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Self-regulation of charity fundraising: will it work?

Whilst the public supports UK charities with generous donations to help them provide a huge benefit to the community, many charities – some of them household names – have increasingly maximised their fundraising using methods which the public find unacceptable. It appears from the way that some charities act that they consider their admirable aim of raising funds to help their beneficiaries somehow justifies aggressive or other dubious means of fundraising by those charities.


How has this come about?

It might be deliberate policy of trustees to fundraise in that way. It might be that whilst charity trustees do not decide that their charity should act in that way, their fundraising staff or volunteers choose to be “over enthusiastic” or cut corners. Charities often engage commercial businesses as contractors to carry out fundraising for them. They are often paid on a results basis, and they may be incentivised by this to act in an “over enthusiastic” manner or worse.

Whether it is the charity’s staff, volunteers or its contractors which are at fault, it remains the responsibility of the trustees to supervise them and to avoid  unacceptable fundraising practices.  It is understandable that charities want to maximise fundraising, and many of them have to compete with other charities for support from the public but the public is entitled to expect charities to use generally acceptable methods and to operate in a way which conforms to clear standards. However, even if one leaves aside the issues about moral or legal acceptability of certain fundraising methods, use of questionable methods by charities may be counter-productive for them: it tends to lead to public disapproval of those methods, charities lose public trust and confidence, their reputation suffers, and the public becomes more reluctant to donate to them. So, just in terms of pragmatism, in the long term it is therefore in a charity’s overall best interests to adopt acceptable fundraising methods.

Public and media complaints

A survey carried out by Harris Interactive for the Third Sector website early in 2016 found that recent stories in the media about charities’ fundraising methods had made 22% of the public much less likely or slightly less likely to donate, and amongst those over 55, this rose to 35%.

A great deal of media criticism has been directed at some charities’ fundraising practices in recent years, particularly since the case of Olive Cooke who died in May 2015 after being distressed and overwhelmed by requests from charities by post and phone for donations. As a result the Fundraising Standard Board investigated the issues raised by complaints received by the Board, and it made a number of findings.

Over a third of the complaints related to approaches by charities being made to elderly people; it was felt that some charities targeted elderly people as a “soft touch”.  Significantly over 40% of complaints concerned the frequency of requests for donations by particular charities. 70% of complaints related to direct mail activity. A substantial percentage of complaints related to the issue of whether consent to be contacted by a charity had been freely given, for example many opt in / opt out statements were difficult to read. A number of complainants also cited the fact that when they received a request by phone to donate, the script used by the charity during the call made it difficult for the recipient of the call to say “no” to donating. Also highlighted was the practice of charities sending free gifts with mail packs which recipents feel are a waste of the charity’s money and a means of inducing  guilt if the recipient does not donate.  Some people complained that despite being registered with the Mailing and Telephone Preference Services, they still received mail or calls from charities.  Another major concern of the Board was that some charities communicated with actual or potential donors using contact data which, without the knowledge or consent of those donors, had been passed to those charities by other charities or by commercial organisations.

Prior to the Board’s investigation about direct mail, email and phone contact with donors, there was also widespread criticism about the ubiquitous presence of (and sometimes intimidation by) so-called “chuggers”  – those engaged by a charity to approach potential donors in the streets to collect cash donations or sign up donors to donate by direct debit.

So,  what changes are being made?

The Harris Interactive survey found that there was a strong public appetite for tighter self-regulation of fundraising. As outlined below, controls on charity fundraising are now changing so that unacceptable fundraising practices will hopefully be eliminated or at least significantly reduced. All charities will now have to adopt acceptable means of fundraising.

The Fundraising Regulator was set up in response to recommendations made in September 2015 by the Cross-Party Review of Fundraising Regulation. 45 of the UK’s largest charities agreed to contribute to the start-up costs of the new Fundraising Regulator. As from 7th July 2016, the responsibility for regulating charity fundraising passed from the Fundraising Standards Board (FRSB) to this new body which is now responsible for the self-regulatory regime for fundraising. The new Fundraising Regulator will deal with all new complaints raised about charity fundraising. This new body also takes control of the Institute of Fundraising’s Code of Fundraising Practice and the Public Fundraising Association’s Rule Book. For the first time, responsibility for all the different aspects of regulating fundraising will be centred in one organization. It will be able to take various steps in response to complaints which it upholds, including naming and shaming charities if it finds that they have not met the standards set out in the Code of Fundraising Practice.

The Fundraising Regulator and the Charity Commission have recently signed an MOU which sets out the criteria to be met for the Regulator to refer complaints to the Commission. If a charity repeatedly fails to respond to the Regulator’s rulings, it will refer cases to the Commission so that it can consider whether there are serious shortcomings in the charity’s governance.

The Cross-Party Review hoped that this beefed up new self-regulatory regime would lead to significant improvements in the fundraising methods adopted by charities. However, the Review also considered that it might yet prove necessary to implement statutory regulation of charities’ fundraising practices. Parliament therefore amended the Charities Act 1992 to create a reserve legal power for the Government to make Regulations compelling charities to comply with the requirements of a specified regulator. Under the new voluntary system, it is not compulsory for charities to sign up to be bound by rulings of the Fundraising Regulator. If this voluntary regulation fails, there is now power under the 1992 Act to make Regulations requiring charities to sign up to abide by the requirements of the Fundraising Regulator. The Regulator could in future thereby be given more teeth. Alternatively, Regulations could pass full responsibility for fundraising regulation to the Charity Commission.

Will the changes work?

It remains to be seen whether the new system of self-regulation will work. Will there now be sufficient compliance by charities with the Code of Fundraising Practice on a voluntary basis, or do you think that the Government should have established statutory regulation now rather than wait to see how well the new improved self-regulatory system works?

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