Charities running lotteries – Code of Fundraising Practice

The Fundraising Regulator sets and maintains fundraising standards across the UK. They ensure that fundraising is legal, open, honest and respectful. The Code of Fundraising Practice (the code) outlines the standards expected of charitable fundraisers across the UK.

What change to the code is being made and why?

A minor change to the current wording of standard 12.6.2 to reflect more accurately the legislation which underpins the standard on hosting a free draw for charitable fundraising purposes.

Standard 12.6.2 will be amended on two key points to remain in-line with the Gambling Act legislation:

  • The inclusion of a letter by ordinary post (either firstclass or second-class) as an acceptable free method of entry;
  • The revision of the current wording on acceptable selection criteria for the draw.

Standard 12.6.2 of the code currently states:

To be a free draw the arrangement must either be completely ‘free’ to enter, as defined in the Gambling Act, or have a free method of entry, which must also be as accessible as and no less convenient than paying to enter. Anyone taking part using the free method must have the same chance of winning as they would if they paid to enter.

The new wording of standard 12.6.2:

To be a free draw the arrangement must either be completely free to enter or have a free method of entry. This free method of entry must either be a letter sent by ordinary post (first-class or second-class post) or another method of communication that is no more expensive and no less convenient than the paid method. The system for allocating prizes must not distinguish between entries made through the free or the paid method of entry.

Standards in the code where ‘must’ and ‘must not’ are in bold text indicate a standard based on a legal requirement (for example, a piece of law or case law).

The change comes into effect from 4 June 2021. Note, that this change to the wording will not require fundraisers to achieve a greater standard than was already set out in the code.

The code for Lotteries, prize competitions and free draws

Contact us

If you would like to discuss anything further, please contact Simon Brown on 0191 285 0321 or email

Responsible investment guidance issued by the Charity Commission

In the April edition of our Not for Profit eNews, we mentioned that the Charities Commission issued guidance for consultation on responsible investment practices for charities.

The Charity Commission closed the consultation on 20th May 2021. Views were sought on the clarity of the revised guidance it has published about the approach to investing charity funds. While the Commission analyses the feedback provided, we share some background to the consultation.


All charities can invest, and for some charities, investments can be a major source of funding.

The Commission are keen to point out that it is the trustees who are responsible for how they invest their charity’s assets, not for the Commission to tell trustees what they should do. However, the Commission does provide guidance for trustees to help them understand and comply with the law.

The issue – was the previous guidance clear?

Trustees have always had the option to make financial investments in ways that align with their charity’s purpose (and values). Previously this was known as ‘ethical investment’, which the Commission have now termed ‘responsible investment’.

The examples given by the Commission are:

  • Negative Screening – avoiding investing in investments which are against the charity’s aims (i.e. a health charity investing in products harmful to health)
  • Positive Screening – choosing to invest in a sector which aligns with the charity’s aims (i.e. an environmental charity investing in renewal energy)

The Commission’s current guidance, ‘Charities and investment matters: a guide for trustees – ’CC14’, describes the legal framework, duties and discretions that trustees have when investing their charities’ funds. The lack of clarity and the reasons given included:

  • That some trustees felt they are unable to make responsible investments, because they perceive they have an overriding legal duty to maximise the financial returns when investing, regardless of any other consideration
  • That there is insufficient assurance that trustees can decide to take a responsible approach to investment
  • A perception that the Commission does not accept that trustees can comply with their duties fully if they adopt a responsible investment approach
  • That some felt that the guidance lacks practical advice

Revised draft guidance

The Commission have updated their draft guidance – the proposed changes can be found here with a copy of the revised draft guidance here.

Contact us

If you would like to discuss anything further, please contact Simon Brown on 0191 285 0321 or email

Collapsed Charity Kids Company – lessons learned

Collapsed charity Kids Company may not have survived even if it had robustly followed governance standards, a report has concluded.

The assessment of the defunct children’s charity follows a High Court judgement earlier this year clearing its former trustees of being unfit to be company directors.

This case had been brought by the Official Receiver against the trustees and ex-chief executive Camila Batmanghelidjh of Kids Company, which folded in 2015.

The latest ICSA: Chartered Governance Institute research looks into the degree in which Kids Company adhered to good governance practice before its demise.

It brings together publicly available information and aims to provide trustees, governance professionals and others in the charity sector with an overview of lessons to learn.

This suggests even if the charity had strictly adhered to the Charity Governance Code, it may not have survived.

The report concludes:

As with other examples of organisational failure and poor governance, it would be difficult to state that Kids Company could have avoided its sad fate if it had followed a governance standard such as the Charity Governance Code.

Areas where governance standards at the charity fell short include trustees confusing their organisational and personal positions in public statements.

Other governance areas looked at, include ensuring effective trustee, board and chief executive relations and avoiding conflicts of interest.

It is hoped that charities will be able to draw valuable lessons from a study of governance practices at Kids Company in order to improve governance within the sector.

Contact us

If you would like to discuss anything further, please contact Simon Brown on 0191 285 0321 or email

Charity Commission revises COVID-19 guidance for the sector

The Charity Commission for England and Wales has published updated guidance in April 2021, for the frequently asked questions it has been asked during the coronavirus outbreak.

The Charity Commission has also used the opportunity to remind charities that their approach to regulation during the uncertain period will be as flexible and pragmatic as possible in the public interest.

The contents published by the Charity Commission include help on the following areas:

  1. Government financial support for charities
  2. Charity meetings
  3. AGMs and other meetings: postponing or cancelling meetings
  4. Holding meetings online or by telephone
  5. Insolvency help for charitable companies and charitable incorporated organisations
  6. Mergers and collaborative working
  7. Using reserves and restricted funds
  8. Insolvency help for charitable companies and charitable incorporated organisations
  9. Further advice on managing financial difficulties
  10. Charity objects: understand if you can help with coronavirus efforts
  11. Reporting serious incidents to the Charity Commission
  12. Keeping people safe
  13. Fundraising and coronavirus appeals
  14. Trading subsidiaries – financial support from parent charities
  15. Reducing or returning contractual fees in return for a modified service
  16. Working with a company or business to help with coronavirus
  17. Charity statement of recommended practice (SORP) guidance
  18. Information from other organisations

Contact us

If you would like to discuss anything further, please contact Simon Brown on 0191 285 0321 or email

HMRC issue new guidance on claiming Gift Aid on waived refunds and loan repayments

Gift Aid on “payments of money”

In the past it was not possible to claim Gift Aid on waived refunds and loan repayments unless the charity first repaid the monies to the donor, then the donor re-donated it.

This is because usually a donation only qualifies for Gift Aid if it is a gift consisting of a “payment of money” by an individual who has/will pay sufficient UK tax, to a charity and it satisfies all of the following conditions:

  • The gift is not subject to a condition as to repayment
  • The gift is not a Payroll Giving donation
  • The gift is not deductible from income for tax purposes
  • The gift is not part of an arrangement for the charity to acquire property from the individual or a connected person
  • Any benefits associated with the gift are within the statutory limits

In addition, a charity may only make a Gift Aid claim if the following conditions are met:

  • The charity must have a Gift Aid declaration made by the donor which covers the donation
  • The charity must have evidence that they’ve explained to the donor the personal tax implications of making a Gift Aid donation – this can be done by including an explanation on the Gift Aid declaration or separately
  • There must be an audit trail linking the donation to the donor and their Gift Aid declaration

New guidance

As a result of the coronavirus pandemic charity funding has been under extreme pressure. In April 2020 HMRC agreed to introduce a temporary concession to allow waivers of refunds and loans to charities to be treated as donations upon which Gift Aid could be claimed. This concession was aimed at charities that had sold tickets for events that had to be cancelled due to coronavirus.

HMRC have now confirmed that this change is permanent and have issued guidance on the matter.

In summary, the guidance states that the waiver will be eligible for Gift Aid provided there is a record of a formal waiver held by the charity and all other Gift Aid rules are met (i.e. the conditions set out above). Information on what is accepted as a formal waiver is set out in the guidance.

We would recommend that the guidance is read in full before making a Gift Aid claim on waived refunds and loans.

Contact us

If you have any queries in respect of the above please contact Louise Cottam or Simon Brown.

Budget 2021: Was it kind to charities?

Whilst the government reminded the sector that it provided £750m of support last year to assist frontline charities through the coronavirus pandemic, unfortunately, there were no real sector specific announcements today to help plug the funding gap.

Key points for charities from Budget 2021

  • Furlough is to be extended until the end of September at 80% of salary up to £2,500, with employers being asked to contribute 10% in July and 20% in August and September.
  • Business grants are to be replaced by Restart Grants of up to £6k from April, however, it is unclear how these interact with State Aid limits .
  • The 100% business rate holiday is extended until June, however, most charities with shops and attractions already receive 80% relief.
  • No changes to the rates of income tax, national insurance or VAT.
  • Corporation tax rates to increase in April 2023 to 25% for companies making profits over £250k, however, most charities and their subsidiaries do not pay Corporation Tax.
  • VAT registration threshold to be frozen at £85k until 2024.

Key funds announced or re-announced in Budget 2021

Cultural Recovery Fund

A £300m boost has been given to the previously announced £1.57m Cultural Recovery Fund. Applications are currently closed to the fund, however, more information can be found here.

National Museums and cultural bodies

Government sponsored National museums and cultural bodies will receive £90m. No further information can be found on this, so we are unsure if this will trickle down to local museums and cultural bodies.

Sport Recovery Package

The government have promised £300m for a Sports Recovery Package. This will help fund spectator sport in England, sporting clubs and governing bodies. More information will be released in the coming weeks.

Community Ownership Fund

A new £150m fund to enable community groups to bid for up to £250k matched funding to help them buy local assets to run as community owned businesses e.g. pubs, theatres, post offices and sports clubs. In exceptional cases up to £1m of matched funding will be available to help establish a community owned sports club or buy a sports ground at risk of loss.

Levelling Up Fund

Announced in November 2020, the government have now released a prospectus for the £4.8bn Levelling Up Fund. This fund is for local infrastructure with the aim to invest in transportation, regeneration and culture. Applications to the fund will be made by councils by mid June 2021, with the expectation that MPs of an area will back one bid they see as a priority.

As the bidding authorities should consult local stakeholders (including community representatives, environmental representatives, universities and colleges), charities may well be asked to get involved.

Contact us

Please contact Simon Brown ( or Louise Cottam ( if you have any queries in relation to the 2021 Budget.