Almost a third of charities that have been asked to pay the Fundraising Regulator’s levy have refused or not responded to requests for payment, the regulator’s chair Lord Grade has revealed.
He said the regulator would be reviewing the payment position over the coming months and might recommend that the government make paying the levy a statutory requirement if insufficient charities contribute.
Speaking this morning at Third Sector’s Annual Fundraising Conference, part of Fundraising Week, Grade said 600 of the 1,900 eligible charities had not yet agreed to give funding to the regulator.
He said the regulator would be reviewing whether or not to ask the government to make the levy a statutory requirement when the watchdog marks its first anniversary in July.
He said he could not guarantee the levy would remain at the same level for the next three years.
The levy applies to all charities spending more than £100,000 a year on fundraising and is currently a voluntary charge to fund the regulator, but the government does have the power to enforce it if not enough charities pay up.
The creation of the Fundraising Regulator was proposed in the review of fundraising practices conducted by Sir Stuart Etherington, chief executive of the National Council for Voluntary Organisations, in the wake of the negative publicity about fundraising in 2015.
Grade said today: "The voluntary levy was a central proposition of the Etherington review, which was accepted by the government. Paying the levy is not just a simple financial transaction, enabling us to operate effectively, it demonstrates commitment to the cultural change in fundraising highlighted as essential in the Etherington review.
"Around 1,300 of the 1,900 eligible charities have either paid or committed to paying the levy. This includes all but a handful of the larger charities. Some of the smaller charities have proved to be less engaged."
Grade declined to name the larger charities that had not yet paid, saying the regulator was still in discussion with many of them. But he said many charities had simply not responded to the regulator’s letters, apparently in the hope that the issue would "just go away". Some had refused on principle, he said.
He said the regulator was being forced to divert valuable resources to chase the payments.
"Over the next two months we will be carrying out a review to determine the ways in which levy collection might be improved in year two," he said.
"Depending on the outcomes of the review and the final out-turn of the year-one levy, my board will consider in July whether we should recommend to the government that it implements reserve powers to make the levy statutory in 2018/19."
He said the regulator and the Office for Civil Society would prefer not to move to statutory enforcement, but his comments about the possibility of it happening were "not a threat – it’s a fact".
Grade said he hoped the number of non-paying charities would "dwindle dramatically" in the coming months.
"I hardly need to point out that the regulation of charities that decline to pay the levy is in effect being subsidised by those that do," he said. "This is not right, nor is it the basis on which the government agreed to give voluntary regulation a chance."
He defended the regulator’s efficiency, saying it cost less than Etherington had predicted it would in his review.
Etherington himself also urged charities to pay the levy today in a speech at the annual business meeting of the Association of NHS Charities. He used the same words as Lord Grade to encourage charities to see the payment as a commitment to improving fundraising practices.