Charities that spend more than £100,000 a year on fundraising will be asked to pay a levy towards the Fundraising Regulator, with the largest facing payments of £10,000 a year, according to new proposals.
The Fundraising Regulator today opened a consultation on proposals for how it will raise funds from charities and said that it favoured levying an annual charge on about 2,000 charities that spend £100,000 a year or more on fundraising.
The charge would be set on a sliding scale, ranging from £250 a year for charities that spend between £100,000 and £150,000 a year on generating voluntary income to £10,000 a year for the 13 charities that spend more than £20m a year on the activity, the proposals say.
The regulator estimates that it would raise £2.6m a year if all charities paid the predicted amounts.
A group of about 150 exempt charities, including some English universities and museums or galleries, would be charged a flat fee of £1,500 a year.
The proposals say that the figure used to determine which category charities would fall into would be set by figures for fundraising costs in their annual returns for the year ending 31 December 2014, or the most recent date in 2014 for which a full set of figures is available.
"Using historic data to set the levy in this way will discourage organisations from seeking to evade a higher levy (or paying the levy at all) by allocating fundraising expenditure elsewhere," the proposals say.
They say that the levy charities will be charged will be fixed for each organisation from 1 August 2016 to 31 March 2019.
Setting a levy lasting almost three years will "allow both charities and the Fundraising Regulator to plan financially with some certainty", the document says.
The proposals say the first request for payment will be for a full year "while the new system beds in and to cover rates of payment".
The proposals say that other charities or commercial agencies carrying out fundraising will be encouraged to register with the regulator so they can use a Fundraising Regulator badge on their websites and in their fundraising materials in return for an annual registration fee of £50 for charities and £250 for agencies.
The regulator estimates that 1,000 charities and 100 agencies would pay this fee, resulting in an additional £75,000 of income a year.
The paper suggests two alternative models for the levy, both based on an amount calculated as a percentage of a charity’s annual fundraising spend.
But the proposal says these alternative models have significant drawbacks because they bring distortions in which a very small number of the largest fundraising charities would be asked to contribute significantly larger sums.
This might have the effect of the large payers being seen as having undue influence over the regulator, the proposals say.
The paper says that the regulator will take over from the Fundraising Standards Board on 7 July.
It says that the regulator’s geographic remit will cover England and Wales, with decisions on whether Scotland would be included being made in the summer and Northern Ireland "later in 2016".
The consultation invites responses on whether £100,000 is the right threshold for the levy, whether the sliding scale put forward is the best option, if there are any issues in setting the levy for almost three years and if the proposals for flat rate charges are set at the right levels.
Gerald Oppenheim, head of policy at the Fundraising Regulator, said he was confident that the regulator’s proposals represented a fair approach.
"A key role for the new regulator is to build and sustain public confidence in the sector; one of the first ways charities can play their part is through registration with the regulator and by payment of the levy," he said in a statement.
The consultation, which can be found here, closes on 22 July.