Fundraising Regulator finds CIC in breach of Code for second time
Melanie May | 10 January 2024 | News
A second investigation into community interest company Inside Success Union (ISU) has found it in breach of the Code of Fundraising Practice, with its magazine vendors having engaged in street fundraising without the appropriate licences and placing undue pressure on the public to donate to the organisation.
ISU offers training and employment opportunities for young people to create a quarterly magazine which is then sold to raise funds for the organisation. The company says its street vendors are licensed to sell magazine copies and regular subscriptions.
The Fundraising Regulator’s investigation was launched after it received several complaints from members of the public related to vendors engaging in charitable street fundraising, which requires a separate licence. Complaints were also made about the conduct of some of their vendors. Its first investigation was concluded in January 2022.
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After launching this second investigation in April 2023, the Fundraising Regulator examined these complaints against the standards within its Code of Fundraising Practice, and found ISU to have committed nine breaches of the Code.
“Considerable evidence”
This included “considerable evidence” that ISU personnel have engaged in street fundraising without the necessary licences and permissions. The investigation also identified a “recurring theme” that vendors were placing members of the public under undue pressure to donate. Breaches related to misleading donors were also identified, as complainants were led to believe that the vendors were representing a charity instead of a CIC.
Regulator’s recommendations
The Fundraising Regulator has made several recommendations to ISU, including carrying out a “root and branch” review of its approach, taking urgent action to ensure that its personnel do not engage in street fundraising, and ensuring that the appropriate permissions, procedures, staff training, and complaints-handling processes are in place.
Alongside this investigation, the Fundraising Regulator has been working with Manchester City Council, which has already successfully taken legal action against ISU relating to carrying out unlicensed street collections. In November 2023, ISU was fined by Manchester Magistrates’ Court for five offences and ordered to pay a victim surcharge and costs.
Gerald Oppenheim, Chief Executive of the Fundraising Regulator, said:
“Our investigation of Inside Success Union has found significant breaches of the Code of Fundraising Practice, not only concerning the behaviour of its fundraisers, but also its inadequate complaints process, misleading the public, and not appropriately responding to the Fundraising Regulator’s previous judgments. As a result, we are working closely with statutory bodies and other regulators to protect not only the public, but also the wider charitable sector.
“At a time when many charities are under significant financial pressures, yet continue to comply with legal requirements and uphold the high standards we have come to expect in the fundraising sector, it is deeply disappointing that ISU has not chosen to respond appropriately to our first investigation, and has continued to engage in behaviour which is potentially harmful to the public and risks bringing the sector into disrepute.”
Cllr Luthfur Rahman, Deputy Leader of Manchester City Council, said:
“The activity of on-street vendors working for Inside Success Union (ISU) completely undermines the legitimate work of the charity sector in Manchester and across the country – which could very well mean fewer people engage with charitable causes in the future and limit the positive impact the sector can have in our communities. In Manchester we will always welcome philanthropy and generosity, but we will also ensure that this money makes it into the hands of people who will put it to good use.
“Partnership working has been central to this investigation and we welcome the findings of the Fundraising Regulator, which has highlighted multiple breaches of the Regulator’s Code. We will continue to work with agencies across the country where concerns are raised to help protect the public.
“We hope that this work will not only change how ISU operate from now on, but also deter similar behaviour and inappropriate tactics being used by street vendors to bully the public into giving away money in the future.”
Louise Smyth, Regulator of Community Interest Companies, said
“As the Regulator of Community Interest Companies (CICs) one of my main priorities is to make sure the CIC brand stays strong. I expect all CICs to comply with any legal obligations or regulations to which they are subject whilst they deliver benefit to the communities they serve.”
About Melanie May
Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via thepurplepim.com.