Brian Seaton: Is the Fundraising Regulator a gamekeeper or poacher?

The "voluntary levy" of the regulator is neither proportionate or fair, especially for smaller charities, writes our guest columnist

It’s funny, isn’t it, how once in a while apparently unrelated things come along together and, unexpectedly, they just click and you start seeing things from a new perspective.

On 22 September, it was Jeans for Genes day, the annual fundraising campaign for Genetic Disorders UK.  The notices sent from my grandson’s school simply said: "On Friday, it’s Jeans for Genes day so school uniform is suspended. Pupils will need to bring in £2, which will be collected by form tutors in the morning."

At first sight it seemed a great idea – teaching children about "charity".

But what did my grandson actually learn about charitable giving from his Jeans for Genes day? Did he learn that there are some children disadvantaged by disabilities and need extra care? Well, yes, but he already knew that. Did he learn to be generous with his money? Well, no. We just gave him £2. Did he learn about the nitty-gritty of charity fundraising? Well, no. Did he discover that at least 35 per cent of the money raised (70p out of my grandson’s £2 donation) didn’t go to children because it was spent on organising the Jeans for Genes day? Well, no.

Instead, he learned about how supposedly voluntary contributions can be made almost compulsory and about the coercive use of "name and shame".

So why doesn’t the Fundraising Regulator ban such coercive fundraising activities?

Because, it seems, that the regulator itself is more of a poacher than a gamekeeper.

The regulator’s guidance on its fundraising levy is a fine example of creating obfuscation through complexity, supplemented by the art of accentuating the positive, eliminating the negative.

The 10-band contributions table is claimed to be "the most proportionate, practicable and clear means of levying as too many bands would be difficult to manage while fewer become unequitable" without any explanation of why the other options originally proposed, such as an across-the-board fixed percentage levy, were more difficult to manage or less equitable.

You only have to look at the banded table converted into simple graphics to see that it is demonstrably inequitable. At the lower end of the fundraising spend scale, a smaller charity that had inadvertently overrun its £149,000 spend budget by 1 per cent (£1,500) would find its voluntary levy jump by 100 per cent from £150 to £300.

At the other end of the scale, a large charity that had inadvertently overspent its £49.9m fundraising budget by the same 1 per cent (£500,000) would only see its "voluntary levy" jump by just 25 per cent from £12,000 to £15,000, and that’s from just 0.024 per cent to 0.030 per cent of its fundraising spend. How is that proportionate or fair?

And it beggars belief that those devising the levy scheme should choose to overlook the serious problems that it recognised would inevitably be caused by setting the levy by reference to a charity’s fundraising spend several years previously and then fixing it for three years.

As for the Fundraising Regulator publishing a list to name and shame the non-payers of its voluntary levy, I can only gasp with incredulity and cringe with disgust. It is pure school playground bullying and coercion of the sort that any self-respecting community should be shunning.

For the regulator to call it voluntary and then resort to naming and shaming those who choose not to pay on the grounds that they have a moral obligation to pay is pure hypocrisy.

So what would be my alternative?

I would make the levy mandatory for all charities, regardless of the level of their fundraising spend.

I’d remove the bands and set the levy at a fixed 0.1 per cent of fundraising spend across the entire sector. When a charity submits its online annual return, including its annual spend on fundraising, to the Charity Commission, the commission will immediately calculate the 0.1 per cent levy, issue an invoice and forward a copy to the Fundraising Regulator. The charity would then make a payment to the Fundraising Regulator.

This approach has several advantages. As the year progresses, the charity can see how its fundraising spend is developing and therefore at any time can see exactly what its levy is going to be. The levy is always based on the actual fundraising spend in the financial year in question – and there’s no more nonsense with inappropriate levies based on different fundraising spends in different years. It’s simple, clear and equitable across the board.

Any disagreements about what does and does not constitute "fundraising spend" for the purpose of setting the levy should be dealt with through the charities Sorp, not piecemeal through the levy process itself. Any low-level threshold - below which charities pay nothing - is simply the point where the amount of the levy is not worth the administrative cost of collecting it.

I can’t see any major disadvantages, except of course that it is so simple to implement and automate online that it will potentially put a whole army of bean counters at the Fundraising Regulator out of work - and cut its running costs. Oh dear.

And when the Fundraising Regulator becomes a proper gamekeeper, and not just a poacher in disguise, it will have the resources to outlaw covertly coercive fundraising schemes like the donate £2 to charity to come to school in jeans.

Brian Seaton is a former NHS senior executive and trustee of a small charity

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