Fundraising Regulator urged to postpone implementation of levy

In response to a consultation on the issue, the Directory of Social Change says 1 August is too soon after the exercise has been completed

Fundraising Regulator
Fundraising Regulator

The Directory of Social Change has called on the Fundraising Regulator to postpone its plan to begin charging charities a levy on 1 August, saying it is "extremely concerning" that it intends to do this only a week after its consultation on the matter closed.

In its response to the regulator’s consultation on the levy it plans to charge charities that spend more than £100,000 a year on fundraising, the DSC says it should not start invoicing charities until after it has properly considered the responses to the consultation, which closed on Friday.

It said the regulator should not act until it has explained to the sector what it means by fundraising expenditure.

"The intention to begin invoicing charities after 1 August, just one week after this consultation closes, is extremely concerning," the DSC response says.

"The Fundraising Regulator has not made clear what charity expenditure will count towards the threshold. This is a big problem, which diminishes the value of this consultation. It is illogical to ask charities what the threshold should be before consulting on what spending should count towards that threshold."

It says the regulator is essentially asking how long is a piece of string.

The DSC says that once its recommendations have been carried out, the regulator should run its consultation again.

The training and publishing charity also criticises the regulator for leaving itself open to accusations of being unduly influenced by charities.

It points to research by the Charity Finance Group that showed the public believes regulators that are wholly funded by those they regulate could be compromising their independence.

A better model would be for the regulator to seek a statutory grant to funds its operations, which it says would free up the regulator from the burden of collecting the levy.

The DSC also questions how the sector can be sure that the £100,000 threshold currently specified by the regulator will not be lowered or that the levy will not be increased over time.

It says there is every reason for charities to expect to contribute increasingly higher amounts as the regulator expands its operations and particularly if it ends up regulating fundraising in Northern Ireland as well as England and Wales.

The charity chief executives body Acevo has also submitted a response to the regulator’s consultation, in which it calls for the levy to be entirely voluntary. It says the levy could place a disproportionate burden on smaller and medium-sized charities that invest significant amounts in fundraising.

The regulator has said the levy will not be mandatory, but it has threatened that the government could enforce the Charities Act reserve power that allows it to bring in mandatory registration if a large proportion of charities refuse to comply.

A spokesman for Acevo said there should be no such repercussions for non-payment and that the regulator should adopt a funding model similar to that employed by the Advertising Standards Authority, which uses a mechanism that prevents it from knowing which advertisers choose to fund it or the amount they contribute.

The Small Charities Coalition warns in its consultation response that decisions about the levy should take into account a charity’s income as well as its expenditure on fundraising.

It says that 300 small charities have been identified as being subject to the levy, which could have a particularly large impact on their incomes.

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