The collapse of Fruitful Fundraising leaves the beleaguered technique of street fundraising in limbo, but what does this mean for its regulation and the future of charity fundraising? Joe Gill investigates.
The face-to-face gold rush may well be over. Amid the debris left by the collapse of Fruitful Fundraising, many charities are having to look long and hard at the merits and dangers of using street fundraising agencies.
Fruitful is one of three major face-to-face companies run by Chris Coleridge to have collapsed over the past 12 months. After Open Air Fundraising went, Push Consultancy and Fruitful followed.
The three companies collapsed owing charities more than £1m. Scope, the Children's Society, Shelter, the NSPCC, the British Red Cross, Great Ormond Street Hospital and Barnardo's are among those affected, and some 800 jobs have been lost in the chaos.
People who have worked with Coleridge, who could not be contacted, describe him as driven, and prepared to go to great lengths to get what he wants.
He has twice changed his name - from Mankey to Cunningham to Coleridge.
He became known to the sector in the late 1990s when he co-founded Personal Telephone Fundraising, later the Professional Fundraising Partnership (PFP), with his then wife, Jane Cunningham.
When the couple split in 2001, Coleridge left PFP, which later became Open Air Fundraising, and set up Fruitful Fundraising.
In 2002, Coleridge did a deal with his ex-wife to take back control of the street fundraising side of PFP, which by then was £1.8m in the red, and renamed it Open Air Fundraising. With £900,000 owed to charity clients, it was forced into administration in July 2003.
Coleridge set up a fund to repay Open Air debts from Fruitful profits and claimed to have paid back around £125,000 to charities before Fruitful went under.
The debts were accumulated in the early days of face to face, when charities paid agencies in advance. Despite these losses, charities insist street fundraising had transformed the fortunes of a sector reliant on legacies and direct mail.
Charities now usually insist that they will only pay agencies for donors recruited on the street after they have been delivered and checked.
Coleridge has blamed negative press coverage for the collapse of his companies, but many of the charities involved claim they had no idea anything was awry until the last minute.
On 14 July, administrator Tenon Recovery took control of three Fruitful subsidiaries, Fruitful Fundraising (GB) Ltd, Fruitful Fundraising (HR) Ltd and Fruitful Fundraising (Workplace) Ltd. The administrator said it "found minimal cash available to pay wages" and, therefore, "had no choice but to make all staff redundant, many of whom are owed two weeks or more in wages".
Several industry insiders have expressed astonishment that Fruitful was allowed to take over the Push Consultancy in May, when two of its own companies had gone into administration in the months beforehand.
When other Fruitful subsidiaries, Face to Face and Door to Door, were declared insolvent earlier this year, a separate administrator, Leicester-based HKM LLP took over the reins. It also handled Push Consultancy's administration, but it did not return calls to Third Sector to discuss the detail of the situation.
The Charity Commission and the Department of Trade and Industry are both conducting their inquiries into Fruitful's demise.
Fruitful is a member of the Professional Fundraising Regulatory Association, the industry self-regulatory body. Chief executive Sue Brumpton said the PFRA had heard nothing from Fruitful about its administration but "practically, we assume nothing is happening anymore".
But what is of particular surprise is that so few charities noticed the wheels coming off the Fruitful wagon, given that two previous Fruitful enterprises had already become insolvent, and that it had inherited debts from the acquisition of Open Air.
The Children's Society's contract with Fruitful was due to finish at the end of July. It is owed £164,000 by Fruitful, money it is now unlikely ever to see, but the setback will not stop the charity from using face to face.
"Our relationship is now based on payment by result," says head of media Sue Williams. "We pay for bona fide direct debit details and carry out secondary checks to make sure they are correct. This technique is much improved compared to how it was five years ago.
"We always thought Fruitful were best for results. It's sad for all the people who have lost their jobs, and because over five years, face to face has generated £5m for us - other methods don't do that."
Ex-staff, many of whom are owed money, are less than happy about the way they were treated. One told Third Sector: "The 'chuggers' had all the bad press and the abuse, while management seems to have got away with it so far.
"The company was losing money and it was only interested in getting more and more bodies on the street. The spin, back in the summer of 2002 (when Fruitful took over PFP's street fundraising), was that a mess had been made by the previous owner and we had to sort it out. You don't want to believe what you were doing for so long, out of commitment to the charities, was not what you thought it was - that you were taking their money."
Unicef had just begun planning a street fundraising campaign with Fruitful when the company went into administration. "We have to now take a decision whether to run the campaign with someone else, or to reassess our recruitment strategy," says head of fundraising Fiona Hesselden.
"Face to face has been hugely successful in recruiting donors in the past, so it is not something Unicef will exclude in future."
A Shelter spokesman said that the collapse of Fruitful was "not a reflection on the sector or business model, but a problem of the management structure of one company and one individual". He added that face to face still formed part of its fundraising activities. Open Air is believed to owe Shelter £127,000.
The collapse of Fruitful means charities are getting tougher in their contract demands with agencies. More may follow the lead of charities such as Concern, which has taken face to face in-house.
"It would be a massive disappointment if other charities now stopped using face-to-face fundraising," says Institute of Fundraising chief executive Lindsey Boswell. "I have no reason to believe at all that this is a result of problems with face-to-face fundraising as a technique, it is a result of management and internal issues of Fruitful."
One charity fundraiser who had dealings with Fruitful remains philosophical: "Face to face has been vital to our success and, more importantly, it enables us to plan, because it is not like a legacy or a collection tin. It's very easy to slag off face to face because it's so annoying, but when did people last give us this much money?"