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Regulators declare war on Charity Sector | Regulatory Lawyer

Regulators declare war on Charity Sector | Regulatory Lawyer

Following close attention by the Information Commissioners Office and the new Fundraising Regulator, the Charity sector is reeling from a raft of new regulation, coupled with intense interest in 'wealth screening', which has prompted a run of new fines in this important sector.

Wealth Screening

The Information Commissioners Office have recently announced substantial fines have been imposed upon The Royal Society for the Prevention of Cruelty to Animals [RSPCA] and British Heart Foundation [BHF], who secretly screened millions of their donors, so they could target them for more money.

The ICO said so-called “wealth screening” was one of three different ways both charities breached the Data Protection Act by failing to handle donors’ personal data consistent with the legislation.

The charities also traced and targeted new or lapsed donors by piecing together personal information obtained from othersources. And they traded personal details with other charities creating a massive pool of donor data for sale.Donors were not informed of these practices, and so were unable to consent or object.

The specific complaints were:

  • Ranking their donors based on wealth, hiring companies to investigate income, property values, lifestyle andeven a person's friendship circle, and using 'legacy profiling' to target those people most likely to leave moneyin their wills.
  • Finding information about a donor that was not provided, using old phone numbers, email addresses etc.
  • Sharing data with other charities

The Information Commissioner, Elizabeth Denham has said that millions of people who have given their time and money to benefit good causes will be saddened to know that their generosity wasnt enough, and will be upset to know that the charities have abused their trust. The fines that were imposed were £25.000 on the RSPCA and £18,000 on the BHF but made it clear that fines of up to 10 times that figure could have been imposed.

The ICO heard that the RSPCA repeatedly wealth screened all 7 million of its supporters.Although the practice had been common since 2010 and had now supended this conduct despite an intial decision to continue. BHF said it had been doing this since 2009 and had provided records of personal data of several million people, to wealth management companies without consent.

These new investigations demonstrate that the Charity sector has been targetted by the ICO, who are also keen to enforce other issues around the sharing of Consent in different markets. Further issues have also been raised in the new General Data Protection Regulations - see blog article dated 24th June 2016.


The Fundraising Regulator.

The regulation of Fundraising by charities is now governed by the Code of Fundraising Practice, designed by the new Fundraising Regulator, who has built on the work of the Institute of Fundraising [IOF]. The IOF set out all the legal areas on their website namely, Tax efficient giving, data protection, solicitation statements, contracts and agreements, honesty in fundraising, trading and VAT and they have set out guidance for best practice in door to door fundraising and a due diligence checklist for all operators.

New ideas include site  management agreements by local authorities which control areas where and when fundraising can take place. There is also an online diary system where bids can be made to operate at certain times/dates.The new regulator has issued the new rule book on Door to Door Fundraising ( July 2016) which followed the Review of Fundraising Regulation by Sir Stuart Etherington who proposed this new regulator. There are the Rules for Fundraisers and the Rules for Operational Staff, relating to wider organisational practices.

The rule book contains guidance on sanction which includes fines for breach which start at 100 points per breach ( each point is £1). If say an organisation had 50 member of staff each committing 50 breaches this would soon rack up. Further, there are multipliers for repeat violations i.e. every 3rd infringement incurs a penalty of double the normal amount.

The regulator has also issued the Code of Fundraising Practice. This is a comprehensive ‘bible’ that looks at compliance forevery aspect of fundraising. It makes the point that many obligations are legal obligations [marked with an *] and the remainder are (merely) best practice where the regulator treats the issue as a professional standard to be met by fundraising organisations.

There is an extensive list of legal obligations derived from statutes which is beyond the scope of this article including the Charities Act 1992, 2011, the Charities (Protection and Social Investment) Act 2016 and the Data Protection Act 1998. For further legal advice, please contact the author. 


For any advice and assistance for issues like these please do call Jeremy on 0844 2722322 or submit a comment below. Jeremy will come back to you at the earliest convenience.

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