Britain’s charity rules reward size, not need

British charity law presents itself as fair. In practice, it tends to favour organisations with the resources to navigate an increasingly complex system. What larger charities absorb as routine compliance often becomes a barrier for grassroots groups.

The Fundraising Regulator, set up in 2016, operates as an independent self-regulatory body. But like many such systems, influence tends to follow resources. While registration is voluntary for most, charities spending over £100,000 on fundraising are expected to register and pay a levy, a threshold that can feel less like a clear line and more like a shifting one for smaller organisations.

Charity fundraising law protects big players

The most significant recent change arrived in November 2025, when a revised Code of Fundraising Practice came into effect. Framed as a modernisation effort, it stripped back prescriptive rules in favour of broader principles, described by its architects as “future-proofing” the sector for innovations like AI-driven donor outreach.

What it also did, less discussed, was change responsibility for interpreting detailed compliance rules onto individual organisations. This includes cross-references to bodies like the ICO and HMRC, adding layers of administrative complexity.

According to the updated Code of Practice, charities must now justify fundraising decisions at senior governance levels and maintain robust internal processes, including whistleblowing mechanisms.

That kind of infrastructure is standard at large, well-staffed charities. For a community group run mostly by volunteers, it’s a significant operational burden. The new principles-based approach sounds progressive, but flexibility tends to work best for those who can afford professional interpretation.

Small groups navigate a compliance minefield

Smaller operators don’t just face higher relative compliance costs; they also find the most lucrative fundraising channels blocked off by structural advantage. Major donor programmes and corporate partnerships require networks and credibility that take decades to build.

Commission-based fundraising models, already controversial for their incentive structures, are now less prescriptively regulated under the new Code, which in practice benefits wealthier organisations that can construct compliant arrangements. The switch to principles means charities bear greater responsibility for demonstrating compliance, a burden that falls unevenly across the sector.

This is where accessible formats become essential survival tools for grassroots groups. Online platforms offering prize draws competitions have given smaller campaigns a competitive entry point. These sites remove the need for scale, infrastructure, and existing donor networks.

Instead of building long-term relationships or funding complex campaigns, organisations can offer a simple, low-cost incentive that encourages immediate participation.

The format does much of the work: low ticket prices encourage micro-donations, digital promotion widens reach, and platform-managed systems handle payments, compliance, and winner selection. That combination allows smaller groups to raise funds and attract attention without the institutional backing larger charities rely on.

Prize draws offer grassroots campaigns a foothold

Prize draws occupy a practical middle ground in fundraising. They don’t require the donor relationships that underpin major gift programmes, and they don’t demand the scale that makes direct mail campaigns viable.

For a local community group or single-issue campaign, they represent a low-barrier route to income that sits within the Code’s broad principles without triggering complex compliance requirements. That accessibility matters enormously when your entire operation relies on a handful of committed volunteers.

The irony is that these formats succeed partly because they’ve been overlooked by the regulatory architecture that governs larger fundraising activity. Where the system has tightened around established channels, smaller organisations have adapted by finding routes that weren’t worth regulating heavily in the first place.

Regulatory reform remains stalled under both parties

Neither Labour nor the Conservatives have shown a serious appetite for reforming the structural imbalance in charity fundraising regulation. The Charity Commission periodically updates its guidance. The Fundraising Regulator consults widely before major changes, but consultation processes themselves tend to be dominated by voices from larger organisations with the staff to respond meaningfully.

According to guidance from the Chartered Institute of Fundraising, navigating UK fundraising rules requires understanding multiple regulatory bodies. This is an expectation that assumes a baseline of professional resources most grassroots groups simply don’t have.

The result is a regulatory environment that performs neutrality while delivering advantage. Bigger institutions adapt quickly, absorb compliance costs, and shape future consultations. Smaller campaigns work around the edges, finding what flexibility remains.

Reform conversations tend to start and stall in the same committee rooms, with the same stakeholders. Until the regulatory architecture genuinely centres smaller organisations in its design, the imbalance isn’t a bug, it’s a feature.

By Nathan Spears

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