Independent schools face fundraising challenges in a tough climate. Learn best practices for compliant and effective fundraising policies.

The growing importance of fundraising

Independent schools have weathered a number of storms in recent years. First came the pandemic, forcing schools to invest in new technologies whilst placing pressure on fee structures and the movement of students. Today we find ourselves in a period of high inflation and an escalating cost of living. A general election is on the horizon, and with it comes the risk of further financial constraints (with the possible elimination of business rates relief currently enjoyed by independent schools and the threat of VAT being imposed on fees). As fundraising therefore becomes increasingly important, independent schools must ensure their approach is robust and integrates effectively into other key administrative policies.

Regulatory overview and key policies

Most independent schools, as registered charities, will be familiar with the regulatory oversight of the Charity Commission. Charitable schools engaging in fundraising activities should also be aware of the Fundraising Regulator, a non-statutory body responsible for setting and promoting bestpractice standards for charity fundraising. Though registration with the Fundraising Regulator is voluntary, charities are required to disclose in their annual reports their approach to fundraising, and whether they are part of any voluntary scheme or standard for fundraising. Registration with the Fundraising Regulator may help demonstrate trustees’ commitment to good governance. Compliance with standards set out in The Code of Fundraising Practice is also key. Together with the Information Commissioner’s Office (ICO), these bodies have issued a raft of guidance for setting out both the legal requirements and general best practice for fundraisers. In the context of independent schools’ development, trustees should consider not only their dedicated fundraising policies, but also instances in which fundraising may form a small part of a broader approach to good governance, so that they have complete oversight of what and how funds are raised. Though non-charitable independent schools may not be subject to this level of regulatory oversight, adoption of suitable policies is still recommended and will optimise their approach to fundraising. The following provides a non-exhaustive list of some of the key fundraising-related policies you may consider adopting:

Donation acceptance policy – Although donations should only be refused or returned in exceptional circumstances, there may be instances in which doing so is in the best interests of the school: for example, if accepting the donation may harm your reputation, or if it is believed that the donor lacked capacity to make the gift. Independent schools must also be aware of the risk of money laundering, particularly where donors seek to remain anonymous. Trustees should refer to Charity Commission guidance on due diligence and monitoring when preparing or reviewing their donation acceptance policy, bearing in mind that a policy which sets out due diligence procedures (including the criteria by which the acceptance or refusal of a gift will be considered), as well as ethical objectives and principles, will not only promote transparency but will provide reassurance for donors and supporters. It is also important to bear in mind that for major gifts, a donation agreement may be appropriate.

Complaints policy – Whilst most independent schools will have a complaints policy to manage any concerns raised from their beneficiaries or the local community, complaints may also arise in the context of fundraising (for example, a third party may have concerns about the messaging of a fundraising campaign). An effective complaints policy should set out the scope of complaints it is designed to manage, and the principles and procedures by which the complaint will be processed.

Direct marketing and data protection policy – Independent schools may wish to retain a database of families and alumni from whom they hope to receive donations, or to solicit donations from a wider community. Data protection and electronic communication regulations are complex; independent schools will benefit from both internal and external direct marketing policies to ensure they have a legitimate basis upon which to process data and send marketing communications, as well as to define the procedures by which these will be sent. The ICO website is a useful resource for trustees to aid compliance, providing helpful guidance on information rights and all aspects of data protection for individuals.

Whistleblowing policy – It is good practice to have a whistleblowing policy and procedure, to protect staff, trustees and volunteers who have concerns about your approach to fundraising. It should, amongst other matters, contain appropriate references to the types of issues the policy is designed to deal with, and how the whistleblower will be protected following their disclosure.

Third-party fundraising policy – Thirdparty fundraisers (e.g. CRM providers) can be valuable but they bring additional risks which need to be managed. An effective third-party fundraising policy will be clear on the due diligence and process necessary to select a third-party fundraiser, putting in place an agreement with the third party and ongoing monitoring of their performance.

This article first appeared in the IDPE Newsletter on 21 March 2024.