Is the 2006 Charities Act review an opportunity, or a threat to fundraising as we know it? Mike Wade explains why we all have to get involved

The review of the 2006 Charities Act has caught many fundraisers off-guard. How can giving be increased? How to keep charities in line to protect public confidence? Everyone involved with fundraising needs to engage with these “carrot and stick” questions now. The Institute of Fundraising (IoF) believes the review has the potential to transform giving, but could, at worst, pose a serious threat to effective fundraising.

Simplify. Modernise. Transform

The Institute believes a three-pronged approach is needed to secure future fundraising growth:

• simplify self-regulation and charitable collection rules
• modernise Gift Aid
• transform payroll giving

1. Simplify

Self-regulation is a mess. The Fundraising Standards Board (FRSB), Public Funding Regulatory Authority (PFRA) and Institute of Fundraising all play formalised roles, and bewildered charities pay subs to all three.

There is still a lack of clarity on whether the 1916 and 1939 laws, intended to protect against fraudulent cash collections, affect today’s face-to-face fundraising – and local councils use this to pick and mix legislation to suit their purpose. Add in the confused regulations around fundraising disclosure statements and it’s a rare fundraiser who is on top of it all.

The good news is that we’ve shown we are “up for it”. Over 1,300 charities have embraced self-regulation and joined the FRSB. But at what cost? Of the many thousands of complaints made annually, fewer than 20 are referred to the FRSB. In five years, only seven complaints have gone to final “stage 3” arbitration. Over the same period the FRSB has cost over £2m to run. Value for money? Perhaps not. At a time when charities are desperate to invest every penny in their charitable work, there has to be a cheaper, simpler approach to self-regulation. Now’s the time to find it.

2. Modernise

Gift Aid is cited as a government success story, with many millions of pounds generated each year. Yet its treatment of higher rate taxpayers has failed to keep up with the times.

When the current Gift Aid scheme was introduced at the turn of the millennium, most higher rate taxpayers probably did complete tax returns and so could – if they could cope with the paperwork – claim back higher rate rebates for themselves.

Tax systems have changed since then, however. The Institute of Fiscal Studies tells us that millions more ordinary workers – from teachers to fundraisers – now pay the higher rate. With monthly PAYE these donors do not fill in tax returns and are unable to easily give tax effectively. The mega-rich, giving multimillion-pound gifts, have accountants who will sort it – millions of ordinary donors giving £10 per month do not.

The government appears to appreciate the principle that the charity should get back all of the tax that the donor has paid on a donation – this idea is at the core of Gift Aid after all. Agreeing the best way to achieve this will take time, but let’s confirm the destination, and get started on the journey there.

3. Transform

Payroll giving has been fundraising’s poor relation ever since it was established in 1987. Even its fans would not claim that the scheme has fulfilled its potential, with a tax benefit of only a few tens of millions. We’ve tinkered around the edges for far too long – payroll giving needs transformational reform.

The Institute has developed three principles which we believe could achieve this transformation: make payroll giving available to all workers, improve connectivity between the charity and donor, and enable portability between employers and into retirement. Together, these three principles could give us a fundraising product we can be proud of.

About the author:

Mike Wade is the director of fundraising and communications for the National Deaf Children’s Society, chair of the Institute of Fundraising’s policy advisory board and an Institute of Fundraising trustee.

This article first appeared in Fundraiser magazine, Issue 14, February 2012