In the United Kingdom, fundraising companies do not usually need a specialized license solely to run online fundraising activities or to accept card payments. However, they must definitely comply with a range of legal and regulatory requirements depending on the nature of their operations and the type of fundraising, and whether they are charities or for-profit entities.
Let us quickly understand the Fundraising Regulation. In short, online fundraising is regulated by the Fundraising Regulator, which basically enforces the Code of Fundraising Practices. This Code ensures that all fundraising activities are performed with full honesty, transparency, and implement fair practices. Any organization that is engaged in fundraising must adhere to these standards to maintain public trust.
Another law which fundraising entities must be aware about is the Charity Act 2011. If the entity is raising funds on behalf of or as a charity, then it must comply with the Charities Act 2011 and register with the Charity Commission. If it meets the criteria, the organization must also follow charity accounting, reporting, and government requirements without fail.
For profit companies which are non-charities, such businesses that conduct fundraising for commercial purposes must comply with Consumer Protection Laws, Tax Regulations, as well as Data Protection Laws i.e. UK GDPR.
They also need a Merchant Account or Payment Gateway from a Licensed Payment Processor to be able to legally accept card payments.
Companies that are involved in high-value or large-scale fundraising companies that are involved in fundraising must also comply with Money Laundering Regulations. This includes verifying donors’ identities and maintaining a transparent transaction record database. This is especially important for substantial donations or international payments.
The fundraising license may be required for certain activities like street collection, door-to-door campaigns, or raffles or lotteries, they do require licenses or permits from the local authority or gambling commissions.
When it comes to payment compliance, fundraising entities must comply with the PCI DSS standards and work with the regulated payment service providers to ensure that the transactions are secure and enhanced fraud prevention measures are in place.
In simple terms, we can say that no special fundraising license is needed for just running an online fundraising or accepting card payments in the UK. However, it is equally important to know that compliance with fundraising regulations, charity law, and AML requirements as well as consumer protection and payment card payment industry standards are definitely mandatory.
The exact obligation will depend on whether the entity is a charity or a for-profit business and the type of fundraising activity it conducts. To get a clarity on whether your fundraising entity will need any special license, we recommend you to contact us. Our team will quickly connect you with payment processors that support fundraising entities in the UK and Europe and they will let you know whether you actually need any special license or approval or permits or not.