Stephen Cook: A fresh start for fundraising regulation

Sir Stuart Etherington's proposal to dismantle the present arrangements in favour of a simpler, tougher system offers the best hope for the sector to get through a reputational crisis, writes the editor of Third Sector

Stephen Cook
Stephen Cook

It isn’t the fault of the Fundraising Standards Board or the Institute of Fundraising that various charities and agencies have been using fundraising methods that are considered too persistent, intrusive, unethical or even unlawful. The organisations concerned have to take responsibility for their actions.

But the FRSB and the IoF have nevertheless been implicated, in the sense that the system of self-regulation of fundraising, run by them, has not been clear or strong enough to deal satisfactorily with complaints and send a strong deterrent message to practitioners.

First, the FRSB was never given the tools it needs for the job. Its jurisdiction covers members only, rather than being universal; its only real sanctions are naming or expulsion, and its influence over the IoF’s Code of Fundraising Practice, against which it has to judge complaints, is limited.

The IoF, for its part, has stuck to a system in which the code has always been set by fundraisers, who naturally prefer the minimum of restrictions. It has guarded the code jealously and dismissed moderately expressed proposals from within the sector for a greater role for independent people who represent the public interest.

Now that the tabloids and politicians have latched on to bad fundraising practice, the IoF is of course hurrying to introduce reforms. Changes to the composition of the code-setting standards committee, along with FRSB-requested changes to crucial sections of the code, have come thick and fast in the past few weeks.

But this has fallen under the heading of too little, too late, and the review of fundraising regulation published this week by Sir Stuart Etherington declares that the IoF "has failed in its stewardship of the code to represent the public interest". The review proposes wiping the slate clean and starting again with an entirely new body called the Fundraising Regulator.

Etherington could, perhaps, have recommended the construction of a new regulatory organisation on the foundations laid by the FRSB over the past seven years, improving its powers and ways of working. But he evidently decided that the foundations were not strong enough to carry the weight of what he thinks is needed.

He has, in effect, said "a plague on both your houses" and gone for a clean sweep that would abolish the FRSB and remove the code from the IoF. This is surely the best way forward from the present system, which is complex, badly structured and brought into disrepute by unresolved rivalries. He is proposing year zero for fundraising regulation; the code would survive, but it would be urgently revised and stewarded very differently.

Etherington and his team of sector-friendly peers have produced a comprehensive and clear-sighted report in record time, and the onus is now on the government to respond promptly as well. There are hopes that a chair of the proposed Fundraising Regulator can be appointed quickly and get on with a speedy transition. That would minimise damage all round and help the sector get beyond the reputational crisis it has suffered recently.

The Minister for Civil Society, Rob Wilson, has emphasised the need for reform, as have the Prime Minister and Chris Grayling, the Leader of the House of Commons. People will no doubt try to persuade him not to adopt at least some of the proposals, but it would be surprising if he does not accept the main planks of the review.

The structural reforms proposed by Etherington are the key to better regulation, but perhaps his most controversial proposal is for a "fundraising preference service". Set up by the proposed regulator, this would allow people, at a stroke, to have their names removed from all fundraising databases. It would no doubt be popular with the public and the Daily Mail, but less so with fundraisers: expect some strong lobbying over this one.

The main thrust of such lobbying is likely to be that the preference service could seriously reduce the pool of people from which charities can ask for donations, in a world where it is well known that people don’t give much unless they are asked. The prospect will be raised of serious attrition of income for charities and their beneficiaries.

This one is a tough call. It would be hard to calculate with any certainty how big the fall in income would actually be. The government has to balance the public interest in allowing people to escape from the charity data pool against the public interest of encouraging giving and a thriving charity sector. But the mood is for drastic action, and the former may well prevail.

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