Matthew Page: FPS costs will force charities to take extreme measures

The costs involved with the Fundraising Preference Service will give many charities no choice but to turn their attentions to forms of fundraising not covered by the service, writes the charity professional

The Fundraising Regulator has at last produced its final proposals for the Fundraising Preference Service and it now looking for feedback from those who it might affect. In summary, it looks as though the Daily Mail will be happier than most fundraisers.

Indeed, the Mail's initial article on the new proposals ("An End to the Begging Charity Calls") seems significantly more upbeat than the initial response from the Institute of Fundraising, whose head of policy and research Daniel Fluskey has expressed some concerns. 

One of the things that Fluskey is worried by is "the additional financial burden for charities". It's not hard to see why.

While the regulator is only proposing to compel charities with an annual fundraising spend of £100,000 or more to use the service, it is also suggesting that those with lower incomes could still subscribe to the FPS "voluntarily to show commitment to good fundraising practice".

As such, it's predicting that somewhere in the region of 1,500 charities will use the service, but the Etherington review calculated that 1,961 charities spend over £100,000 a year on fundraising, so numbers could soon exceed 2,000. 

The FPS working group has also predicted that costs for the first year of the service's operation are likely to be in the region of £750,000, for "set-up and delivery", with an undisclosed amount of operating costs on top.

The proposal is a little opaque on the likely range of these operating costs. It refers to the experience of the other preference services  the Telephone Preference Service and the Mailing Preference Service – and suggests that perhaps five or six members of staff will be required so these operating costs could be in the region of £300,000. 

It's somewhat shocking then the working group is proposing that all eligible charities will have to pay between £3,000 and £4,000. This could deliver the regulator an annual income of up to £8m – ten times its estimated first-year set-up costs. And all of this would be money that charities will have received from donors, but will end up having to divert from their cause to these administration costs. 

The proposed cost is also alarming because it's so much greater than those involved with the existing preference services. The TPS costs £2,200 per year for a full licence, which allows you to view the TPS file, and the MPS only £1,100. The £3,000-plus the FPS will cost is as much as the two services put together and offers very little additional advantage for those who press the "large red button".

Furthermore, the additional costs of managing the extra data will add to the burden placed on charities. 

The likely result of this is that charities will go to one extreme or the other.

Those that decide the investment is worth it will want to make the most of it, perhaps increasing the amount of direct fundraising their supporters will receive.

But at the other end of the scale, it's likely that many will pull out of direct fundraising altogether, resorting to other, less regulated, forms of fundraising such as street fundraising or door to door instead just to cover their costs. While many people do not like direct mail or telephone fundraising, it needs repeatedly restating that many donors out there do like these methods and respond to them in their droves. 

When the Etherington review first came up with idea of an FPS, many feared that it would be a sledgehammer to crack a nut. Now that the detail has been proposed, it's encouraging that the sledgehammer will be accompanied by a slightly more precise tool, but the cost of it will, one way or another, leave a hole in many charities' finances. And ultimately the people that will really suffer are the beneficiaries.

Matthew Page is a CRM database manager for a medium-sized charity. He writes in a personal capacity.

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