying online. Further information is available on the GOV.UK pages.

If the application is properly completed and submitted, the authority must authority must grant the licence subject to certain exceptions. The licence is generally granted for such period, not being longer than 12 months, as is specified in the application. A local authority has power to make a licence expire after a longer or shorter period in order to co-ordinate annual expiry dates.

Tacit consent: it appears there is inconsistent application of tacit consent rules within England and Wales, with some authorities confirming it does apply but with varying time limits, e.g. 28 days or 40 days, and other authorities claiming that tacit consent does not apply.

Refusal of licence: a licensing authority may refuse or revoke the grant of a licence if it appears to it that:

* the total amount likely to be applied for charitable purposes as a result of the collection, including any amount already applied, is inadequate in proportion to the value of the proceeds likely to be or already received;
* remuneration which is excessive in relation to that total amount is likely to be, or has been, retained out of the proceeds of the collection by any person;
* the grant of a licence would be likely to facilitate the commission of an offence of begging, or that such an offence has been committed in connection with the collection;
* the applicant or licensee is not a fit and proper person to hold a licence by reason of conviction in the United Kingdom of certain offences, or conviction in any part of the Queen's dominions of any offence involving fraud or dishonesty;
* the applicant or licensee has failed, in promoting a licensed collection, to exercise due diligence to secure that persons authorised by him to act as collectors were fit and proper persons, to secure the compliance of persons so authorised with regulations under the House to House Collections Act 1939, or to prevent prescribed badges or certificates of authority being obtained by unauthorised persons;
* the applicant or licensee has refused or neglected to furnish the authority with such information as it has reasonably required for informing itself.

Right of appeal: if the authority refuses or revokes a licence, it must forthwith give written notice to the applicant or licensee stating the ground or grounds on which the licence has been refused or revoked and informing him of the right of appeal. He may within 14 days of the notice appeal to the Minister, whose decision is final. The Cabinet Office deal with such appeals.

Case law: Support Pen-Y-Bont Ltd and Support Hollies School Ltd v Cardiff Council. 12 April 2013: Cardiff Council refused to grant Support Pen-Y-Bont Ltd and Support Hollies School Ltd contracts in 2011. Both organisations, which share the same directors, had been granted previous contracts to collect in the city. But analysis of the results of the previous contracts showed that in the case of Pen-Y-Bont just 6.4 per cent and 7.2 per cent of proceeds were gleaned for the Y Bont charity and Support Hollies donated 8.9 per cent of its proceeds to charity.
Other councils, including the Vale of Glamorgan, took the same decision based on the same reasoning. Following an appeal to the Cabinet Office by the organisations’ directors, Aleksej Plachtej and Jakub Czerneki the decisions have been overruled by the Cabinet Office.

Local exemption certificate: a person may apply for a local exemption certificate under the HHCA. If granted, the certificate gives an exemption from the need to have a licence under the HHCA and other provisions except those relating to the unauthorised use of badges and the requirement of collectors' names. The exemption applies within the locality and for the period specified in the certificate.
Application is made to the chief officer of police for the police area covering the locality in which the collection is proposed to be made. The police must be satisfied that the purpose of the collection is local in character and that the collection is likely to be completed within a short period of time.

National exemption: Charities collecting throughout England or a substantial part may apply to the Minister for the Cabinet Office for a national exemption order for house-to-house collections. National exemption orders are generally available to charitable organisations that have obtained house to house collection licences in at least 70 to100 local authority licensing areas for the two preceding years, and are able to provide evidence of licences and collection returns.

Collectors, badges and certificates of authority

The House to House Collections Regulations 1947 SR & O 1947/2662 provide detailed rules about how collections should be carried out and accounts. A promoter of a house to house collection must provide a collector with a prescribed certificate of authority and a prescribed badge and, if money is to be collected, a collecting box or receipt book. He must also exercise all due diligence to secure that all certificates of authority and prescribed badges obtained for the purposes of a collection are destroyed when no longer required.

Collectors: Promoters must exercise due diligence to ensure that collectors are fit and proper persons to act as such and to secure their compliance with the provisions of the regulations governing house to house collections. No collector may importune any person to his annoyance, or remain in or at the door of any house if requested by the occupant to leave. No person under the age of 16 years may act or be authorised to act as a collector of money.

Collectors must sign the prescribed certificate of authority and prescribed badge, produce the certificate on demand, wear the badge during collecting, and return both to the promoter when the collection is completed or on demand of the promoter. A police constable may require any person whom he believes to be acting as a collector for the purpose of a collection for a charitable purpose to declare to him immediately his name and address and to sign his name. If any person fails to comply with such a requirement he is guilty of an offence.

A collector collecting money by a means of a collecting box may receive it only by permitting the person from whom it is received to place it in the box, and when he is collecting money by other means he must give a signed receipt. Collectors are trustees of the funds they collect (Jones v A-G (1976) Times, 10 November).

Collecting boxes, with seals unbroken, and receipt books, together with the total sum of money which is entered in them, must be returned to the promoter when the collecting box is full or the receipt book is exhausted, upon the demand of the promoter, when the collector does not desire to act as a collector or upon completion of the collection.

Accounts: An account of the collections for which a licence has been granted must be furnished by the chief promoter to the authority granting the licence within one month. In the case of a national exemption, account must be made annually to the Minister. The time for furnishing the account may in either case be extended. In appropriate cases the account for the house to house collections may be combined with that required for street collections. The account must be in the prescribed form, duly certified and vouched.

Enforcement


Civil enforcement: not applicable.


Criminal enforcement: A promoter of a house to house collection without a licence is liable on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding level 3 on the standard scale, or to both. A collector without a licence is liable to imprisonment for a term not exceeding 51 weeks or to a fine at level 2, or to both.

Any person who contravenes or fails to comply with the provisions of the House to House Collections Regulations, or who fails to declare immediately his name and address and to sign his name if so required by a police constable, is liable, on summary conviction, to a fine not exceeding level 1 on the standard scale.
A person who uses a collector’s badge or certificate without authority, or uses a false badge or certificate, is liable to imprisonment for a term not exceeding six months or to a fine not exceeding level 3 on the standard scale, or to both.

Street and public place collections

The collection of money or sale of articles in the street and other public places for the benefit of charitable or other purposes is regulated under the Police, Factories etc. (Miscellaneous Provisions) Act 1916 s.5. The 1916 Act allows the local authority (or in the City of London the Corporation of the City of London and in the rest of London the Metropolitan Police) to require collectors to have a permit. Most local authorities have adopted this power (perhaps 80 per cent according to the Prime Minister’s Strategy Unit report “Private Action, Public Benefit” published  in September 2002).

Public places: the expression “street” includes any highway and any public bridge, road, lane, footway, square, court, alley, or passage, whether a thoroughfare or not. Shopping precincts and railway station councourses are a grey area. However, it is clear that charitable collections in other places where the public have access by permission from the landowner will require permission from the landowner as a matter of private property law.

Collections for “money”: Legaleze comment: there are differing views on whether the 1916 Act covers the solicitation of direct debit authorities from donors. The Act refers to the collection of “money”. The general consensus appears to be that direct debit collection is not covered by the legislation (see the Hodgson Report). The Metropolitan Police and a number of local authorities take the view that the Act does not cover direct debits. Therefore in the Metropolitan Police area and the areas covered by the other authorities, no permission is required to solicit direct debits (subject to self-regulation - see above). On the other hand, Birmingham City Council seems to require permission to collect direct debits. In cases of doubt, collectors should enquire of the relevant authority.
Collection regulations: each local authority may prescribe its own regulations provided that the regulations must be confirmed by the Secretary of State [or the Minister for the Cabinet Office. Most local authorities adopt regulations substantially in the form of the model regulations although there are variations, particularly on the length of notice required.. Local authorities usually restrict each charity to one collection per year in a particular locality. The regulations applicable in London are here.

Applications for a permit


A local authority may allow applications online. Applications must usually be made by the first of the month preceding the day of collection, although the rules vary with each local authority.
Tacit consent: as in the case of house to house collection licences, there is inconsistent application of tacit consent rules within England and Wales, with some authorities confirming it does apply but with varying time limits, e.g. 10 working days or 28 days or 40 days, and other authorities claiming that tacit consent does not apply.

Appeals: Unlike in the case of applications for house to house collection licences, for street collection permits there is currently no right of appeal.

Enforcement


Civil enforcement: not applicable.


Criminal enforcement: any person who acts in contravention of street collection regulations is liable on summary conviction to a fine not exceeding level 1 on the standard scale.

Professional fund-raisers commercial participants and representation statements

A “professional fund-raiser” must solicit money or other property for the benefit of a charitable institution only in accordance with a written agreement with the charity which complies with the regulations (Charities Act 1992 ss.59 et seq.).

A “commercial participator” may only claim that charitable contributions are to be given for the benefit of a charity if it is done in accordance with an agreement with the institution satisfying the prescribed requirements (Charities Act 1992 ss.59 et seq.).

In this context:

* “charitable institution” means a charity or an institution (other than a charity) which is established for charitable, benevolent or philanthropic purposes [for convenience in this section the term “charity” is used in this wider sense.

* “commercial participator”, in relation to any charity an person [(apart from a company connected with the charity] who carries on for gain a business (other than a fund-raising business) but in the course of that business, engages in any promotional venture in the course of which it is represented that charitable contributions are to be given to or applied for the benefit of the charity.

* “fund-raising business” means any business carried on for gain and wholly or primarily engaged in soliciting or otherwise procuring money or other property for charitable, benevolent or philanthropic purposes.

* “professional fund-raiser” means any person (apart from a charity or a company connected with a charity)) who carries on a fund-raising business, or any other person who for reward solicits money or other property for the benefit of a charitable institution. Excluded from this definition are any charitable institution or any company connected with one; any officer or employee of any such institution or company, or any trustee of any such institution, if they acting in that capacity as such; any person acting as a collector in respect of a public charitable collection (apart from a person who is a promoter of such a collection as defined in section 47(1) of the Charities Act 2006); any commercial participator; and any person who makes a solicitation at the instance of a charitable institution or a company connected with it in the course of a radio or television programme during which a fund-raising venture is undertaken by that charitable institution or company.
In addition, the definition of “professional fund-raiser” does not apply to a person if he does not receive more than £10 per day or £1,000 per year as remuneration in connection with soliciting money or other property for the benefit of the charitable institution; or more than £1,000 as remuneration in connection with any fund-raising venture in the course of which he solicits money or other property for the benefit of that institution.

Fund-raising agreements

Agreement between a charity and a professional fund-raiser or commercial participator: such an agreement must:

* be in writing;
* signed by or on behalf of the charitable institution and the professional fund-raiser;
* specify the name and address of each of the parties to the agreement;
* specify the date on which the agreement was signed by or on behalf of each of those parties;
* specify the period for which the agreement is to subsist;
* specify any terms relating to the termination of the agreement prior to the date on which that period expires and  any terms relating to the variation of the agreement during that period;
* contain a statement of its principal objectives and the methods to be used in pursuit of those objectives;
* if there is more than one charitable institution party to the agreement, provide how the proportion is determined in which the institutions are to benefit under the agreement;
* provide for the remuneration or expenses of the professional fund-raiser.
(Charitable Institutions (Fund-Raising) Regulations 1994 1994 No. 3024 Regulation 2)

Agreement between a charitable institution and a commercial participator: such an agreement: the requirements for such an agreement are the same as those required in the case of a professional fund-raiser and in addition the agreement:

* in relation to the statement of its principal objectives and the methods to be used in pursuit of those objectives, must include in relation to each method specified a description of the type of charitable contributions which are to be applied for the benefit of the charity institution and of the circumstances in which they are to be so given or applied;
* specify the proportion of the consideration given for goods or services supplied by the commercial participator, or of any other proceeds of a promotional venture undertaken by him, which is to be applied for the benefit of the charity; or how donations by the commercial participator in connection with the sale or supply of any goods or services are to be applied.
(Charitable Institutions (Fund-Raising) Regulations 1994 1994 No. 3024 Regulation 3)

Books, documents or other records

A professional fund-raiser or commercial participator which has a fund-raising agreement with a charity must on request and at all reasonable times, make available to the charity any books or other records which relate to that charity and are kept for the purposes of the agreement.

 Transmission of money and other property to charitable institutions

Any money or other property acquired by a professional fund-raiser or commercial participator for the benefit of a charity, must:

* must pay any money, cheque or negotiable instrument which is payable to or to the account of the charity, as soon as is reasonably practicable after its receipt and in any event not later than the expiration of 28 days after that receipt or such other period as may be agreed with the charity, to the charity trustees (i.e. the trustees, directors or other persons having the general control and management of the administration of the charity);
* pay the money etc.  into an account with an authorised bank which is under the control of charity trustees;
* deal with any other property in accordance with the charity’s instructions;
* pending the charity’s instructions hold the charity’s property securely.
(Charitable Institutions (Fund-Raising) Regulations 1994 1994 No. 3024 Regulation 6)

Representation statements to be made by a professional fund-raiser

Where a professional fund-raiser solicits money or other property for the benefit of one or more particular charities, the solicitation must be accompanied by a statement clearly indicating:
* the name or names of the charity(ies) concerned;
* if there is more than one charity concerned, the proportions in which the charities are respectively to benefit; and
* the method by which the fund-raiser's remuneration in connection with the appeal is to be determined and the” notifiable amount” of that remuneration.
(Charities Act 1992 s.60(1))

Where a professional fund-raiser solicits money or other property for general charitable, benevolent or philanthropic purposes of any description (rather than for the benefit of one or more particular charity(, the solicitation must be accompanied by a statement clearly indicating:
* the fact that he is soliciting money or other property for those purposes and not for the benefit of any particular charity;
* the method by which the proceeds of the appeal are to be distributed between different charities;
* the method by which his remuneration in connection with the appeal is to be determined and its “notifiable amount”.
(Charities Act 1992 s.60(2))

Representation statements to be made by a commercial participator

Where any representation is made by a commercial participator to the effect that charitable contributions are to be applied for the benefit of one or more particular charities, the representation must be accompanied by a statement clearly indicating:
* the name or names of the institution or institutions concerned;
* if there is more than one charity, the proportions in which the charities are respectively to benefit; and
* the “notifiable amount” of whichever of the following sums is applicable in the circumstances: (i) the sum representing so much of the consideration given for goods or services supplied by him which is to be applied for the benefit of the charity(ies) concerned, (ii) the sum representing so much of any other proceeds of a promotional venture undertaken by him as is to be applied for such benefit; or (iii) the sum of the donations by him in connection with the supply of any such goods or services which are to be supplied.
(Charities Act 1992 s.60(3))

Radio and television charity appeals with payment by debit or credit card

If a professional fund-raiser or commercial participator makes a solicitation or representation relating to charities as is covered above in the course of a radio or television programme, and there is an associated announcement that payment may be made by means of a credit or debit card, the representation statement must include full details of donor’s right to have refunded any payment of £100 or more.
(Charities Act 1992 s.60(4))

Non-broadcast solicitation or representation

If a professional fund-raiser or commercial participator makes a solicitation or representation relating to charities as is covered above but it is not made by speaking directly to the particular person and in his presence, or in the course of any radio or television programme, the professional fund-raiser or commercial participator concerned must, within seven days of any payment of £100 or more being made to him in response to the solicitation or representation, give to the person making the payment a written statement of the information required in the representation statement, and full details of the right to cancel an agreement made in response to the solicitation or representation, and the right to have refunded any payment of £100 or more made in response thereto.
(Charities Act 1992 s.60(5))

In the above case, the making of a payment includes any payment by credit or debit card or a payment in any other way. A payment sent by post is regarded as made at the time when it is posted.
(Charities Act 1992 s.60(6))

Right of refund and cancellation of donation of £100 or above

A donor who makes a payment of £100 or more in response to a radio or television appeal has the right to demand a refund. This right must be exercised by serving on the relevant fund-raiser before the end of the period of seven days beginning with the date of the appeal a notice in writing which (however worded) indicates the donor's intention to cancel the payment.
(Charities Act 1992 s.61(1))

If a donor agrees in response to an appeal with the relevant fund-raiser to make any payment of £100 or more, he has the right to cancel the agreement similarly by serving on the fund-raiser before the end of the period of seven days beginning with the date of the appeal a notice in writing which (however worded) indicates the donor's intention to cancel the agreement.
(Charities Act 1992 s.61(2))

The right to demand a refund and cancel an agreement to donate a sum of £100 or more also arises in the case of a non-broadcast appeal not made personally; the cancellation notice must be served in that case within seven days beginning with the date on which the donor is given the written statement.
(Charities Act 1992 s.61(3))

A charity may deduct from the amount refunded any administrative expenses reasonably incurred by the relevant fund-raiser in connection with the making of the refund or in dealing with the notice of cancellation. In the case of a payment for goods already received, a refund may be conditional upon the donor returning undamaged the goods in question.
(Charities Act 1992 s.61(4))

Other persons making charitable appeals

A person acting for reward as a collector in respect of a public charitable collection must comply with the same requirements to make a representation statement as apply to a professional fund-raiser.
(Charities Act 1992 s.60A(1))

This does not apply in the case of:
* a person who organises or controls the conduct of the charitable appeal in question;
* a person under the earnings limit;
* trustees, officers and employees of a charity who give the required representation statement.

A person is under the earnings limit if he does not receive:
* more than £10 per day or £1,000 per year by way of remuneration for acting as a collector in relation to  public charitable collections conducted for the benefit of the charity or the charitable, benevolent or philanthropic purposes;
* more than £1,000 by way of remuneration for acting as a collector in relation to the particular collection.
(Charities Act 1992 s.60A(2)-(3))

A trustee, officer or employee of a charity or company connected with the charity who solicits money or other property for the benefit of one or more particular charities, and who receives remuneration either in his capacity as officer, employee or trustee or for acting as a collector, must accompany the solicitation by a statement clearly indicating:
* the name or names of the charity(ies) for whose benefit the solicitation is being made;
* if there is more than one such charity, the proportions in which the institutions are respectively to benefit;
* the fact that he is an officer, employee or trustee of the charity or connected company;
* the fact that he is receiving remuneration as an officer, employee or trustee or (as the case may be) for acting as a collector.
(Charities Act 1992 s.60A(4)&(6))

If a trustee, officer or employee of a charity or company connected with the charity as described above solicits money or other property for general charitable, benevolent or philanthropic purposes of any description (rather than for the benefit of one or more particular charity), the solicitation must be accompanied by a statement clearly indicating:
* the fact that he is soliciting money or other property for those purposes and not for the benefit of any particular charity;
* the method by which it is to be determined how the proceeds of the appeal are to be distributed between different charities;
* the fact that he is an officer, employee or trustee of the charity or connected company; and
* the fact that he is receiving remuneration as an officer, employee or trustee or (as the case may be) for acting as a collector.
(Charities Act 1992 s.60A(5))

A trustee, officer or employee is excluded from the requirement to make a representation statement as above if he is under the earnings limit which is:
* is not more than £10] per day or £1,000 per year; or
* if a lump sum, is not more than £1,000.
(Charities Act 1992 s.60A(7) & 60B(4))

Charitable claims made by non fund-raising businesses

If a non fund-raising business runs a promotional activity and in the course of the promotion makes any claim that charitable contributions are to be applied for general charitable, benevolent or philanthropic purposes of any description (rather than for the benefit of one or more particular charities, the business must make a “representation statement” as required by the regulations unless he has a reasonable excuse.

The representation statement must clearly indicate:
* the fact that the charitable contributions referred to in the representation are to be applied for those purposes and not for the benefit of any particular charitable institution or institutions;
* the notifiable amount of whichever of the following sums is applicable in the circumstances: (i) the sum representing so much of the consideration given for goods or services supplied by him which is to be applied for those purposes; (ii) the sum representing so much of any other proceeds of a promotional venture undertaken by him which is to be applied for those purposes; or (iii) the sum of the donations by him in connection with the sale or supply of any such goods or services which are to be applied for those purposes; and
* the method by which the charitable contributions referred to in the representation are to be distributed between different charities.
(Charitable Institutions (Fund-Raising) Regulations 1994 1994 No. 3024 Regulation 7)

Notifiable amount


A “notifiable amount” in relation to any sum is a reference  to the actual amount of the sum, if that is known at the time when the statement is made. Otherwise it is a reference to the estimated amount of the sum, calculated as accurately as is reasonably possible in the circumstances.
(Charities Act 1992 s.60(3A))

Enforcement

Civil enforcement

Only the charity concerned may enforce the fund raising requirements imposed on professional fund-raisers and commercial participators. The charity must apply to the court for an injunction ordering this. On the other hand, if a professional fund-raiser or commercial participator has an agreement which does not comply with the regulations, he may not enforce the agreement unless the court makes an order to permit such enforcement.

Right of charity to prevent unauthorised or undesirable fund-raising

A charity has the right to object to certain fund-raising representations and activities by others if the other person is:
* using methods of fund-raising to which the charity objects;
* claiming that he is to apply charitable contributions to the charity’s benefit and the charity does not wish to be associated with the particular promotional or other fund-raising venture in which that person is engaged;
* not a fit and proper person to raise funds for the institution.

The charity must first serve on the person in question a notice in writing:
* requesting him to cease forthwith) soliciting money or other property for the benefit of the charity, or representing that charitable contributions are to be applied for its benefit of the institution (as the case may be); and
* stating that, if he does not comply with the notice, the charity will make an application under s. 62 Charities Act 1992.
Provided the above circumstances apply and the required notice has been given not less than 28 days before the application, the charity may apply to the court for an injunction restraining the person from doing such acts.

Criminal enforcement

If a professional fund-raiser, commercial participator or trustee, officer or employee contravenes the requirements to make a representation statement, he is guilty of an offence and liable on summary conviction to a fine not exceeding the fifth level on the standard scale. There is a due diligence defence to the commission of this offence.
(Charities Act 1992 s.60(7))
If a professional fund-raiser, commercial participator or other business fails to comply with the Charitable Institutions (Fund-Raising) Regulations 1994, he commits an offence punishable on summary conviction by a fine not exceeding the second level on the standard scale.

False statements relating to institutions which are not registered charities: If a person to solicits money or other property for the benefit of an institution in association with a representation that the institution is a registered charity, if the institution is not such a charity, he is guilty of an offence and liable on summary conviction to a fine not exceeding the fifth level on the standard scale. There is a defence if the person proves that he believed on reasonable grounds that the institution was a registered charity.
(Charities Act 1992 s.63)

[Page updated: 18/01/2015]

 

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