A new era for fund raising

The scheme is operated by the Fundraising Regulator and allows people to opt out of receiving communications from up to three charities at a time.

It is the latest measure to be introduced to tighten up charity fund raising and was recommended in the government-commissioned Etherington Review itself set up after a slew of scandals.

The establishment of the Regulator was also recommended by Etherington. Earlier this month it extended its remit to Northern Ireland at the invitation of NICVA, a move which has been welcomed by the Charity Commissioner.

There has been an early rush for the Funding Preference Service with around 500 people signing up on day one.

However it is not without its critics. Many in the sector believe that the new regulatory regime is unnecessary and have been scathing about Fundraising Regulator chair Lord Grade who characterised some charities as “laggardly” in getting into line and mistakenly claimed that the service could be used to block all charities, instead of up to three at a time.

The fact that Lord Grade made a mistake of this magnitude in launching the service is unfortunate to say the least, but charities would be much better served ensuring their activities are beyond reproach rather than taking offence at what he had to say.

Unethical fund-raising practices have caused enormous damage to the sector. Incidents may be rare, but they have been widely covered by the media - some of what has been done is unconscionable, public trust has plummeted and MPs are threatening to get really tough.

The irony is that a tighter regime is also an opportunity because it gives fund-raisers the imperative to re-group, re-think and reinvent themselves.

The fact remains that one of the worst cases to date surfaced after the Etherington Report was published and after a group of MPs told the sector that the report constituted the last chance to put things right.

The Neet Feet case was exposed by the Sun newspaper in July of last year under the headline Charity firm hires drugged-up ex-criminals to ‘squash’ old and vulnerable for donations

The company was hired by several charities to raise cash. It operated door to door in working class areas. Staff regularly referred to residents as “trash”. The firm’s campaign manager specifically targeted people with “no cold calling” signs on their doors and encouraged his team to target old and vulnerable people boasting that he had pitched to an old man who looked “brain dead”. He urged his team to be “brutal”. Some of the team had criminal convictions and took illegal drugs whilst working.

Chuggers on the team referred to “squashing” donors and “boxing them in” to get them to sign up.

Neet Feet raised money for eight charities. Action for Children, Home Farm Trust, RNIB, Save the Children, Smile Train, The Children’s Trust, Unicef and World Animal Protection.

The story broke shortly after the Regulator was established and so it became the first case for it to investigate. Its findings are here.

It ruled that seven of the eight were in breach of The Code of Fundraising Practice by failing to take “all reasonable efforts” to ensure Neet Feet’s on-going compliance with the Code. The Children’s Trust was excepted.

The ruling concluded: “As part of our work on this case we have seen how the monitoring of Neet Feet’s work conducted by the charities concerned seemed in most cases to be largely focused on financial performance – how much money was raised. More attention could, and should, have been paid to the experience of the donor. Irrespective of what policies and procedures the agency had in place, from what we have seen there was a firm focus by the charities on the financial outputs of the fundraising campaigns. It is, therefore, perhaps not surprising if Neet Feet in turn focused more on the financial results than on how those results were achieved.”

It added: “one key lesson to be drawn from this investigation is that charities who contract with third-party agencies need to demonstrate to the agencies the equal priority they attach to the way in which funds are raised and the assurance they require from those agencies that they and their fundraising staff are complying with the Code.”

These press stories feed directly into public opinion.  Last year a Populus poll showed that 74% of people felt uncomfortable about some fund-raising methods.

There is, of course a tension here. Charities, by definition do good work. All are under financial pressure. Sustainable fund-raising is essential for their survival. The problem is that poor practices are not helping, rather they are undermining fund-raising not just for the charities involved, but for the entire sector.

Bernard Jenkins chair of the public administration and constitutional affairs committee  was crystal clear as to where he believes responsibility ultimately rests. He said in January of last year:

“This is the last chance for the trustees of charities, who allowed this happen, to put their house in order. Ultimately, the responsibility rests with them. No system of regulation can substitute for effective governance by trustees.”

Part of this is upholding, not just an ethos of compliance within organisations and the third parties that work for them, call centres, direct marketing companies and the like, but more than that ensuring that the ethics and purpose of the organisation is upheld in every activity, including fund-raising.

Fund raising guru Charlie Hulme, managing director of DonorVoice puts it like this:

The sector itself, as formally constituted, is in danger of extinction at its own hand.

“If we want to avoid irrelevance and extinction we need to accept we don’t have a God given right to exist and to people’s generosity.  If we’re to win their respect, admiration and trust we’re going to have to show them the same. We can start by seeking and acting on supporter commitment, identity and experience as the practical actions that lead to a permanent change for the better. Or we can adhere to ‘best’ practices that have only made things worse.

Fundraising was hard long before the summer of 2015. And from summer 2018 it’s going to be a lot harder. But it doesn’t have to be. Actually, it can be a lot easier.”

There are some great examples of charities that have thrived after adopting new approaches, based on putting donors first. The Merchants Quay homeless charity based in Dublin is a supreme example.

It recruited American specialists to re-vamp and renew its funding strategy back in 2008. Within five years the organisation experienced an annual revenue increase from €250,000 to €3 million; a donor retention rate increase from 57 per cent to 69 per cent; an active donor file of 17,000 in 2016 compared to under 2,000 in 2008; a donor newsletter response rates increase from 2.7 per cent to nearly 14 per cent. This was even more remarkable in that it was achieved at a time when the Irish economy was in meltdown. A full analysis of Merchants Quay can be found here.

The lessons are clear. Fund raising is ultimately the responsibility of trustees. They must be on top of it. Not knowing what is being done in your name is not an excuse. Public trust us eroding rapidly and that threatens future revenues. The fact that bad practice is rare is not valid reason for defensiveness. Re-building trust and revenues by putting donors needs and interests first is the way forward.