It’s now just over a month since the report of Stuart Etherington’s fundraising review was published. There has been a huge amount of comment since then and not least a range of voices about its implications for the sector. So here are my thoughts now the dust is beginning to settle.
The next few years are going to see a huge change in approach to fundraising self-regulation. While it remains self-regulation, the change in style is about as dramatic as I can imagine without becoming statutory regulation. The last few years of self-regulation could be characterised as relaxed parenting: the kids went to bed when they wanted, discipline was mild to non-existent and the rules of the house were such that no child had much difficulty in meeting them. The new regime is going to be strict bedtimes, supervised homework, and harsh punishment for minor infringements.
But what about the individual elements of the proposals?
The Fundraising Regulator. At the heart of the new regime is the Fundraising Regulator. Getting this body right will be absolutely critical. I am not convinced that getting rid of the old body, the FRSB, to replace it with something that is remarkably similar, makes a huge amount of sense. It certainly makes the transition to the new regime that much harder. Rather than evolving the FRSB with new staff, new budgets and the like we have revolution, not evolution, meaning greater cost and longer timescales. A further concern is that the budget for the new regulator of £2.5 million to be raised from membership of charities looks entirely unrealistic. It’s 2.5 times bigger than the income NCVO receives from its members – so reaching it will be a super tough ask. Let’s hope government or grant-makers will chip in.
The Code of Practice. Its good to see that the Code of Fundraising Practice will now be independent of the Institute of Fundraising. Expect a raft of changes to reduce the feeling from donors that they are hounded by charities. Necessary as some changes are, the speed of their introduction runs the risk that the pendulum swings too far or too quickly toward the interests of donors. Less ‘asking’ means less fundraising, which ultimately means less money raised
The Fundraising Preference Service. Along with many fundraisers, it is the Fundraising Preference Service that worries me the most. I have a new motto. When people say ‘the devil is in the detail’ or ‘we needed to consult the sector first’ be very concerned. The issues with the FPS are sizeable. My biggest worry is that people will be peeved by the activities of a single charity and sign up to FPS and none of the existing charities they support will be able to contact them again.
If the sign-up patterns are anything like those for telephone or mail preference service we can expect charities to be stopped from talking to millions of their existing supporters. FPS will require tens of thousands of charities to be screening their databases on a regular basis against the FPS list. This will increase costs and hassle enormously. It’s worth bearing in mind that while the Code of Practice can tighten and then relax its requirements on charities, once a donor has said I don’t want to hear from charities there is no going back. A generation of donors could be permanently removed from important communications with the charities they support.
While I fully support the other key recommendations of the review I don’t support this as it stands and would advise charities against taking part. At the very least, I would leave its introduction until the new regulator is up and running in a few years’ time.
The people involved. Getting the right people at the heart of the new Fundraising Regulator is critical. I really hope Andrew Hind will agree to be chair of the new body. I struggle to think of anybody better. We need people who know about charities, regulation and fundraising in those jobs. Knowing our luck, the new people responsible for the regular will have probably just run a financial services company and have raised money in a couple of marathons as their credentials!
Getting from here to there. The transition from the current regime is not going to be quick or easy. My guess is that it will take two years before the new regulator is up and fully-functioning. Don’t forget that charities need to be signed up, staff recruited, and much more. Will FRSB staff hang around in that period, or could we be left with even less regulation in the interim?
Be in no doubt that charities will raise less money as a result of these changes.
The real question is by how much, not whether, income from individuals will fall. Tighter regulation means making it harder or more expensive to do the ‘asking’ that is the pre-requisite of fundraising. I would be surprised if the drop in income from individuals were less than 10% and it could be much more than that for some charities, depending on their fundraising strategy.
Innovation and diversification of fundraising away from those techniques that rely on directly asking individuals will become absolutely vital. Just as austerity begins to bite even deeper in terms of government funding, fundraising from the public is also going to become much harder. Tough as this may be, the fundraising sector has only itself to blame for not doing more in the past few years to listen to public and donor opinion.
I agree that £2.5m funding for the new Regulator will be difficult to raise from charities by annual subscriptions. A much more cost-eefective funding mechanism would be a 0.2% levy on Gift Aid tax refunds. This would spread the levy across many more charities (c60,000), giving greater "ownership" by the sector.
I didn't read Etherington's proposals as implying a wholesale abandonment of the FRSB, but its evolution into a transformed body with greater powers, building on its existing experience.
The proposed FPS will need to complement the MPS/TPS covering other media (SMS, email). Perhaps there should be a duty on all charities to check their existing donors' communications preferences every 3 years, rather than allowing a blanket "no communications from any charities" rule. Whatever happens, the charity sector needs to ask why it is necessary to treat it differently to the rest of the direct marketing industry (eg banks, travel, cars).
Joe is spot on to highlight the risks in the Fundraising Preference Service. The simplest fix and biggest mistake would be to base it on the Telephone and Mailing Preference Services. Ths risks that generous donors might inadvertently opt-out of hearing from charities that they are happy to support are hard to overstate. We need some very careful thinking to get any opt-out choices right.
Surely a key principle should be that restrictions on charity marketing/comms should be no greater than the restrictions placed on the coporate sector.
In fact they should probably be less - as people are unlilely to pro-actively opt in to receive charity appeals the way they might opt in to receive marketing materials of products they might want to buy.
At present though the proposed restrictions on charities potentially go much furhter than those on the private sector. It seems, for example, unthinkable that a preference service would be set up allowing people to opt out of any communication from any trading company.