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Dear Vice-Chancellor or Principal

Update on fundraising regulation and practice

1. HEFCE is the principal regulator of those higher education institutions (HEIs) it funds that are exempt charities. Our duty is to promote trustees’ compliance with the law in exercising their duties and responsibilities. In delivering this duty, HEFCE works with the exempt charity HEIs themselves as well as other regulators (such as the Charity Commission for England and Wales) and other organisations (such as Universities UK, GuildHE and the Leadership Foundation for Higher Education).

2. Following recent high-profile failures in the charities sector, the Cabinet Office asked Sir Stuart Etherington, Chief Executive of the National Council for Voluntary Organisations to chair a cross-party review to examine how fundraising regulation could be strengthened. Its output was a report, ‘Regulating fundraising for the future: Trust in charities, confidence in fundraising regulations’, which was published in September 2015. This report is commonly referred to as the ‘Etherington Review’. It proposed a new regulatory framework for fundraising that comprised three lines of defence:

  1. First line of defence – trustees are the first line of accountability for the charity’s fundraising activities and have the responsibility to ensure fundraising is carried out in compliance with the law and to high ethical standards.
  2. Second line of defence – if malpractice occurs, a specialised fundraising regulator has the power to intervene to ensure the public interest is protected.
  3. Third line of defence – the relevant statutory regulator acts as the backstop in cases that raise regulatory concerns on issues that fall within their remit and powers.’

      (Etherington Review, page 50)

The Etherington Review also recommended that the statutory regulators ‘should highlight the responsibility of charities to support the Fundraising Regulator, both financially and by complying with its rules and adjudications’ (page 10). The Cabinet Office accepted the recommendations of the report, and Government supports their implementation to strengthen and restore public confidence in fundraising.

3. The Fundraising Regulator (FR) has therefore been established as the second line of defence recommended in the Etherington Review, and was officially launched in July 2016. To discharge its own duties under the new fundraising regulatory framework, the FR will have formal relationships with the charity regulators that form the third line of defence in the framework. The FR is the independent regulator of charitable fundraising and constitutes voluntary self-regulation by the charity sector itself. The FR is funded by a levy on those charities that spend more than £100,000 on fundraising and recently consulted on its proposals, including a flat levy for exempt charities that are not subject to the Charities Statement of Recommended Practice (the accounting framework for charities). The FR considers that all charities that undertake fundraising, whether registered or exempt, fall under its remit and are subject to its investigation if concerns are raised about their fundraising practices.

4. As the FR’s framework is one of voluntary self-regulation, charities can choose whether they wish to engage with it and whether they wish to pay its levy. As principal regulator, we encourage exempt charity HEIs to have regard to the FR’s Code of Fundraising Practice and any other guidance that it may issue. In addition, where exempt charity HEIs undertake fundraising activities, we encourage subscription to the FR through payment of the levy. Supporting the FR will enhance the reputation of the higher education sector as comprising responsible charities that deal fairly with those from whom they fundraise, primarily their alumni. HEFCE considers supporting the FR to be good practice, but is not requiring exempt charity HEIs to take any action.

5. Further information about the Fundraising Regulator can be found on its website.

6. The Charities (Protection and Social Investment) Act 2016, which received Royal Assent in March 2016, includes reserve powers to control fundraising: this comprises registration with and payment of fees to a regulator, and legal obligations both to comply with regulator-imposed requirements and to have regard to guidance issued by the regulator. If the self-regulatory framework embodied in the Fundraising Regulator is perceived to have failed, then it is expected that these reserve powers will be enacted, to place fundraising regulation on a statutory basis.

7. The same Act places new obligations on those registered charities that are subject to statutory audit to report about fundraising in their annual reports. These obligations do not apply by law to exempt charities, but HEFCE encourages exempt charity HEIs to disclose this information voluntarily in their audited financial statements in the interests of transparency and accountability. The additional disclosures about fundraising can be found in section 13 of the Act and include the following:

  1. A description of the approach to fundraising taken by the charity or by anyone on the charity’s behalf, including whether professional fundraisers or commercial participators carried out these activities for the charity.
  2. Whether the charity monitored the activities of fundraisers acting on its behalf.
  3. The number of complaints received by the charity about its activities (including fundraising) or about a fundraiser acting on behalf of the charity.
  4. What the charity has done to protect vulnerable people and other members of the public from unreasonable intrusion on their privacy, undue pressure to give money or other property, or unreasonably persistent approaches to obtain donations to the charity.

8. We hope this update is useful to you and the relevant staff in your institution. For briefings and alerts about charity-related matters that impact the higher education sector, sign up to HEFCE’s charity regulation alert service.

Yours sincerely

Professor Madeleine Atkins

Chief Executive


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Date: 25 September 2016

Ref: Circular letter 29/2016

To: Heads of HEFCE-funded higher education institutions

Of interest to those
responsible for:

Charity regulation and compliance; Finance

Enquiries should be directed to:

Jacqui Brasted, email