The Fundraising Regulator has almost doubled its spending forecast for its first 15 months of operation to £2.5m, about half of which will be spent on setting up the Fundraising Preference Service.
The regulator’s budget for the 15 months to March 2017, which was published on its website yesterday, shows that it plans to spend significantly more than the £1.4m it was previously anticipating to spend over the same period, according to an earlier version of its budget obtained by Third Sector in June.
The new budget also shows that the regulator now plans to spend £1.2m on the set-up costs of the FPS, up from the £200,000 it was forecasting in the previous budget.
Third Sector has reported that several large charities were concerned so little was being budgeted for the FPS because the kind of service favoured by the sector – multi-optional and tailored to people’s preferences – would require substantial investment.
The increased sum appears to reflect the regulator’s decision to develop a more nuanced FPS than was previously planned. The regulator’s final proposals for the service, published last month, revealed that the FPS would give donors the option to specify the charities they did not wish to hear from as well as to block all fundraising communications.
The Fundraising Regulator has also revised down the amount it plans to hold in reserve by March 2017 – from £810,000 to £495,000 – after being criticised by the sector for amassing such a large sum over a relatively short period of time when many charities are struggling to balance the books.
The regulator notes in the latest budget that "any surplus will be returned to charities if the FR does not continue".
Asked why the reserves were still relatively high, a spokesman for the regulator said it was "prudent financial management" to ensure that the body would be able to meet its obligations to staff in the case of closure. He said it was also a requirement of the licence agreement at the new offices in London's Old Street, into which the regulator moved earlier this month.
The amount the regulator intended to spend on board and governance costs also caused anxiety among charities when the last budget emerged. Instead of revising this down, however, the regulator has slightly increased this figure – it includes "board expenses and fees", including the chief executive’s salary – from £142,000 to £166,000 by next March.
Some of this money will finance the £300-a-day fee paid to each of the body’s board members.
The budget shows that the regulator also plans to spend £94,000 on "public relations costs" during its first 15 months.
Since April it has been working with the communications firm Pagefield, whose founder, Mark Gallagher, is a former colleague at ITV of the regulator’s chair, Lord Grade.
The budget shows that the regulator expects to receive £2.4m by next March from a levy on charities that spend more than £100,000 on fundraising.
It anticipates that it will receive £500,000 from the first month’s levy income in October, increasing to £600,000 in November and £750,000 in December. It expects the amount to fall to £550,000 in January 2017.
It notes that it is in discussion with HM Revenue & Customs about gaining an exemption from VAT charges on the levy.