Charities and Fund-Raising

I INTRODUCTION

Charities and Fund-Raising, organizations established for exclusively charitable purposes and governed by charity law; fund-raising is a major means by which charities finance themselves. Charities are subject to the jurisdiction of the High Court in England and Wales.

A recognized charity usually benefits from both tax advantages and the goodwill of the public. In England and Wales, official recognition is secured when a body is registered as a charity with the Charity Commission, thus gaining charitable status. Society supports charity in a number of ways, and the process of registration must reflect the responsibility that a charity has as a result of this. When the Charity Commission registers an organization as a charity, this confirms that it exists for the public benefit and that it is expected to be publicly accountable in a number of ways. Registration or official recognition of charities in other countries usually operates under similar criteria.

II CHARITY FUND-RAISING

Charities perform many valuable services in the community and often raise funds from the public and other sources in order to fulfil their objectives. In many cases, the only dealings the public have with a charity is through their fund-raisers.

Over the years there have been many innovative methods used by charities to raise funds. The precise methods used are usually a matter for the trustees or other directors of the charities to determine. However, when deciding upon potential fund-raising opportunities, trustees should be alert and sensitive to public opinion and criticism. Methods that are distasteful or extremely costly may meet with disapproval that can damage the charity and the sector as a whole.

The most common methods of raising funds are street collections, house-to-house collections, direct mail, and fund-raising events. Charities may use volunteers and paid employees, but increasingly the larger charities are turning to professional organizations to support their fund-raising efforts in areas such as general fund-raising, advertising, direct mail, and telephone fund-raising. More often, charities also enter into agreements with commercial manufacturers and retailers to associate their charitable cause with products offered for sale.

Charities that decide to raise funds can do so by using professional fund-raisers: individuals contracted externally to raise donations. In order to raise funds, charities can also enter into a promotion with someone who is known legally as a “commercial participator”. This is someone who runs a business and sells a product, stipulating that some of the purchase prices will benefit the charity. However, there are usually legal constraints on this kind of fund-raising, and charities must exercise discretion. The controls usually include requirements for a written agreement between the charity and the professional fundraiser or commercial participator, a statement informing potential donors or purchasers what proportion of their donation will be used to pay the costs of the fund-raiser, a statement detailing how the charity will benefit from its involvement with a commercial participator, and formal arrangements for the transfer of funds raised by professional fund-raisers or commercial participators to the charity.

Finally, it must be remembered that a charity’s name is both precious and valuable and should not be given to a third party without serious consideration of how the charity will benefit. As the name is the means by which a charity is recognized and by which its reputation will be judged, great care is required when allowing its name to be used in conjunction with a promotional venture. Before any agreement is reached it is essential to decide whether a particular relationship is appropriate for a charity and whether it may damage the charity or the good name of the charity sector.

III HISTORY

Forms of charity and philanthropy have been present throughout history, frequently to provide some form of social welfare or to alleviate poverty. Most major world religions have given rise to charitable organizations of one form or another: Christianity and Buddhism are notable for their charitable traditions. Monasticism has been historically associated with charity work, but most monastic orders were and are self-financing organizations with little in common with modern charities, their chief purpose being religious rather than philanthropic.

The charitable trusts that established almshouses are one of the earliest Western examples of charities. Charitable fraternities and trusts often related to guilds of urban origin were another important precursors of modern charities. The Reformation encouraged the spread of secular charities in Protestant countries, as the end of monasticism created a need for other philanthropic bodies to provide the services previously offered by the monasteries. As legal codes became more complex and formal, and methods of tax collection more prevalent and effective, statutes were drafted to define charitable status, and more organizations began to apply for the benefits of this status.

Modern-day charities cover many fields and often have little more than their legal status and a broad philanthropic purpose to link them. For example, the Royal College of Surgeons of England, which oversees surgical standards, is a registered charity, as is the British Film Institute; many educational bodies, including fee-paying schools, adopt charitable status. Modern charities may be religious in origin, as with Christian Aid and the Young Men’s Christian Association (YMCA), or entirely secular in inspiration, as with the Zoological Society of London or the British Association for the Advancement of Science. They may be international in scope (Oxfam, Médecins Sans Frontières), or confined to one country (the Ramblers’ Association, the National Trust). They may exist to do medical, emergency, or aid work (the Royal National Lifeboat Institution, Action Aid), or they may have cultural or more general social aims (the Prince’s Trust). Very large and important charities sometimes achieve the status of Non-Governmental Organizations (NGOs), and can actually influence governments worldwide.

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