Fundraising costs fairly reported
This criterion assesses whether the organization transparently and accurately reports the costs associated with its fundraising activities. Fair reporting of fundraising costs is essential for donor trust, regulatory compliance, and effective resource management. It specifically requires avoiding selective netting or exclusions that create a misleading impression that fundraising is ‘free’ or that all donations reach beneficiaries without explaining how fundraising and core operations are funded.
| Metric | Fundraising Cost Ratio & Efficiency |
|---|---|
| Target | Trustee-defined tolerance bands |
| Frequency | Quarterly internal; Annual public |
| Method | Ratio: (Total fundraising costs ÷ Voluntary income). Must separate acquisition vs. stewardship costs. Must disclose treatment of payment processing fees (gross vs net). Must disclose material one-offs (e.g., legacies) via bridging note. |
| Unit | Percentage / Ratio |
Level 1: Initial/Ad-hoc
Ad-hoc: Fundraising costs are not formally tracked or reported. Any accounting is informal and inconsistent. No separation of direct vs indirect costs.
Level 2: Developing
Developing: Basic direct fundraising costs are tracked. No formal policy for allocating indirect/shared costs. No reconciliation between fundraising records and finance system.
Level 3: Established
Defined: Formal policy exists for allocating direct and indirect costs. Costs are reported consistently to management. Meets minimum statutory requirements for Annual Report but lacks detailed notes on allocation bases.
Level 4: Advanced
Managed & Measured: Publicly discloses costs/ratios with detailed SORP-compliant notes (apportionment bases). Trustees have approved targets/tolerances for ratios; breaches trigger documented action plans. Statutory fundraising statement is comprehensive.
Level 5: Optimizing
Optimizing: Proactively educates donors on investment/payback; publishes channel-level ROI and LTV:CAC. Obtains independent assurance (e.g., ISRS 4400) over allocation controls and KPI calculations. Continuous optimization of channel mix.
Organisation Types
By Organisation Size
| Size | Applicability | Notes |
|---|---|---|
| Micro | exempt | Eligible for Receipts & Payments accounts; SoFA and complex cost allocation policies are not required. |
| Small | exempt | Below the £250k threshold for accruals accounts; formal SoFA disclosures and detailed allocation packs are disproportionate. |
| Medium | partial | Accruals accounts (SoFA) required above £250k, but cost allocation methods and packs can be simplified based on operational complexity. |
| Large | full | |
| Major | full |
Applicable When
- The organization engages in fundraising activities.
Not Applicable When
- None of the organization’s income is derived from fundraising activities conducted by the charity or on its behalf. Note: If third parties or volunteers fundraise on the charity’s behalf, the criterion remains applicable for disclosure of arrangements, monitoring, complaints, and any known fees/retentions in the Trustees’ Annual Report.
Related Criteria
Discussion (1)
📋 **Version updated: 1.0.0 → 2.9.7** **Changes:** Updated islamic_references from mizan-297.json
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