Fundraising Regulation: 'Things have changed forever'

Far-reaching changes are on the way for fundraising. Third Sector reporters summarise them and find out what practitioners think

The world of fundraising is struggling to come to terms with the momentous events of the past summer, which culminated with the Institute of Fundraising rushing out far-reaching revisions to its Code of Fundraising Practice and the government ordering a root-and-branch restructure of regulation.

Many fundraising charities are now trying to figure out how to deal with this double whammy: code changes that will come into force shortly, severely restricting the way they use supporters' personal data, and the prospect of a more robust regulatory system that, among other things, introduces a Fundraising Preference Service (see the main points of both initiatives below).

The FPS is the proposal that appears to be causing most consternation among the practitioners and consultants who agreed to be interviewed for this article. One commentator thinks it could reduce philanthropy by 20 per cent; one charity is expecting a 10 per cent drop in income.

Some fear that the FPS will be an expensive nightmare to administer and could drain the pool of potential donors who can be approached by charities to a level where fundraising would be unsustainable. Others, including our columnist Stephen Pidgeon, are relatively sanguine.

It remains to be seen whether the Fundraising Regulator will be functioning within six months of the publication of the review that recommended it, as Sir Stuart Etherington proposed. The Cabinet Office says it will consider whether additions will be needed to the Charities Bill going through parliament, and it seems likely that a rearguard action will be mounted against the FPS and the abolition of the Fundraising Standards Board.

Generally, a sense of uncertainty reigns. One senior practitioner says: "Everyone is walking on eggshells and cancelling campaigns right, left and centre." Another says simply: "Fundraising in this country has been changed forever."

On the other hand, our columnist Debra Allcock Tyler confidently expects the fuss to die down and everything to go back to normal. Only time will tell.


1. A new regulator All recommendations of the review of fundraising self-regulation by Sir Stuart Etherington have been accepted by the government. The Fundraising Standards Board is to be abolished and replaced with a new Fundraising Regulator with jurisdiction over all charities and strong links with the Charity Commission and the Information Commissioner. The regulator will be funded by contributions on a sliding scale from the estimated 2,000 charities that spend more than £100,000 a year on fundraising. Organisations could choose to register with the regulator.

2. 'Reset' button A new Fundraising Preference Service, set up and overseen by the Fundraising Regulator, will allow the public to opt out of all fundraising communications without the need to contact individual charities. People will be able to add their names to a suppression list that fundraisers will have to check before embarking on a campaign. Etherington calls this "pressing the reset button". People can subsequently opt in to hear from charities they are interested in.

3. New code-makers The Code of Fundraising Practice is to be transferred from the Institute of Fundraising to a new practice committee hosted by the Fundraising Regulator. It will have an "appropriate balance of fundraising expertise, donor and public representation and legal expertise". A member of the Institute of Fundraising will have observer status on the committee. The code is to be reviewed as a matter of urgency on the grounds that some parts do not reflect legislation or best practice, changes take too long and rules are sometimes disregarded.

4. Breaking the code Sanctions will include publishing names of organisations found in breach of fundraising rules, ordering compulsory training, requiring organisations in breach to stop using certain fundraising methods and referring them to the Charity Commission or other regulators if the malpractice indicates governance failure or breach of other legal requirements. A badge of good fundraising practice could also be revoked from organisations in breach of the rules.


1. Communication preferences Addressed fundraising communications must explain clearly how donors can opt out. This information must be in the same font and type size as text that captures the donor's details and donation amount. If there is no data-capture section, type must be no smaller than 10 point. A sector-wide opt-out icon, produced by the Institute of Fundraising, is to be used on printed communications to make it easier to find opt-out information. Charities making first contact by phone, text or email should not rely on indirect consent given more than six months earlier.

2. Persuasion and frequency Clause 1.3(b) of the code saying "fundraisers ought not to pressurise donors or potential donors but may use reasonable persuasion" is to be changed to remove "reasonable persuasion". The phrase is to be replaced by a prohibition on being "unreasonably intrusive", "unreasonably persistent" or placing people under "undue pressure" to donate.

3. Data Charities are now banned from selling supporters' data to third parties for commercial gain. They can share data with third parties for fundraising communications only if the person concerned has provided express consent (this does not apply to agencies fundraising on a charity's behalf). A clear requirement is being introduced for charities to provide people with a privacy notice, telling them who the charity is, what it plans to do with their data and who it will be shared with.

4. Telephone Supporters registered with the Telephone Preference Service must not be contacted by phone unless they have given express permission to a charity to call them. Fundraisers must end calls when asked. Calls from agencies and call centres must be made from identifiable numbers, with no more than three asks in a call. Fundraising agencies should gain TPS-assured certification of conformity with legal principles and best practice. Charities are now obliged to monitor telephone agencies to ensure code compliance.


Tobin Aldrich Chief executive, Misfit Foundation

The FPS: Damaging and ineffective

The proposal to move to an "opt-in" approach for all donor communications could lead to whole channels of fundraising communication becoming unviable, starting with mail and telephone. The practical effects will depend on how the opt-in is defined, how it is described to supporters, how they interpret it and how long it lasts. The idea of a Fundraising Preference Service could also have extremely damaging implications for almost all types of fundraising, and is unlikely to protect vulnerable people - presumably someone with dementia isn't going to sign up to a service like this.

Hundreds of millions lost

Nobody knows how the changes will affect income, because no one has done any research on the impact. But individual giving using direct-marketing methods accounts for about £4bn of UK charity income. The potential impact is therefore hundreds of millions of pounds a year, perhaps more. The FPS proposal alone will cost the sector tens of millions. Research from the Public Fundraising Association indicates that the new rule forbidding fundraisers to ignore no-cold-calling signs could lose the sector up to £4.2m a year, and I think that's about right.

Supporters down by 70 per cent

The extension of the Telephone Preference Service to warm files of existing supporters will eliminate at least half of current telemarketing; some charities have seen the number of supporters who can be asked to upgrade to regular gifts reduced by as much as 70 per cent. But none of the changes will address the issue of people who are happy to receive charity mail in principle but are simply getting too much.

Adrian Sargeant Fundraising academic, consultant

Bigger impact on smaller charities

A properly funded regulator will be more proactive and make charities more thoughtful. The switch to opt-in should make a huge difference to the way they do things. But the Fundraising Preference Service is a negative, ill-conceived proposal which, if some terrible disaster unfolds, will prevent charities asking 10 per cent of the population, by telephone or any other "direct response" channel, to express their love and support for those affected. You could advertise on TV - but how many charities have that kind of budget? Other media are all high-cost and frequently planned months ahead. The impact on smaller charities will be bigger.

A 20 per cent reduction in philanthropy

A Fundraising Preference Service could cut philanthropy by more than 20 per cent. It could cost the sector millions in donations from people who, if you asked them respectfully, would have been happy to give.

The new rule against data-sharing probably won't have a huge impact - people only swap lower-value donors. You lose 10 per cent of the value of the donor when you swap them and also run the risk of irritating people. In fact, charities have been swapping the very people who might have left them legacies.

Beth Upton Director of the agency Money Tree Fundraising

Many won't change their practices

Some charities were already pledging to change their practices, but there are probably a lot that don't think any of this affects them and possibly aren't reading the changes to the code of practice because they don't think the criticism was aimed at them.

Short-term dip in income

Everyone I've spoken to who does mass-participation fundraising says they will see a short-term dip. The larger charities are trying to find ways to bridge that income gap through other means.

My biggest concern is the Fundraising Preference Service and the negative consequences it will have on major giving. Major givers are quite clued up about giving and are approached a lot by charities, so they are the first group who are going to sign up to something that means they won't get hassled any more. That means we're going to lose the means to communicate with them.

What's more, the review group might not have thought through the mechanics of excluding all charities - such as your child's school, for example.

There are also people who will sign up to the FPS but will want to be approached only by charities in certain cause areas and, because they will need to choose specific charities that can contact them, the famous ones will get chosen. This will curtail the little, unique charities that are doing something the others aren't.

Director of fundraising For a well-known, medium-sized charity

Consent valid for 12 months

The changes have caused a lot of uncertainty, and many charities will be changing their strategies. The pressure on fundraising agencies will increase, so most of them will refocus their business and adapt to the new marketplace.

Charities will definitely be affected by the explicit opt-in for phone fundraising, and the big question will be whether that applies to historic donors or just those recruited in future, and on how long consent will be valid. I think the Information Commissioner is going to recommend 12 months. There's a concern that charities will try to contact people as much as possible within the initial period so they can solicit consent, which could mean, ironically, that donors get more calls than before.

We'll raise 10 per cent less in 2016

Charities have to accept that we're going to be significantly affected and that long-term relationships won't be the same. My charity will review its whole fundraising strategy. It's been working well, but now the world has changed, so we need to as well.

Our strategy has been based on the large-scale acquisition of donors, mostly through door-to-door and private-site fundraising; and what we've seen this summer, even before the recommendations, is a reduction in what suppliers can deliver. So we're already investing significantly less than planned. Within the financial year, we'll get more net income and more profit because we're spending less. But in the longer term, our returns are going to be a lot lower.

What we can't plan for is the effect the FPS and the move to opt-in will have, because we don't yet know how many people will sign up. We're fairly lucky because we do have explicit opt-in from the majority of our donors to contact them by telephone, so we're not as affected as some other charities. We're on the sixth version of our budget for next year already and, as it stands, we still expect to grow, but not at the rate we had planned. We will raise 10 per cent less than expected, which amounts to millions of pounds.

Alison Godfrey Director of fundraising, The Fishermen's Mission

Agencies should be regulated

The changes will have a significant impact on smaller charities. Large ones will be able to snap their fingers and comply, but small ones will struggle with these changes. Most medium to small-sized charities don't participate in commercial fundraising.

I can foresee issues with the FPS, especially if you have a database of older donors, like we do - people who prefer to be communicated with by letter. Unless the scheme gives donors the chance to pick and choose how often charities can contact them (for example, once a year), which would in any case be impractical to manage, you could have donors who would like to hear from you but who you can't talk to. I'm concerned that the administrative detail will be top-heavy.

I'd like to say that the changes will put an end to the practices that have been irritating some people, but I recently donated to a large charity and specified that I didn't want to hear from it again - but it sent me a text message anyway. The new regulatory body will be key - it ought to oversee not just charities but also commercial providers.

Fundraising: More onerous

Income will drop, but not necessarily because of the measures - more because of publicity. The public perception of charities has been knocked, and people are more cautious. We don't use commercial fundraisers and our fundraising will become more onerous.

We have a very personal relationship with our donors. We know many of them by name, and it seems this is going to create a lot of administration that we don't have resources for. The no-cold-calling rule will not affect us because we didn't knock on doors with these signs anyway.

Alan Gosschalk Director of fundraising, Scope

Ending phone calls when asked is good

The big unknown is the FPS. If you're a supporter of Scope and you sign up to the FPS, at the moment it's unclear whether we must stop contacting you immediately or whether there is a period of time, or a number of communications, during which we can ask you to opt in. The worst scenario would be having no one in the country that any charity can contact because they are all signed up, although I doubt we'll get to that.

The new IoF rule to ensure fundraisers end telephone calls when asked, and the Charities Bill measures on vulnerable people, are good practice - I don't think they will mean a lot of lost income.

TPS will cost us £250,000 a year

We know that the new TPS rules on getting express consent from donors registered with the service will cost us about £250,000 a year because we can't call people to upgrade them. That's about 2.5 per cent of our individual giving income. We're now allowed only to call 20 to 25 per cent of the people we would have called before. The FPS could be even more significant. If it stops us from contacting a lot of supporters then it's gone beyond its original purpose.

Generally, I'm going to be conservative with my projections for next year because at the moment it's not a very positive climate for fundraising. But until we know more about the FPS, I'm not sure it's right to be forecasting decline. We hope we can attract new donors by other means to offset the people we're losing through the TPS.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in
RSS Feed

Third Sector Insight

Sponsored webcasts, surveys and expert reports from Third Sector partners

Third Sector Logo

Get our bulletins. Read more articles. Join a growing community of Third Sector professionals

Register now