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Fundraising events can be an effective way of generating income for your charity while getting donors and the community involved.
What sort of event?
Charities use a wide variety of events to fundraise, from musical performances to sporting events, bazaars, auctions and jumble sales. You may wish to keep things simple at first and avoid certain types of activity which require compliance with particular regulatory regimes, such as the licensing to sell alcohol.
Can we do it?
It is important to check that your charity has the power to engage in the event. This will usually be covered by a power to trade or raise funds. It may also be possible to rely on a general ‘sweep up’ power, for example to do lawful things to further the charity’s objects.
The trustees should approve all types of events, particularly those involving risky activities or new types of event for your charity.
Who is responsible for the event?
Consider who will take responsibility for the event. This needs to be clear to all involved, including donors, sponsors, suppliers and participants. Is it the charity, the charity’s trading company, or maybe a group of volunteers? Is a separate body or consultant organising the event?
If a third party event organiser is engaged, your charity should have a clear written contract that covers all the relevant parts of the relationship and ensures the organiser is legally responsible to perform their obligations and insure appropriately. Such a contract may also be necessary if the event organiser could be a ‘commercial participator’ or ‘professional fundraiser’ for the purposes of fundraising regulation.
Risk Assessment
No new activity should be undertaken without the trustees engaging in a full risk assessment. This should consider the event all round and recognise the type of activity, the location, the participants, and all relevant circumstances that could increase the risk to the charity’s assets or reputation. It can be useful to seek feedback from other charities that have undertaken a similar activity, or used a proposed third party event organiser to gain their informal view of the challenges or pitfalls involved.
The risks identified need to be covered by sufficient insurance, and you must ensure that no risks fall ‘between the cracks’ of the charity, a third party organiser, and venue operator.
Tax and VAT
Unless your event is directly related to your charity’s objects, the income generated by the fundraising event could be taxable. Where your charity is organising its own event, one option is to plan the event so that it fits within the ‘one-off’ fundraising event exemption.
The event should be organised by the charity or its trading subsidiary and promoted primarily to raise money for the charity. There should be no more than 15 events of the same type in any one location within any one financial year. Finally, the event should not include the provision of accommodation for more than two nights.
In relation to VAT, there is a specific exemption which may apply to events organised by a charity and promoted to raise money for charity. This will only apply if the fundraising purpose is made clear to those attending the event, and will not be available where a third party event organiser is running the event.
The above general points are the tip of proverbial ice-berg but can help your charity get started in a complicated area of charity operations.
Alana Lowe-Petraske is a solicitor at Bates Wells & Braithwaite. www.bateswells.co.uk