Fundraising Regulator to add two bands to fundraising levy

Chief executive Gerald Oppenheim says he expects the new system, to run from 1 September, to raise about £200,000 of additional income

The Fundraising Regulator has said it will change the way it calculates the fundraising levy, in a move that it says could result in some smaller charities paying less.

The regulator has added two extra income bands, which will reduce the amount some smaller charities are asked to pay towards the voluntary levy.

But Gerald Oppenheim, chief executive of the Fundraising Regulator, said that although some charities would pay less the watchdog estimated its income from the levy was likely to rise in the next two years.

Charities that spend more than £100,000 a year on fundraising are asked to pay a voluntary annual levy of between £150 and £15,000 based on their fundraising spending to fund the regulator.

In the first three years of the levy, which was launched in 2016, charities spending between £200,000 and £499,999 on fundraising have been asked to pay £800 a year, while those spending between £500,000 and £999,999 were asked to pay £1,500.

Under the new system, which will be introduced from 1 September for the fourth year of the levy, charities spending from £200,000 to £349,000 will pay £500 and those spending between £500,000 and £749,999 will need to pay only £1,000.

Oppenheim told Third Sector: "When we launched the levy in 2016 we said we’d hold it for three levies, so it's time to have a look at it for the fourth year and see if we need to make any amendments.

"One of the things we looked at was the fact that some of the steps on the levy are quite steep, particularly lower down the levy, so that’s why we introduced more steps."

The regulator will update the data on which it bases its decisions about which charities should pay the levy and how much they should pay. The calculations are currently based on data from charity accounts filed with the Charity Commission in 2014. Under the new regime they will be based on the most recent sets of accounts.

Oppenheim said some charities would find themselves paying less as a result of the updated information, but more were likely to move up a band.

"We expect that might generate about £200,000 of additional income and help get us to the £2.2m budget income it was always envisioned we should have in order to be effective," he said.

Oppenheim said it was too early to know how many charities would be in each band, but he expected the number of charities eligible to pay the levy to remain at about 1,900.

Charities affected by the changes would be told in the summer how much they would be expected to pay for year four, he said, but charities should be able to look through their finances and come up with their own estimates of where they were likely to fall.

He said there were no plans to introduce more bands at the top end of the scale, but a more in-depth look at the levy was expected to take place ahead of levy six in 2021.

Oppenheim said that just under 94 per cent of eligible charities had paid the levy for year four, but the rate of payment had been quicker than last year and it was possible that the figure could rise to 95 per cent by the end of 2019.

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