The use of telephone fundraising to recruit new donors through cold calling or to solicit bigger contributions from existing donors increased from 11 million calls in 2010 to 14.4 million last year among member charities of the Fundraising Standards Board – a rise of 30 per cent. Ninety per cent of the calls are done by agencies, one of which, Pell & Bales, estimates that the annual income for charities from telephone fundraising is £35m.
But this growth has been accompanied by a decline in the popularity of the method among donors. The number of complaints reported by charities to the FRSB more than doubled to 8,019 between 2010 and 2013. It now takes 923 calls to produce a complaint – fewer "contacts" than for any other fundraising method – and 36 per cent of complainants last year cited a "general dislike of the method", compared with 10 per cent in 2011.
This dislike was reflected in a representative survey in March carried out by the sector consultancy NfpSynergy, which discovered that 51 per cent of people found telephone fundraising very annoying, compared with 37 per cent who said the same about street fundraising. Only doorstep fundraising, at 54 per cent, was less popular. The nfpSnyergy co-founder and leader Joe Saxton said: "We have to start working out ways of reducing the annoyance from some of our most effective and successful methods."
There has also been a rash of media interest. Earlier this year the Daily Mail and the BBC radio programme Five Live Investigates carried items critical of telephone fundraising. And in August the Channel 4 programme Dispatches broadcast the findings of two reporters who had worked under cover at Pell & Bales and NTT Fundraising. One of the reporters was apparently dismissed for supposedly finding it hard to make the required three asks of people she considered vulnerable. The Daily Mirror followed with a story alleging that agencies took an excessive proportion of the donations they secured.
Some of the concerns about the methods are shared by sector insiders. Stephen Lee, a former director of the Institute of Fundraising and a professor of voluntary sector management at Cass Business School, thinks the IoF and the FRSB should jointly lead a commission on the future of telephone fundraising practice. He says that it should comprise representatives of charities, agencies and consumer organisations, as well as academics and lawyers, to review, for example, the law on solicitation statements and whether self-regulation is working.
"We really do need to see some effective leadership from the IoF and the FRSB urgently if the future of telephone fundraising in this country is to be properly assured," says Lee. He featured in the Dispatches programme, taking issue in particular with the timing of the declaration fundraisers must make about being paid for their work. The FRSB says it is pursuing some of the issues in its programme with its members.
There is also concern about the financial security and employment practices of parts of the telephone fundraising industry. One agency, Pure Associates, went into administration in August. A month later it was taken over by the business process outsourcing firm Parseq, which also acquired Pell & Bales last year and now turns over £65m. Pure has told 60 of its workers they face redundancy, and a further 100 are being offered zero-hours contracts, loss of sick pay and wage cuts.
Elaine Lee, vice-chair of the Direct Marketing Association's Contact Centre and Telemarketing Council, says it is a myth that telephone fundraising companies make large profits. For the dozen or so agencies involved, of which about nine are charity sector specialists, Lee says the average profit margin is actually about 10 per cent; Pell & Bales, for example, made a profit of £1.3m last year on an income of £10m.
"When you're negotiating contracts in this sector, it's low-margin work," she says. "They're providing a service to fundraisers, which is an area that's often undervalued by charities themselves." She says turning a profit is made more difficult for agencies by minimum-wage legislation, new pension rules and the cost of technology and management.
Another challenge to telephone fundraising might come from the European Union proposals to reform the Data Protection Directive so that it includes a requirement for members of the public to give their consent before organisations can contact them for marketing services by direct mail or telephone. "We would have to call prospective donors and ask if they would be willing to receive fundraising calls from us, without attempting to fundraise from that call, which would be difficult," says Lee.
The so-called "right to be forgotten" is also part of the proposals. This would involve complying with donor requests to be taken off a charity's database, which Lee says could affect Gift Aid and cause other tax issues. It could also mean that people are contacted who have previously asked not to be.
Seven years ago Colin Lloyd, the chair of the FRSB, warned that telephone fundraising could be dead within five years because of the rise in the number of households signing up to the Telephone Preference Service, which means they cannot be cold-called. Clearly that was excessively pessimistic, although the number of phone numbers registered with the TPS has risen from 14.8m in 2007 to 20.1 million this year.
Jane Cunningham, co-founder of the agency Personal Telephone Fundraising, thinks the industry will survive. "People have been predicting the end of fundraising for the past 20 years," she says. "But if what we do is not palatable to the public, they will let us know and we won't be able to do it.
"The way fundraising needs to move generally is to enable people to be contacted and to give in the way that they want – whether that's by text or phone, by cash, cheque or direct debit," she adds. "It's our sector's job to make sure that is as pleasurable as possible and not to overwhelm them."
Complaints show that more people have 'a general dislike of the method'
The Fundraising Standards Board, a self-regulatory body, has nearly 1,500 members that between them raise nearly £5bn a year – roughly 50 per cent of all voluntary income raised by charities in the UK.
About one-fifth of FRSB member charities do telephone fundraising, mostly through agencies, and 65 per cent of those who use it reported to the FRSB in 2013 that they had received complaints about it.
The volume of telephone fundraising calls went up by 25 per cent last year to 14.4 million from 11.5 million in 2012, which might partly reflect the fact that 225 more organisations joined the FRSB in that time – an increase of 13 per cent.
Of the 48,400 complaints reported to the FRSB last year, 8,019, or 17 per cent of the total, were about telephone fundraising, compared with 6,379 the previous year – an increase of 26 per cent, which mirrored the growth in volume.
The biggest percentage rise in complaints about telephone fundraising was 64 per cent between 2011 and 2012, when the volume of calls increased from 10 million to 11.5 million, or 15 per cent.
The number of complaints last year was – as in previous years – second only to direct mail, which attracted nearly 17,000 complaints. It took 923 calls, fewer "contacts" than for any other form of fundraising, to produce one complaint about telephone fundraising.
More than a third of last year's complaints related to the tone or content of the call and 36 per cent to a general dislike of the method. The latter figure was only 10 per cent in 2011. Twelve per cent of last year's complaints were about frequency of calls, followed by data protection issues and the timing of calls.
The FRSB receives very few complaints about solicitation statements because most of the public do not know that such statements are required by law to be made during calls.
Alistair McLean, chief executive of the FRSB, says: "Telephone fundraising is very successful and hugely important to many charities. It is a fundraising technique that is important to the sector and, overall, done to a high standard."
A telephone fundraiser's view: 'Short-term success can trump good standards'
Graham Kirby, who used to work in telephone fundraising, believes the way it is done lacks transparency about costs and puts people under unfair pressure. Here is his story
It is a cold winter evening. Mrs Smith has just got in from work and she is cooking dinner when the telephone rings. It is a polite young man or woman, calling on behalf of Charity X, who asks her about the cause and updates her about the charity before moving seamlessly on to ask her to either increase her direct debit or to set one up.
That is what I did, day in day out, for six months last year at the new Manchester office of the telephone fundraising company R Fundraising. I was successful and did the job to the best of my abilities; and, despite the constant rejection and occasional abuse, I think the job is necessary.
So this article is not an argument against telephone fundraising or charity outsourcing. Running a call centre would be prohibitively expensive for a charity. Charities need regular income, preferably by direct debit, to budget and plan. There are 16 million potential donors who do not give and 40 per cent of us could easily double our donations. Only 31 per cent of all donations are made by direct debit. Charitable giving is stuck in a Dickensian time warp.
Telephone fundraising – like its cousins in the street and on the doorstep – does raise practical and ethical questions that charities are perhaps reluctant to answer. Consider what happens if a supporter signs up. Once the instruction is confirmed, the fundraising agency sells it to the charity. The fee – roughly £70 or more – is almost always a flat rate, and the charity buys the paperless direct debit, to use the lingo, in the knowledge that the average length of a direct debit is four years.
So a gift of £10 a month is assumed to be worth £480; a £5-a-month gift, £240. If a donor gives less than £6, it will probably take more than a year for any donation to reach the charity, and if it is cancelled rapidly – as is the donor's right – none of the money will go to any good cause: it will actually cost the charity money.
There is always pressure on fundraisers, often agency staff on low wages and temporary contracts, to get PDDs; there is rarely an insistence on minimum donations that ensure that money quickly starts going to the charity. And in my experience, it is never explained to donors that the fundraising company's costs have to be met before their gifts will help the cause.
Telephone fundraisers – often out of work actors, writers and students – are encouraged to play on emotions and use provocative language. This is fair enough and nothing new, but there have to be reasonable boundaries, don't there? At R Fundraising we were encouraged to ask people if they had been affected by cancer, and there was always the danger that this approach could go beyond "reasonable persuasion". One colleague was given the line: "Every penny raised is one less tear by a frightened, vulnerable child." Objectionable on literary grounds, but also factual, practical and – dare I say it? – moral ones too.
I heard fundraisers claim that an information pack would "protect you and your family from cancer", give out incorrect charity details and use potentially misleading information to persuade donors to increase their gifts. I have accidentally done the second and, to my regret, the last. Only twice was I rebuked for inaccuracy and never did I have a call critically assessed or reviewed.
Most telephone fundraising companies are members of the Fundraising Standards Board, which applies the Institute of Fundraising code of conduct that prohibits the use of misleading or incorrect information. The code also requires companies to disclose campaign costs and goals to potential donors and to train and induct employees.
Fundraising companies are under no obligation to uphold the ethical standards of the charities they represent. Fundraisers are paid less than the average wage and the living wage, but are incentivised to increase the number of PDDs. Most fundraising companies outsource the bulk of their recruitment to agencies, employing staff on flexible contracts who can be dismissed easily. Is it ethical for charities to silently endorse potentially questionable business practices when publicly they might preach different messages?
Disillusioned, I left fundraising after six months. Yet I still believe in telephone fundraising. It just isn't working now. The process lacks openness, which means some donors think they are helping when in fact very little of their donation reaches the charity. The lack of effective public regulation, or oversight by the charity, means that misleading messages might be sent out by people supposed to represent the charity. Until charities stop adopting a Nelsonian attitude, the quest for profit means short-term fundraising success trumps good standards and, sometimes, transparency.
Leaving aside any moral reasons, I believe there is a strong practical case for the fuller disclosure of fundraising costs. Many in the profession don't want to undermine the romantic fiction of amateur fundraising, but these days more people are aware – and accepting – of fundraising as a process that needs investment.
So charities should embrace a more transparent age and explain honestly that this is a process that costs money and needs time. People, presented with the reality, might very well give more and for longer; some might not give, but should they have been asked at all? Direct fundraising is about asking people to make moral and ethical choices. For the charity, the question becomes when to refuse donations that might not be large enough to help.
And me? Since leaving R Fundraising I have been called several times by charity fundraisers. The polite young person on the other end of the phone has explained that they are calling on behalf of Charity X and has got me talking by asking what inspired me to support the charity. As I answer, they have already been working out how to persuade me to sign up for that regular gift.
These days I ask them what they get paid – but, more importantly, I ask what their company gets paid for signing me up. If I want to support the charity, I will work out whether the amount I am able to give is really worth it.
Sometimes it is. And because I know the costs, I know my commitment really is worth something.
R Fundraising replies: 'We work very hard to stay on message'
Hugh McCaw, founder of R Fundraising, disputes many of the assertions made by Graham Kirby, especially in relation to the disclosure of the company's costs to people who are telephoned.
He says the majority of the campaigns Kirby worked on were "stewardship" calls that did not involve asking for money and therefore did not require disclosure.
On calls that do ask for money, he says, some fundraisers use scripts that include disclosures and others who use "free language" always have a checklist of what must be mentioned, including disclosures.
"The disclosure says that we are paid but doesn't state the actual amount," says McCaw. "We believe that is compliant with the legal requirement."
Earlier this year the Fundraising Standards Board considered a complaint by Kirby relating to disclosures, training and alleged misleading statements. Its decision, released by Kirby to Third Sector, said there was "not enough evidence to suggest that R Fundraising has systematically breached the Institute of Fundraising's code of practice at an organisational level".
The FRSB's adjudication was based on the company's scripts and training materials. McCaw says recordings from the time of Kirby's employment were no longer available because the complaint was made more than four months after he left.
The FRSB recommended that the company introduce additional training material to "cover the importance of delivering a disclosure statement during a call and the legal requirement to deliver the direct debit guarantee". The guarantee includes the right to cancel the direct debit.
The FRSB also said it was important to ensure during calls that a clear distinction was made between the agency and the charity. The company's Rapport Training Workbook, it said, encouraged the use of "I" and "we" and said "avoid phrases such as 'they need funds'".
"I'm not saying things were perfect," says McCaw. "It was a new office with new staff. The legal requirement could have been made clearer in training – we accept that and we have put it right.
"The Dispatches programme did not show the industry in a very good light, and I'm glad that's not the way we behave. We were one of the first to sign up to the FRSB and we work hard to be on message – our attrition rate is the lowest in the industry."