By Nick Allaway, Head of Finance at the Fundraising Regulator
Here we are, eight years on.
I’ve been here so long I remember when the Fundraising Regulator was set up in 2016 on the back of the cross-party review of fundraising. It was decided that a new regulator was needed to regulate how money was raised for charity. The Charity Commission was not funded to take this task on and did not have the full range of powers where fundraising agencies are concerned, and had enough to do to regulate how the money was spent. So, 45 of the largest charities all donated to set up a new non-statutory regulator - and the Fundraising Regulator was born.
Our initial funding was running out pretty quickly by autumn 2016 so we established the levy system, recommended in the cross-party review with the aim of raising the £2.5 million that the review had considered necessary to run the new organisation. After engaging with the sector, the consensus was that a fair way to proceed was to base the fee on an organisations’ fundraising expenditure, as this corresponded with activity they were undertaking. Banded fees ensured those spending the most on fundraising paid the most. We had considered funds donated as the denominator for setting the levy, but rejected it as a less accurate activity subject to the rules in our code.
Our first few years of raising the levy were fraught with issues. Naturally, many parts of the sector were not keen to pay for their regulation. Our initial data of who should pay also proved to be problematic and we had some charities within it who shouldn’t have been there. Our contact data for charities also had to be set up from scratch; and our financial collection systems were very rudimentary.
Nonetheless, we managed to collect enough revenue to continue through and beyond our first year and grow as we established our regulatory role. Over the years, our confidence and skill as a regulator has grown. There is now much more recognition and value in organisations having the Fundraising Badge as public consciousness has increased; and we are receiving more complaints than ever to investigate.
As time has gone on, charities have understood that paying for the regulator is an established cost of business that benefits them, and we have become more efficient and cost-effective in running our operations. We have even created a small reserve to pay for any bumps in our funding and in case of legal challenges to our decision making, as well as holding funds to cover costs should we not be able to continue.
However, in the last few years we’ve seen a combination of a drop in charity revenue post-covid (when more traditional forms of fundraising virtually stopped) and higher than expected inflation, at the same time as needing to be a more front footed and proactive regulator, which requires greater investment.
This means we need to ask for a rise in our levy for the first time in eight years. While we realise charity funds are under strain and there is never a perfect time to ask, what it costs for the sector to have an effective regulator is less than one percent of the total charities’ spend on fundraising activity. So, if you look at it that way, it’s a good investment for the future and helps maintain public confidence in charity fundraising.