The local infrastructure body Navca has criticised the Fundraising Regulator for failing to give enough information about how it plans to spend charities’ money and for not trying to recruit board members with experience in smaller charities to its board.
Responding to a consultation on how the regulator should raise funds from charities, which closes today, Navca says the regulator should provide more information about the measures it has in place to keep expenditure down before deciding how it will raise funding.
It also says it is disappointed that there has been "no attempt to recruit board members with any experience or understanding of smaller charities and community groups", saying that they are deeply affected by any fundraising activity that erodes public trust in charities.
The umbrella body writes in response to a discussion paper published last month by the regulator, which said it favoured levying an annual charge on about 2,000 charities that spend £100,000 a year or more on fundraising, with the largest of these facing payments of £10,000.
"We feel that this paper contains a lot of information about how money can be raised but offers very little information about how the money will be spent or why it is needed," Navca’s submission says. "If this were a funding application it would be rejected."
It says Navca considers it a particular concern that the regulator has not said who sets its annual budget and how it will be independently monitored, arguing that the regulator will have no incentive to reduce expenditure if income through a levy is always readily available.
It also say it is dismayed that the regulator thinks it is appropriate to pay its board members, who receive £300 a day for their work, because although the regulator is not itself a charity, it should follow best practice in the sector in order to avoid damaging public trust in charities.
Navca also criticises the regulator for saying in its discussion paper that it wants to build up reserves. The body says in its response that it makes the regulator look "out of touch" with the reality faced by charities that are spending rather than accumulating reserves.
It says that it opposes the regulator’s proposal to charge charities that spend less than £100,000 a year on fundraising a £50 registration fee, saying registration should instead be free for such charities because this would maximise the number of organisations that would be supported to follow best practice. "Charging for registration incentivises the regulator to use it as a way to raise income," it says. "It can also create a divide between those who can afford a ‘badge’ and those who cannot."
Navca also objects to the regulator’s suggestion that charities that refuse to pay the levy could increase the cost for those organisations that pay it, saying: "The failure of the regulator to collect the levy and/or make a robust case to charities for payment should not be borne by charities."
The regulator also received a submission from the Institute of Fundraising, but a spokesman for the body declined to share this with Third Sector. In a statement summarising the body’s position, he said it supported the proposed model set out in the paper but had some concerns about the impact the regulator’s proposed "banded levy approach" could have on charities at the upper and lower ends of each band.
"We would encourage the Fundraising Regulator to keep an eye on how this operates to ensure the system functions in a fair and transparent way," he said.