Fundraising Appeals

Some charity fundraising appeals raise too much, or too little, money to achieve the appeal’s aim. This topic is covered by the Guidance Note: Fundraising Appeals By Charities - Suitable Wording for Appeals. It deals with the current law on the subject but it will be updated in due course to cover the changes made by the Charities Act 2022 once the relevant provisions of the Act have been implemented. The Act received Royal Assent on 24 February 2022, but its provisions will not be effective until implemented by means of regulations to be made by the Secretary of State.  

The current law requires charities to contact donors to offer to return their donation if a fundraising appeal for a specific purpose (e.g. to buy a particular piece of equipment) does not achieve its target. Contrast this with the case where there is no target and the stated purpose is not specific but is instead, say, an appeal for funds for the charity’s general purposes. Where the stated purpose is specific, and the sums raised are insufficient for that purpose, those sums may not be legally devoted to another purpose because the donors will not have expressed a “general charitable intention” when donating but will only have intended to donate for the stated purpose. Similarly, where the appeal raises more than is needed for the stated purpose, the donors would have to be contacted to ask if they wish the surplus donated is to be returned to them. The effort to return donations in such cases can be disproportionate to the size of the individual donations.

Therefore, the Act creates rules (not yet in force - see above) permitting use of the funds concerned in four circumstances (see below) for another purpose which is “cy-près” (a legal term meaning “as near as possible”) to the stated specific purpose of the appeal.

Firstly, the Act provides that, once the relevant provisions are in force, if the court or Charity Commission decides that it would be unreasonable to incur expense in taking steps to return the donation, or it would be unreasonable for the donors to expect the donation to be returned, the charity can use the funds for a “cy-près” purpose.

Secondly, the Act establishes a threshold below which, once the relevant provisions of the Act are in force, a charity will not have to contact a donor. Unless, when making the payment, the donor states that the donation must be returned if the specific charitable purpose fails, where the donor has not given more than £120 in total in a year to the particular appeal, the charity will not have to contact that donor but will be able to use all of the sum concerned “cy-près”. (Note that if a donor’s total gift exceeds £120 in the year, no part of the total gift may be used under this new rule.) In each case the charity’s trustees will have an obligation under the Act to “take reasonable steps” to ascertain whether the donor’s total gifts to the appeal in the year exceeded £120.

Thirdly, the Act provides that, once the relevant provisions of the Act are in force, a charity can agree with the Charity Commission the particular steps that it should take to attempt to identify and find donors to a failed fundraising appeal (to ask them if they require their donation to be returned) where the Act still requires a charity to do so. Where it takes those steps but fails to contact a donor, it will be able to use the funds “cy-près” donated by that donor. This process will be more flexible than the current specific and onerous rules on the action that charities must take to contact donors.

Fourthly, once the relevant provisions of the Act are in force, the Act will allow donations from unidentifiable donors to be applied "cy-près". As an example, donors would be unidentifiable where there is a charity bucket collection of cash in the street from unknown donors.

In any of these circumstances, a charity will be able under the provisions of the Act to decide to use the funds concerned (without having to ask the Charity Commission to make a “cy-près” scheme) by resolving that they should be used for different charitable purposes. They must have regard to (a) the desirability of securing that the purposes are, so far as reasonably practicable, similar to (“cy-près”) the specific charitable purposes for which the appeal was made; and (b) the need for the purposes to be suitable and effective in the light of current social and economic circumstances. However, where the total proceeds of an appeal exceed £1,000, the charity’s resolution will not take effect unless and until it receives consent to it from the Charity Commission.

These various changes will simplify the process that a charity has to follow where it is permitted by law to use funds for a purpose other than the specific stated purpose of a fundraising appeal by the charity. The new rules, once implemented, will be simpler and more proportionate.

Once the implementation dates for the relevant provisions of the Act are known, and if any supporting legislation is subsequently passed which impacts on the provisions discussed above, this page will be updated to reflect that impact.