The many suppliers and charities that have been left out of pocket over the years by the fundraiser Chris Stoddard will be gratified by the news that he has been disqualified from being a company director for the next nine and a half years.
Rather than contest a court case brought against him by the Insolvency Service, Stoddard last week accepted the disqualification as a consequence of irregularities in his string of fundraising companies that have either been dissolved or gone into liquidation.
He also admitted breaching charity law by failing to provide adequate information in fundraising materials, allowing one of his companies to keep more than £125,000 of donations to charity and breaching his fiduciary duty in his accounting methods.
This won’t mean that printers and other creditors will finally be paid or that charities will receive all the donations due to them, but it makes it less likely that others will fall into his or similar traps. The Insolvency Service deserves full credit for finally putting a halt to his activities.
Stoddard’s methods, analysed by Third Sector in 2015, were based on a cynical attitude to charities, ruthless exploitation of donors and questionable business methods. They centred on the so-called "payment from proceeds" system that originated in the US and relied heavily on the large databases Stoddard had built up since the 1990s.
Small or fledgling charities were asked to pay nothing up front, and once they signed up Stoddard would produce slick, tear-jerking copy about their causes, ranging from starving children to suffering donkeys and medical research.
Hundreds of thousands of direct-mail appeals were then sent to potential donors on Stoddard’s databases, which he also rented out using advertising tags such as "mainly female, 65-plus".
When money came in, the charity would receive nothing, unless it could claim the Gift Aid, until the company’s expenses had been paid and its profit taken, which could take years. Some small charities were happy because no income was replaced by some income with nil expense; over time, however, some of the clients realised they were getting a poor deal and began to complain.
When fundraising became more difficult in recent years and Stoddard’s companies got into serious difficulties, he performed a number of so-called "phoenix" operations – going out of business, leaving suppliers unpaid, and using a fresh company to take over the assets of the previous one and carry on much as before. The dubious inter-company transactions involved in these operations led to his eventual downfall.
Two aspects of the story stand out. The first is the echo of the Olive Cooke case, which led to a scandal about high-volume direct-mail fundraising, a tightening of the law and the creation of the new, more rigorous Fundraising Regulator. Stoddard’s operations contributed to the unscrupulous bombarding of potential donors, many of them vulnerable or elderly, that brought fundraising into serious disrepute.
The second is Stoddard’s disregard of the law, which requires that potential donors are properly informed in appeals about how their donations will be used. The message in his mailshots implied that up to 65 pence would go to cover expenses, but the low response rate to such mailshots meant that, in practice, the entirety of many donations was used to cover expenses. A former colleague of Stoddard complained to the Advertising Standards Authority in 2010 that the message was misleading, but the ASA did not uphold the complaint. Stoddard’s admission last week that he was indeed in breach of the law in this respect makes that decision now seem particularly unfortunate.
Stoddard is approaching 70 years of age, so it seems unlikely that he will return to the fundraising scene once his disqualification as a company director has expired. Many people in the fundraising world have been uneasy about his methods for years, and it has taken too long to bring him to book. But he has now, in effect, departed, and that gives a small but significant boost to the continuing project to improve the practice of fundraising and restore its reputation.
Stephen Cook is a former editor of Third Sector