ACEVO full response to Fundraising Regulator consultation
Friday 22nd July 2016
Funding the Fundraising Regulator: A consultation response from The Association of Chief Executives of Voluntary Organisations (ACEVO)
1. On the implications of a new charitable regulator for fundraising
1.1 Civil society has altered significantly over the last few decades. The sector’s scope and professionalism has increased while the environment in which it operates has become ever more complex, both in terms of delivering services and speaking on behalf of its beneficiaries.
1.2 There are over 160,000 registered charities in the UK, many providing vital community services at grassroots level. Only a very small percentage of these organisations are raising voluntary income in a way that is unethical.
1.3 Over the last eighteen months a small number of worrying examples of poor fundraising practice have understandably drawn significant media attention. These concerns mainly focus on the actions of high street fundraisers (chuggers) and the conduct of third party call centres working under contracts from large charities. This has led to a misconception that the charity sector is under-regulated.
1.4 Serious complaints need to be investigated as a priority and action should be taken to prevent them from happening again. However, it is important to recognise that registered charities must already comply with a number of statutory regulations and governance procedures. They are also accountable to the Charity Commission which has responsibility for ensuring that charities’ legal obligations are met and to take enforcement action when misconduct is identified. In addition to the Charity Commission, many organisations in the sector are regulated by public service regulators like the CQC and Ofsted. The Charity Commission has not always been an effective regulator, and ACEVO has previously called for improvements to be made to the Commission’s Board in order to expand its expertise and make it more representative of the organisations it represents.
1.5 Charities are not inherently anti-regulation – indeed most are content to bear a burden of regulation in recognition of its importance to ensuring that their beneficiaries are well served. We understand the virtue of having a tough new regulator and being seen to have a tough new regulator. However, as currently posited there is a real risk of disproportionate regulation by multiple regulators. The sector’s regulation must be proportionate and the relationship between the new regulator and the sector must be seen in light of the multiplicity of regulatory relationships that currently bind our charitable organisations. We must not let red tape kill the sector we love.
2. The question of a levy
2.1 The question of how the regulator is to be paid for is tied to the above analysis. With so many regulatory burdens that have financial implications in terms of compliance, we should be chary of adding yet greater burdens that prevent the discharge and operation of the good: this sector’s stock in trade.
2.2 We must also prevent leaving ourselves open to criticism. With charity back office costs a subject of considerable debate, we are concerned that, in the event of a compulsory levy that pays for regulation, donors will be confused as to why their donations are by operation of law compulsorily funding regulation, the office of the regulator, the events of the regulator and the regulator’s staff, items which are popularly – and in most cases properly - regarded as the proper duty of government to provide.
2.3 We further consider that donors are more likely to be understanding of a situation where a charity to which they give explains of its own volition whether it has chosen to financially support the fundraising regulator through donations - or not.
2.4 There are good arguments on both sides and we consider that ‘the rule of thumb’ when dealing with an independent sector should be that it is for independent organisations to make those arguments themselves to their supporters and public, not for the state to blanket-impose what is effectively a new tax on charitable giving unilaterally.
2.5 As such we can see no good reason, other than the convenience of the regulator, for financial contributions to regulatory bodies to compulsorily come from charitable donations, which have been freely given by the British public, not to pay for regulation, but to do social good. We contend that the levy should be voluntary and that it should be left up to individual organisations to decide, based on their own operational parameters, whether such a cost is justifiable or necessary.
2.6 This model may sound difficult to generate reliable incomes but in fact it has precedent. A similar model is operated by the Advertising Standards Authority (ASA). The ASA offers a proactive model of regulation that aims to prevent breaches from occurring in the first instance, rather than simply acting to remedy them after the event. In addition to enforcing regulations and dealing with complaints, the ASA provides advice and training to the sector, including providing advice to advertisers prior to ads being run. They also offer a number of training events, to increase knowledge of regulation, and thus improve standards. This model is also highly effective, with few organisations opting not to pay – despite the fact that all contributions are blind, so the ASA do not know who pays and who does not.
2.7 If the Fundraising Regulator operated a similar proactive model to the ASA, then many charitable organisations would choose to pay the levy. The cost would not be seen as a burden on limited funds that should be made available to beneficiaries, but instead a worthwhile investment to ensure effective and appropriate fundraising practice.
2.8 We remark further that the Fundraising Regulator must demonstrate how it plans to add to the existing regulatory framework, and it must work in partnership with the sector to raise standards. A voluntary levy would encourage the regulator to engage with the sector, who in turn would be grateful when bad practice is properly confronted and would welcome engagement and support to keep practices fresh. Charity regulation has lost its way and become obsessed with ‘policing’ when a sector as diverse as this often requires support to ensure bad practice does not happen in the first place. The fundraising regulator, funded by voluntary contributions, would be a testament to this principle and a welcome counterpoint to the other regulators in this ever more crowded space.
3. Selected ACEVO member views
3.1 Operating under a voluntary levy system would also address many of the other concerns that have been raised to us by members of ACEVO, examples of which are given by direct quotes from our consultation of members, as follows:
3.2 On the disproportionate burdens that the levy could represent for smaller and medium sized charities: “The way the banding and levy rates are set in the proposal paper penalises smaller and mid-sized charities who pay between 0.015-0.2% of their income raised as levy. Whereas the significantly larger charities, although paying more in cash, are paying proportionally less. This feels regressive and unfair.”
3.3 Concern was expressed that money may have to be diverted away from core and front-line activity: “Small charities can ill-afford to waste money on a levy, and for the most part do not indulge in the practices which were originally criticised.” This submission goes on to outline fears that there will be inevitable mission-creep: “. . . there is a risk that such a bureaucracy will feel a need to extend its remit . . . Indeed, the consultation papers refer to consideration of ‘exempt’ bodies such as museums and HEFCE regulated bodies . . . Only a matter of time, then, before all charities (exempt or otherwise) pay a useless levy to what used to be known as a quango.”
3.4 Elsewhere questions were raised about the vagueness of definition. “. . . what counts as 'Fundraising spend'- does this include salary costs? . . . different charities count different expenditure as 'fundraising'.”
Interim Chief Executive
Association of Chief Executives of Voluntary Organisations (ACEVO)