From 1 April 2008, the Charities Act 2006 has changed the disclosures that third party agencies must make when soliciting donations on behalf of a charity. How should this be communicated to potential donors in a telephone conversation? Nick Johnson investigates.
Who: Office of the Third Sector
Where: United Kingdom
When: April 2008
Law stated as at: 28 April 2008
With effect from 1 April 2008, the Charities Act 2006 has introduced changes to the disclosures that outside agencies are required to make when soliciting donations on behalf of a charity.
Previously, under section 60 of the Charities Act 1992, any such professional fundraiser was required to disclose its identity and in general terms the method by which they were remunerated.
Section 67 of the new Act has amended the 1992 Act to introduce a much more specific disclosure requirement. Now, professional fundraisers must disclose both the method by which their remuneration is determined and also the "notifiable amount" of remuneration in connection with the particular appeal. This is the amount of remuneration actually payable if known, or otherwise the amount expected to be received, calculated as accurately as reasonably possible.
The Office of the Third Sector has issued draft guidance on the new Act (see here) and is running a consultation exercise (due to close on 31 May 2008).
Why this matters:
The requirement for additional transparency can be met by field marketing agencies relatively easily through written disclosures handed over at the time of any solicitation. But telemarketing agencies potentially face a much more significant challenge. Just how should this extra information be communicated to potential donors in connection with a telephone conversation?
The Act requires that the information must "accompany" every solicitation. So charities and their agencies clearly need to find ways to comply with that obligation without any negative impact on conversion levels and donations.
Thankfully, neither the Act nor the draft OTS guidance requires that the disclosure be made before any solicitation, as opposed to later during the call. And while the Charity Commission's guidance on the previous requirements of the 1992 required disclosure in advance of any solicitation, no such guidance has been issued in relation to the new Act's more extensive disclosure requirements.
The Act also does not require that the disclosures be made using the same medium, so it is open to telemarketers to explore the use of other media (eg SMS, the internet etc) in order to comply with these obligations.
Many in the sector will be hoping that the final OTS guidance will take into account the difficulties faced in a telephone marketing context and will expressly support alternative compliance routes that do not undermine fund-raising efforts, while still providing for high levels of transparency.