Posted on

New Fundraising Regulator About To Start Work

The new Fundraising Regulator will commence its work in regulating charity campaigns this month.

The precise date is yet to be confirmed, but when it is, the Regulator will take over complaints about charities’ fundraising tactics from the Fundraising Standards Board (FRSB). It will also take control of the Code of Fundraising Practice, currently administered by the Institute of Fundraising (IoF), and the Fundraising Rule Books, which at the moment are the responsibility of the Public Fundraising Regulatory Association (PFRA); those two bodies are also due to merge this summer.

Unsurprisingly, charities are keeping an eye on these changes, and there is some concern about what their implications might be, for, amongst other aspects of donations, charitable, or society, lottery campaigns. But what has brought them about?

You will no doubt be aware of the media firestorm in recent years – particularly the last year – surrounding the methods charities use to elicit donations. Some of you will remember the case of Olive Cooke, the elderly poppy seller who tragically died in May last year, amidst allegations that she had been “hounded” by charities asking for donations. Whilst her family did not believe that charities were directly responsible for her death, they told the subsequent FRSB investigation, which reported in January this year:

We are very grateful that there has been an investigation into charity fundraising practice and are pleased that there have been changes to the Code of Practice as to how charities fundraise, as well as changes to the law to prevent elderly and vulnerable people feeling pressurised to give when they can’t. We want Olive to be remembered for her incredibly kind, generous and charitable nature. Far from being a victim, she was a strong believer in the importance of charities in UK society and local communities. At the same time, she was concerned about the amount of letters and contact that she was receiving from charities and we are sure she would have been very upset to know that her details were being shared or sold by some charities who she had agreed to support.

Olive’s death led to the Government commissioning the review by Sir Stuart Etherington, Chief Executive of the National Council for Voluntary Organisations, into the self-regulation of charity fundraising. That review took evidence from stakeholders in order to identify what changes were required to rebuild public trust in fundraising by charities. It was closely followed by the FRSB’s investigation, which looked specifically at Olive’s case, and by a report of the House of Commons Public Administration and Constitutional Affairs Committee, which was also published this January.

The Etherington Report and other investigations all identified shortcomings in fundraising practices, lessons to be learned and the need for more effective regulation. In Olive Cooke’s case, it emerged that she had received 466 charity mailings in the year leading up to her death, that some 99 charities had her details, and that approximately a quarter of those had passed them on to others, the overwhelming majority either without her consent or with only “assumed consent”. The default position of most charities was that the onus was on the donor to initiate an opt-out of data sharing, without clear guidance on how to do it. In addition, charities were failing to provide adequate opportunities for donors to opt out of future mailings.

The Government accepted Etherington’s recommendations in full. These included:

The abolition of the FRSB and the establishment of the new Fundraising Regulator which will no longer have a membership structure, but instead a universal remit to adjudicate all fundraising complaints and stronger sanctions for non-compliance;

  • The speedy merger of the IoF and the PFRA;
  • More focus on best practice and compliance by the merged IoF-PFRA body;
  • The move of the Code of Fundraising Practice into the new Fundraising Regulator;
  • A new Code of Practice, clearly aligned with the Charity Commission’s guidelines on charities and fundraising;
  • A move by fundraising organisations towards adopting a system of “opt-in” only, in their communications with donors;
  • The creation of a registration “badge” which organisations can display as a sign of their commitment to regulation and high standards; and
  • The creation of a “Fundraising Preference Service” (FPS) which will enable members of the public to prevent the receipt of unsolicited contact by charities and other fundraising organisations.

The changes this month, then, will bring these recommendations to fruition. The new Fundraising Regulator will assume responsibility for handling all complaints from members of the public and it will also start work, in collaboration with the newly-merged IoF-PFRA body, on drafting the new Code of Practice, although that process represents a significant piece of work and is expected to take some time. It will also develop the FPS and be responsible for operating it.

The FPS will complement the existing Telephone Preference Service (TPS), which is statutory, and the Mail Preference Service, which is not. It will enable those who are identified as vulnerable, and their families, as well as those who are aggrieved by being approached by charities, to opt out of being contacted. In future, charities will need to check the FPS as well as the TPS before contacting a potential donor.

The idea is to move towards a position where positive consent to being solicited will be required – this approach will be brought into force in any event in 2018 by the European Data Protection Regulation. Even if Britain were to leave the EU, positive opt-in is a concept favoured by the current Government, so it is likely to remain the ultimate objective in any event. In the interim, though, quite how negative opt-out will evolve into positive opt-in is something which the new Regulator will have to work out.

The new Regulator’s stated aims are to:

  • Be more accessible, providing a single point of contact for members of the public to register any concerns they may have about fundraising activities;
  • Put the public in control by making it easier for them to manage fundraising communications with charities;
  • Be more independent, ensuring that a wide range of views are reflected in the new Code of Practice and Rule Books;
  • Be collaborative, by working with the IoF and other sector stakeholders to share issues and trends in fundraising practice and identify areas where sector support on regulatory issues is needed; and
  • Strengthen regulatory partnerships, by working with the Charity Commission and other UK regulators such as the Gambling Commission, to share information and refer cases where wider governance issues arise.

The Regulator will be able to name and shame organisations that transgress, prevent them from carrying out certain types of fundraising for a period, and apply other sanctions, such as ordering compulsory training. It is expected to cost between £2 and £2.5 million a year to run, and these costs will be covered by charities themselves, via a levy that will depend on their fundraising spend – those that spend over £100,000 a year on fundraising will pay the highest rate.

Some charities have voluntarily changed their means of soliciting donations in recent times, in response to the various investigations and media criticism. Oxfam have stopped doorstep recruitment altogether, the RNLI and Cancer Research UK now only use a positive opt-in across all channels, and the Red Cross and Age Concern have signed up to renewing supporters’ consent every two years. This notwithstanding, there is widespread concern in the sector about the impact the changes will have, with some taking the view that they represent “a sledgehammer to crack a nut” by, effectively, punishing everybody to tackle the methods of a few.

Of course, lotteries represent an important fundraising stream for charities, and more and more are entering into the lottery market. The new Regulator’s Head of Policy, Gerard Oppenheim, was invited to speak at the recent Lotteries Council Annual Conference, and he fielded a series of anxious questions from the floor. He made it clear that, where lottery tickets are “primarily sold to raise money”, they will be treated as a donation, and thus will be subject to the scrutiny of the Regulator surrounding the way in which they are sold. It is difficult to see why lottery tickets would be sold for any other reason, and thus society lotteries will be subject to the new regime across the board, should a member of the public choose to complain about the way in which they are promoted.

Mr Oppenheim did recognise that society lotteries are already highly regulated, whether by the Gambling Commission or local authorities, and pledged to avoid “double regulation”. However, the new system will inevitably lead to an additional layer of control and further compliance issues for charities to worry about. Once the IoF and PFRA are merged, the intention is to produce fresh training and support in order to assist charities in coping with the new requirements. Quite how effective this is, and how it is disseminated, remains to be seen.

As matters stand, the Fundraising Regulator will have no jurisdiction in Scotland, and will only operate in relation to England, Wales and Northern Ireland. A decision in Scotland is expected in the summer, and Mr Oppenheim made it clear that the Regulator’s preference is for a UK-wide scheme to apply. This would certainly make sense in the interests of consistency and would assist those larger charities that operate nationwide, meaning that their obligations on both sides of the border would be the same.

Some say that the new rules will cost charities £20 billion in donations, and predict that some 30 million people will sign up to the FPS. Mr Oppenheim dismissed these estimates as “wild” and expressed the view that the FPS system would “fall over”, were this to be the case – it would simply not be able to cope. He also made the point that the FPS will enable members of the public to choose not to be contacted by certain charities, whilst remaining accessible to others.

The fact remains that the new scheme will undoubtedly have an impact on charities – representing, at the very least, an additional cost – and society lotteries look likely to be affected. As some delegates at Conference pointed out, they are already subject to a high degree of regulation, are competing with commercial entities, and are not eligible for Gift Aid. The precise effect of the changes remains to be seen and the devil will be in the detail of the new Code of Practice, complaints that are made to the Fundraising Regulator, its adjudications, and sanctions applied.

Worse may yet be to come – the Government has, in the Charities (Protection and Social Investment) Act 2016 which received Royal Assent in March, reserved various powers to the Minister, Rob Wilson, to impose levies and new regulation on charities if they don’t toe the line. The new Fundraising Regulator represents, Government says, the last chance for the self-regulation of the charity sector.

We will continue to monitor the situation and will update you when the new system comes into effect.