For 14 years, Personal Telephone Fundraising was a successful business. From when it started in 2002 to this year it raised £340m for organisations such as the Blue Cross, Greenpeace and Barnardo's. Then, in July 2015, the Information Commissioner announced that fundraising organisations were prohibited from calling charity supporters who were registered with the Telephone Preference Service.
This put the agency out of business: its doors closed in February and 32 people were made redundant. Jane Cunningham, PTF's co-founder and managing director, says: "About 75 per cent of my business disappeared overnight. I immediately said to my clients: I'm a rule follower. I'm not prepared to break the rules."
Cunningham says that, before the commissioner's announcement, calling existing charity supporters who were registered with the TPS was a sector norm. "Imagine if you had a job painting red and green doors and most of the work was red doors, but someone said you couldn't paint red doors any more..." she says.
Not the only casualty
PTF was not the only telephone fundraising agency to close last year. Changes to the TPS rules, the increased scrutiny charities faced over their fundraising tactics after the death of the poppy seller Olive Cooke and various media exposes led to the demise of several others. The first to fall was GoGen, which ceased trading last July. Within weeks another telephone agency, R Fundraising, collapsed, and Insight CCI went into liquidation in February (see "Timeline"). The closures were not limited to telephone agencies. The face-to-face agencies Future Fundraising, Person to Person Direct and Fundraising Initiatives have also shut in the past nine months.
Rupert Tappin, the co-founder of Future Fundraising, believes the pressure on agencies to keep their prices low was to blame. His agency appointed a liquidator last August after finding itself unable to cope with staff costs and other overheads at a time when negative media coverage was making prospective donors keep their wallets closed.
"Agencies that employ their staff have all the risk on them because they have to pay the fundraisers their hourly wage," says Tappin. "The marketplace is very focused on minimising the cost per recruit. It's primarily been pile 'em high and sell 'em cheap - and when that's too low for an agency, the agency just can't make it work."
Some charities have started to engage more with their agency partners by, for example, sending their chief executives to meet fundraisers and inviting trustees to listen to calls. But a growing number are cutting out the middleman and setting up their own in-house teams.
Oxfam expanded its in-house face-to-face fundraising team last year (see "Case Study" below) and the British Red Cross says that setting up an internal telephone fundraising operation remains an option. But Cancer Research UK says the charity - which works with agencies including Ethicall, Pure, Real and Together - has not moved any of its individual giving fundraising in-house over the past year and has no plans to do so.
Cunningham now works as a consultant, helping five charities of various sizes replace their telephone agencies with in-house programmes, and says there is plenty of demand for this. Some of the charities she is working with are former clients of PTF, she says, who are anxious about taking on other agencies after hers closed down.
Others want to take comfort from having more oversight of the calls that are being made in their names.
Another option for charities has been to replace the income they once got from telephone and face-to-face with alternative fundraising streams. Oxfam scrapped its doorstep fundraising programme last December and is increasing its investment in mass-participation events to make up the shortfall. Other charities, including St John Ambulance and Barnardo's, are focusing more on fundraising from trusts and foundations. Direct-response TV has proved a popular option for some others.
Peter Hills Jones, chief executive of the Public Fundraising Association, says that income from face-to-face fundraising is now falling. Its latest figures show that income from street fundraising fell from an estimated £14.6m in 2014/15 to £12.3m in the year to March 2016, and doorstep fundraising revenue fell from £83m to £70m over the same period.
The three Ms
He attributes the fall to "the three Ms": media environment, the maturity of the market and the Metropolitan Police. Negative media coverage of charities has led to fewer people giving, he says, and the face-to-face market reached a peak in 2014 that was not sustainable. The police service, he says, has had an impact because in January it introduced a policy that required fundraising organisations to give all their London-based doorstep fundraisers criminal record checks. At between £25 and £40 apiece, the cost of the checks has forced many door-to-door agencies to suspend the campaigns they had planned.
Stephen Lee, professor of voluntary sector management at the Cass Business School, says that the short to medium-term prognosis for agencies is poor. He says: "You would have expected some of the larger agencies to have gone out of business because they're in a high-volume, low-yield industry. Charity trustees now have a very heightened, largely conservative awareness of the risks of being associated with them."
Lee is particularly surprised that Listen Ltd, the telephone fundraising agency that was at the centre of the media storm last summer, has survived. The RSPCA and Unicef were among the charities named as working with Listen in a Mail on Sunday article published last June, which accused the agency of using high-pressure fundraising techniques - a claim that was later upheld by the Fundraising Standards Board. Both charities still work with the agency, as do the Red Cross, Macmillan Cancer Support and Barnardo's.
Tony Charalambides, managing director of Listen, says it has been testing new fundraising approaches and is optimistic about the future.
Richard Taylor, executive director of fundraising, marketing and communications at Macmillan, says the charity has maintained its contract with Listen because it is satisfied the agency has taken action to address its former non-compliance with some fundraising rules. Macmillan, the NSPCC, Oxfam and the Red Cross have been under investigation by the FRSB for their work with GoGen since last summer.
"We have taken steps to ensure the work we do with Listen follows all the rules, is in line with our values and delivers excellent fundraising," says Taylor, who is also chair of the Institute of Fundraising. "Listen is responsive, sensitive and understanding."
Pell & Bales, one of the agencies that was the focus of a critical Channel 4 Dispatches documentary on telephone fundraising in 2014, says in a statement it has experienced "difficult trading conditions" over the past year, although it still counts charities such as the Red Cross and CRUK among its clients.
Dominic Will, managing director of the door-to-door agency Home Fundraising, which has lost custom from charities including Oxfam and Save the Children in recent months, admits that his business has had a tougher time lately. "Some clients have become very cautious over the past year," he says. "This is because they have come under scrutiny from the media or because they have some trustees who feel very cautious about fundraising."
Home, whose existing clients include CRUK and Macmillan, has noticed a decline in the percentage of people it has persuaded to sign up as donors. "This is the most significant shift in response that I've seen in my time in fundraising," says Will. "Some people either don't want to engage with the fundraisers or are just more sceptical than they would have been before."
However, there is some optimism about the future. The PFRA says it is anticipating a modest recovery of face-to-face fundraising income over the next year. It says that some street and door-to-door agencies might be able to bolster their income by diversifying into private-site fundraising.
The IoF is also preparing guidance for charities and agencies to help them work better together. For Tappin, who now works full-time for Decaid Consulting, the fundraising consultancy he founded in 2012, this closer collaboration is crucial to the industry's survival.
"The future of fundraising agencies has the potential to be great, but it is totally down to the way that charities work with them," he says. Charities need to accept responsibility when their agencies are criticised in the press for their practices, Tappin says.
"The sector is going in the right direction, but if it continues to hang agencies out to dry, there will be no more fundraising agencies left."
CASE STUDY: OXFAM
Oxfam's response to the negative press coverage it received last year over the fundraising practices used by its agencies was to end the contracts. First it dropped GoGen in June 2015 after the Daily Mail reported that the agency was "exploiting loopholes" in the Telephone Preference Service while working its behalf. Then it dropped Listen and the Street Academy in July after The Mail on Sunday claimed that they were using high-pressure donor recruitment tactics during a campaign for the charity.
And, unlike several of the charities that received similar criticism in these articles, it did not restart these contracts once the media furore died down a few months later.
Tim Hunter, director of fundraising at Oxfam, says the charity also decided to stop its door-to-door fundraising programme last December because of poor returns, putting an end to its relationship with the doorstep agency Home Fundraising. Future Fundraising, another face-to-face agency with which it worked last year, went bust in August.
Hunter says: "We have had to take a look at our fundraising. We know we're not going to grow in certain areas in the future, so we're trying to invest in different areas."
The charity intends to continue working with agencies, but says it will now do this in a more "structured and comprehensive" way than before.
"We're not in the camp that says in-house equals good, agencies equal bad," says Hunter. "But we're now making sure we're consistently putting our procedure into action."