Commercial partnerships between businesses and charitable institutions are increasingly popular, aligning with environmental, social, and governance (ESG) goals. While these collaborations can bring significant benefits, they also require strict compliance with legal requirements and fundraising regulations to protect all parties involved.

A recent Fundraising Regulator investigation highlights the risks of inadequate governance of such arrangements. The case involved a commercial business, Recycling Solutions North West, its charity partner Cancer Relief UK, and a householder’s complaints about receiving unsolicited and unwanted charity bags. Finding that both Recycling Solutions and Cancer Relief UK had breached the Code of Fundraising Practice (the UK’s charitable fundraising standards), the Regulator recommended corrective actions.

Recycling Solutions is registered with the Fundraising Regulator and uses its
‘registered with Fundraising Regulator’ logo in exchange for a commitment to comply with the Code of Fundraising Practice. The Regulator said remedial action should be taken by the company to prevent the delivery of unwanted charity bags in the future, and noted that Recycling Solutions had already cut ties with the distributor company that had caused the breach.

The Regulator commented on the parties’ failure to produce evidence of a written agreement to govern their arrangement; a possible violation of the Charities Act 1992 which mandates legally compliant written contracts for all professional fundraiser and commercial participator arrangements.

The case highlights the critical need for formal agreements to:

• Protect businesses from unenforceable terms or donor disputes.
• Ensure charities’ interests are protected and they’re shielded from reputational and regulatory risks.

The Charity Commission expects all charities (whether registered with the Fundraising Regulator or not) to follow the standards set out in the Code of Fundraising Practice. Where charities engage professional fundraisers, or deal with commercial businesses wishing to profit from an association with them, it is essential that they:

• Ensure legal compliance: contracts and the Code of Fundraising Practice.
• Strengthen internal controls: boards should regularly review significant contracts and monitor compliance with legal and regulatory standards.
• Conduct audits: to identify and address risks in fundraising arrangements

Schofield Sweeney advises fundraisers, businesses, and charities to establish robust contracts that protect you, while fostering meaningful and productive collaboration. We’re here to help, get in touch with Jo Green at JoGreen@schofieldsweeney.co.uk.