The poverty relief charity Penny Appeal committed five breaches of the Code of Fundraising Practice, including misleading donors in two of its child sponsorship appeals, the Fundraising Regulator has found.
The regulator found that three programmes breached the code on informing donors and treating people fairly, use of funds and complaints handling.
It comes after the poverty relief charity defended itself in March against claims that it failed to complete a building project in Pakistan using an individual’s £40,000 donation.
The regulator said it received three complaints about the Penny Appeal over a 12-month period, and a fourth was received during its investigation.
The charity’s OphanKind and Hifz Orphan appeals were found to have breached the code because they invited donors to sponsor individual children, implying that the money would be used exclusively to benefit them.
The regulator said it was “not sufficiently clear” to donors that children primarily benefit indirectly from accumulated sponsorship funds being distributed to communities or projects that the children are involved in.
The Penny Appeal’s Thirst Relief Appeal was also investigated by the regulator and was found to have breached the code regarding the use of direct debits.
The regulator found that the FAQs supporting the campaign were “ambiguous and do not make it clear that a monthly direct debit would continue after 12 months until the donor cancels it”.
It said that while the terms and conditions of the charity’s website did refer to the ongoing nature of regular monthly donations, donors were not directed to read them before donating.
The regulator said: “We have found that the charity breached the sections of the code that relate to treating donors fairly and misleading donors by omitting essential information.”
The regulator’s report says the Penny Appeal updated its website and payment platform in October, so donors are now presented with a message that reads: “All direct debit payments are continuous until requested to cancel by the donor.”
The charity said this message had been on its donation forms handed out at events since February last year.
The regulator found that the Penny Appeal also breached the code relating to complaints handling, finding that two of the complainants had initially contacted the charity by phone but had not received the promised call back.
Once a complaint was escalated and a response was received, the charity’s reply “did not always acknowledge or apologise for the poor complaint handling”, the regulator said.
The charity’s 100% Zakat appeal was also investigated, with the regulator saying it had concerns about some of the language used in the appeal. But the regulator said it had not received any complaints about this issue and therefore did not find it to be a breach of code.
The regulator has recommended that the Penny Appeal review and amend the language used in all of its fundraising material to ensure it is clear who benefits from donations.
It has also urged the charity to review the way it promotes the Thirst Relief appeal, so that the nature of the direct debit payments are clear from the outset.
Three of the complainants involved in the investigation had previously asked the charity for refunds of their donation, the regulator said. It has urged the charity’s trustees to consider whether to refund these donations and explain the decision to each complainant.
The regulator said the Penny Appeal has agreed to comply with its recommendations.
Gerald Oppenheim, chief executive of the Fundraising Regulator, said: “We will continue to engage with Penny Appeal as it implements the recommendations outlined.
“We understand that fundraising appeals encouraging donors to raise money for a particular individual can be very effective. However, we urge all charities that pool the money raised through such appeals to ensure their fundraising material clearly reflects this.”
A spokesperson for the Penny Appeal said it had been working closely with the regulator and that several of the recommendations had already been actioned. This includes a “rigorous” review of all of its communications, particularly those pertaining to its Hifz Orphan, Orphan Kind and Thirst Relief appeals, the spokesperson said.
They said: “Transparency and clarity are at the forefront of everything we do, and we are keen to carry on working on improving and refining our processes in all areas of our work as we continue in our mission to support those most in need.”