The Fundraising Regulator has found that the social enterprise Inside Success Union (ISU) breached its Code of Fundraising Practice nine times due to the behaviour of fundraisers.
Its youth vendors placed pressure on people to donate and misled the public by saying it was a charity, the investigation found.
ISU is a community interest company (CIC) that works with young adults to create and sell magazines. It is not a registered charity, but complaints received by the regulator suggest it had misled the public by saying it was.
Other breaches included pressurised fundraising, causing an obstruction, a poor complaint handling process and a lack of licenses to fundraise.
The investigation states: “Based on the complaints we received we were not able to establish ISU was solely engaged in selling magazines. Instead, the complaints suggested that ISU vendors were conducting street fundraising activities without the necessary licences and permissions.”
Gerald Oppenheim, chief executive of the Fundraising Regulator, said it was “potentially harmful to the public and risks bringing the sector into disrepute.”
Second investigation into the social enterprise
The Fundraising Regulator concluded an investigation into ISU’s fundraising activities in January 2022 after it received 15 complaints from members of the public over two years about the company’s practices.
Its investigation found six breaches of its fundraising code. It said ISU did not have the correct licenses to fundraise, placed “undue pressure” on the public to donate, and recommended its directors to review the learning from the investigation.
Following this, it convened a meeting of stakeholders including the Metropolitan, City of London, and British Transport Police who had also received complaints about ISU from the public.
Last November, magistrates fined ISU for five offences for approximately £665, according to media reports.
However, within six months of the investigation concluding, the regulator received 21 more complaints about ISU.
In June 2023, Fundraising Regulator launched its second investigation into the CIC after it failed to receive a response from the organisation when it reached out months before.
‘Harassed and intimidated’
The complaints had the recurring themes of ISU youth vendors obstructing people’s paths or shopfronts to talk to them, soliciting donations, using pressurised fundraising techniques to increase donations and engaging in fundraising without the necessary licenses.
One complainant to the Fundraising Regulator said a youth vendor approached them and asked for a “contribution”. When asked if ISU was a charity, the vendor said it was. Upon asking why the vendor was not displaying the charity’s registration number, a heated exchange took place with the vendor's manager.
The manager started to film the complainant with a mobile phone and the complainant said they were prevented from leaving, making him feel “harassed and intimidated”.
‘Misleading the public’
Oppenheim said: “Our investigation of Inside Success Union has found significant breaches of the Code of Fundraising Practice, not only concerning the behaviour of its fundraisers, but also its inadequate complaints process, misleading the public, and not appropriately responding to the Fundraising Regulator’s previous judgments.
“As a result, we are working closely with statutory bodies and other regulators to protect not only the public, but also the wider charitable sector.
“At a time when many charities are under significant financial pressures, yet continue to comply with legal requirements and uphold the high standards we have come to expect in the fundraising sector, it is deeply disappointing that ISU has not chosen to respond appropriately to our first investigation, and has continued to engage in behaviour which is potentially harmful to the public and risks bringing the sector into disrepute.”
Councillor and deputy leader of Manchester City Council, Luthfur Rahman, said: “The activity of on-street vendors working for Inside Success Union (ISU) completely undermines the legitimate work of the charity sector in Manchester and across the country - which could very well mean fewer people engage with charitable causes in the future and limit the positive impact the sector can have in our communities.
“In Manchester we will always welcome philanthropy and generosity, but we will also ensure that this money makes it into the hands of people who will put it to good use.”
Louise Smyth, regulator of Community Interest Companies, said: “As the Regulator of Community Interest Companies (CICs) one of my main priorities is to make sure the CIC brand stays strong. I expect all CICs to comply with any legal obligations or regulations to which they are subject whilst they deliver benefit to the communities they serve.”
ISU did not respond to a request for comment.
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