23 September 2019 - Article
The Fundraising Regulator has published its final proposals in relation to the levy imposed on charities to pay for its running costs and the Fundraising Preference Service (the 'FPS').
FUNDRAISING REGULATOR LEVY
From 1 September 2016, all charities who spend over £100,000 a year generating voluntary income will be liable to pay a levy to the fundraising regulator.
The levy is payable on a graded basis starting at £150 a year for charities spending between £100,000 and £149,999 on generating voluntary income rising to £15,000 for the two charities who spend over £50 million a year. The amount payable is based on figures included in 2014 Charity Commission Annual Returns and will be fixed at that level until September 2019.
Exempt charities in England and Wales are due to pay a fixed amount of £1,500 irrespective of their spend on generating voluntary income. Exempt charities include a wide range of charities including universities, academy trusts, foundation and voluntary schools, further education corporations, certain museums and galleries (such as the British Museum, the National Gallery, the British Library and the Royal Botanic Gardens, Kew) and social housing providers operating as Industrial and Provident (Community Benefit) or Friendly societies. The rationale for a blanket fee for exempt charities is that, because they are not registered with the Charity Commission, they do not complete annual returns and an independent source of their fundraising spend is not available.
The Fundraising Regulator's comments in relation to exempt charities have focused on universities, almost all of which are exempt charities with HEFCE as their primary regulator, and it has been agreed that the 18 universities who are registered with the Charity Commission will pay the fixed levy rather than the graduated scale.
What is not clear is the position for other exempt charities, many of which are unlikely to spend funds generating voluntary income, such as academy trusts or foundation and voluntary schools. The Fundraising Regulator is in the process of writing to all charities who it expects to pay the levy and if such charities do not receive the letter, they will not be expected to pay it. Equally, if charities are asked to pay the levy but do not consider that they should, perhaps because they do not carry out fundraising activities or do so on a very small scale, with the appropriate evidence, the Fundraising Regulator may agree that such a charity does not need to pay. It would seem unfair that exempt charities are prejudiced simply because they have a different primary regulator and reporting requirements.
It is worth noting that the Fundraising Regulator is a voluntary scheme of self-regulation and charities are not legally obliged to contribute towards the levy. Having said that, the Fundraising Regulator may publish a charity's refusal to pay or notify the Charity Commission of that refusal. The Government also has a reserve power under the Charities Act 2016 to require charities to pay the levy.
Charities outside the scope of the levy can choose to voluntarily register with the Fundraising Regulator paying a fixed fee of £50 per year.
Fundraising agencies will also be encouraged to join the fundraising regulator paying a registration fee on a sliding scale based on income starting at £100 for those with an income of under £100,000 and rising to £1,200 for agencies with an income of over £1 million.
The full report in relation to the levy is available here.
FUNDRAISING PREFERENCE SERVICE
We now have some more detail about the long-awaited FPS released in a report by the Fundraising Preference Service Working Party and the Fundraising Regulator has agreed with the recommendations made.
Individuals will be able to register with the FPS; it will be on an individual basis rather than a household basis. An attorney appointed under a lasting power of attorney will be able to register a vulnerable person, but otherwise the registration must be made by the individual personally.
When individuals register, they will not be asked if they want to exempt any particular charity or fundraising organisation. Rather, organisations who have received a donation from an individual in the past 12 months will have the opportunity to make contact and ask the individual whether the registration with the FPS was intended to cover that organisation within 28 days of registration. Registration will not prevent organisations from contacting the individual where an individual provides fresh consent to being contacted after the registration date.
There will also be an option to indicate specific organisations from which the individual does not wish to receive fundraising communications, rather than a blanket opt out.
The registration process will also signpost to existing preference services such as the Telephone Preference Service ('TPS') and the Mail Preference Service ('MPS'). Unlike the TPS and MPS, registration will be time-capped to two years. The FPS would contact people three months before their registration lapsed.
Individuals registered with the FPS cannot be contacted by telephone, post, text or e-mail (unless they subsequently provide fresh consent) in respect of any 'fundraising communication'. The definition of 'fundraising communication' for the purposes of the FPS is different to that used by the ICO for data protection. A 'fundraising communication' for the FPS is one where the core purpose of the communication is to raise funds. This means that newsletters, update emails or member magazines, which often include an associated fundraising ask, would fall outside of the scope of the FPS. Raffles and lotteries will fall within 'fundraising communications' but the working party did not reach a conclusion on how trading communications should be treated.
The FPS will not apply to door to door fundraising or social media communications, but the working group suggests that the Fundraising Regulator may want to extend the scope to door to door fundraising and unaddressed mail in due course if problems continue.
Not all organisations will need to screen their contact lists against the FPS; this requirement will be on the basis of the level of expenditure on direct marketing activity. The working group considered that expenditure was a reasonable indicator of the volume of the activity. It is anticipated that the threshold set by the Fundraising Regulator will be organisations who spend over £100,000 a year on generating volunteering income – ie those liable to contribute towards the levy discussed above. The Fundraising Regulator has also suggested that those with a lower fundraising spend could still subscribe to the FPS 'voluntarily to show commitment to good fundraising practice'. Compliance with the FPS will be included as a provision of the Code of Fundraising Practice.
It is expected that the FPS will be operational in early 2017.
The proposals have already been criticised by some in the sector. The Institute of Fundraising is concerned about the plan to allow charities to contact existing supporters who have signed up. They fear that this may lead to increased costs for charities and lead to a worse experience for supporters.
The full report on the FPS proposals can be found here.