Editorial: A second look at self-regulation of fundraising

Greater public representation on the committee that sets the rules would be a useful addition to the proposals, says Stephen Cook

Stephen Cook
Stephen Cook

When the summary version of the report by the consultanct PwC on the future of fundraising self-regulation was published two weeks ago, the preliminary assessment in this column was that it was a bit of a mouse. Now that Third Sector has seen the full version of the report, it is clear that it is a rather more substantial animal that deserves a fuller appraisal.

The summary version said the "preferred option" was essentially one of cooperative evolution – a joint communications strategy, a joint online portal for the three bodies involved in self-regulation and increased representation on each other’s boards and committees. Perhaps the most significant proposal was to appoint an independent chair to the IoF standards committee, which sets the codes used by the Fundraising Standards Board in its adjudications, and to make that committee responsible for the rules of fundraising of all types.

A question of trust

The most eye-catching finding of the complete report, however, is the lack of trust between the three bodies. The underlying cause of this is that a significant body of opinion persists among fundraisers that regulation is unnecessary and a waste of resources. As a result there has been rivalry and suspicion in the years since the FRSB was set up in the wake of the Charities Act 2006, and the strain has showed. But now the proposed option is that there should be extensive cooperation between three organisations that are judged by their consultants not to trust each other sufficiently to work effectively together. In the circumstances, it is not surprising that the three bodies chose not to publish a report that contains such an inconvenient finding. The key question, however, is whether the prescription is a convincing one.

The political scene

The political background is that the government is concerned about the effectiveness of self-regulation, mainly because a certain amount of complaint about face-to-face fundraising, direct mail and telephone fundraising is channelled to it by backbench MPs. Lord Hodgson, in his 2012 review of the Charities Act 2006, has also drawn attention to the complex and confusing structure of the current system. In the wake of Hodgson, the ministers funded the PwC report in the hope of moving matters forward. But they are not so concerned about self-regulation of fundraising that they are prepared to intervene decisively. There is an election coming up in which the regulation of the energy market or financial services may well feature, but regulation of fundraising will not. The prospect of this or the next government invoking (and paying for) the statutory system of fundraising regulation that is held in reserve in the 2006 act is virtually zero.

This gives the three bodies in the existing system a certain amount of leeway. They know they are unlikely to be obliged to do anything radical, so they are able to continue with adjustment rather than reform. In the last few years, they have managed only to reach a joint declaration that the Fundraising Standards Board should be the single public-facing body for dealing with complaints. This was a step forward, but only one, and they accept that more are needed.

Choosing the options

The five options in the unpublished report are called: Better Joint Working; One Set of Rules Independently Set; Clarity Over Regulator Role; One Regulator; and One Organisation. The last one, which involves combining the trade organisation and the regulator, is clearly a non-starter because of the conflicts of interest.

Anyone coming fresh to the situation with the interest of the public foremost in their mind would probably opt for the simplicity of One Regulator – a set-up where the trade body is clearly separate from the regulator, which takes account of the trade body’s views in setting the standards by which it adjudicates.The sixth, preferred, option is described in the report as building on One Set of Rules Independently Set, and Clarity Over Regulator Role. It does not quite entail the independent setting of rules – it entails the rules still being set by the Standards Committee of the Institute of Fundraising. But it would bring together under that committee the Code of Fundraising Practice, the FRSB's Fundraising Promise and the PFRA rule book, which would end one source of confusion; the committee would also have members from the FRSB and the PFRA and "an independent chair who is expert in regulation".

The preferred option does not say in clear terms what the Clarity Over Regulator Role option says, which is that the PFRA should cease to call itself a regulator and remove the word regulatory from its name. The list of recommendations released with the summary does mention this, however.

The ideal solution

In summary, then, the ideal solution that would make most sense to the outside world and really clarify matters for the public has not been chosen. One reason is that the government is not insisting that this should happen and is leaving the parties to sort something out themselves; other reasons are upheaval, expense and reluctance to give ground. Only the PFRA appears to have accepted a significant change to its role, although it has suggested that by joint working it might avoid the the proposal in the preferred option that it should eventually become part of the IoF.

Instead of the ideal solution, we have incremental action, a statement of a direction of travel and assurances that the mistrust cited by PwC will melt away as the three organisations focus on the new vision. The best one can hope for is that a watershed in attitudes really has been crossed, that past experience will not be repeated and that there really will be cooperation and evolution. With a new chair in post at the Institute of Fundraising and renewed pledges of mutual respect, perhaps that will be possible.

What about the public?

In the end, the heart of the matter is the setting of the rules: if all three sets of rules are indeed brought together under one roof, set by a committee with an independent chair and wider representation, then it starts to matter less whether the committee is part of the IoF or (as would be more logical) part of the FRSB. But there is one crucial element that is underplayed in the proposals for that wider representation – apart from the chair, no proposed places are reserved for people from outside the fundraising bubble who would be there to take a balanced and reasonable view of what the public can expect in terms of the behaviour of fundraisers and a proportionate view of appropriate redress when the rules are broken. The debate has taken on a rather introverted quality, and it’s easy to forget that the key audience is the wider public, where considerable scepticism and confusion persist about fundraising and the way it is regulated.

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