It is now just over a month since Sir Stuart Etherington’s fundraising review was published. There has been a huge amount of comment since then and not least a range of voices about its implications for the sector. So here are my thoughts now the dust is beginning to settle.
The next few years are going to see a huge change in the approach to fundraising self-regulation. It will remain self-regulation, but the change in style is about as dramatic as I can imagine without it becoming statutory regulation. The past few years of self-regulation could be characterised as relaxed parenting: the kids went to bed when they wanted, discipline was mild to non-existent and the rules of the house were such that no child had much difficulty in meeting them. The new regime is going to be strict bedtimes, supervised homework and harsh punishment for minor infringements.
The individual elements of the proposals
The Fundraising Regulator
This will be at the heart of the new regime and getting this body right will be absolutely critical. I am not convinced that getting rid of the old body, the Fundraising Standards Board, and replacing it with something that is remarkably similar makes a huge amount of sense. It certainly makes the transition to the new regime that much harder. Rather than evolving the FRSB with new staff, new budgets and the like, we have revolution, not evolution, meaning greater cost and longer timescales. A further concern is that the budget for the new regulator – £2.5m, to be raised from its charity members – looks entirely unrealistic. It's two-and-a-half times bigger than the amount the National Council for Voluntary Organisations receives from its members, so reaching it will be a super tough ask. Let’s hope government or grant-makers chip in.
The Code of Fundraising Practice
It is good to see that the code will now be independent of the Institute of Fundraising. Expect a raft of changes to reduce the feeling from donors that they are hounded by charities. Necessary as some changes are, the speed at which they will be introduced runs the risk that the pendulum swings too far or too quickly toward the interests of donors. Less "asking" means less fundraising, which ultimately means less money raised.
Fundraising Preference Service
As with many fundraisers, it is this that worries me the most. I have a new motto: when people say "the devil is in the detail" or "we needed to consult the sector first", be very concerned. The issues with the FPS are sizeable. My biggest worry is that people will be peeved by the activities of a single charity, sign up to the FPS and none of the existing charities they support will be able to contact them again.
If the sign-up patterns are anything like those for the telephone or mail preference services, we can expect charities to be stopped from talking to millions of their existing supporters. FPS will require tens of thousands of charities to be screening their databases on a regular basis against the FPS list. This will increase both costs and hassle enormously. It is worth bearing in mind that although the code can tighten and then relax its requirements of charities, once a donor has said they don’t want to hear from charities there is no going back. A generation of donors could be permanently removed from important communications with the charities they support.
Whereas I fully support the other key recommendations of the review, I don’t support this as it stands and would advise charities against taking part. At the very least, I would leave its introduction until the new regulator is up and running in a few years’ time.
The people involved
Getting the right people at the heart of the new Fundraising Regulator is crucial. I really hope that Andrew Hind, the chair of the FSRB, will agree to be chair of the new body. I struggle to think of anybody better. We need people who know about charities, regulation and fundraising in those jobs. Knowing our luck, however, the new people will probably have run something like a financial services company and will have little knowledge of the sector beyond running a couple of marathons for charities.
Getting from here to there
The transition from the current regime is not going to be quick or easy. My guess is that it will take two years before the new regulator is up and fully functioning. Don’t forget that charities need to be signed up, staff need to be recruited and so on. Will FRSB staff hang around in that period, or could we be left with even less regulation in the interim?
Be in no doubt that charities will raise less money as a result of these changes. The real question is by how much, not whether, income from individuals will fall. Tighter regulation means making it harder or more expensive to do the "asking" that is the prerequisite of fundraising. I would be surprised if the drop in income from individuals was less than 10 per cent, and it could be much more than that for some charities, depending on their fundraising strategies.
Innovation and diversification of fundraising away from those techniques that rely on directly asking individuals will become absolutely vital. Just as austerity begins to bite even deeper in terms of government funding, fundraising from the public is also going to become much harder. Tough as this might be, the fundraising sector has only itself to blame for not doing more in the past few years to listen to public and donor opinion.
Joe Saxton is the co-founder of nfpSynergy, a specialist charity research consultancy
This article was first published on the Third Sector blog