Has the recent CharityGiving saga done irreparable damage to public trust in online giving? Rick Pearson investigate, and reveals what you should be doing to keep your online finances secure

You know the story by now. In July 2013, CharityGiving, an online donations site run by the Dove Trust, was suspended by the Charity Commission after concerns were raised about an estimated £250,000 in missing charitable donations.   

The Charity Commission had already appointed an interim manager of the Dove Trust and found a shortfall between the amount owed to charities and the amount the trust had in the bank.

Some 7,000 people had been raising funds for charities via the portal. However, as a result of this negligence, some of the donations may not be recovered and charities could lose out.

Commission impossible?

The ‘blame game’ began in haste. The finger was pointed variously at the Charity Commission, the Dove Trust’s management and the lack of regulation of online fundraising.

But there may be an even bigger casualty in the middle of this: public trust in online giving. 

After all, it’s not the first time something like this has happened. It comes just months after the Cup Trust’s tax-avoidance scandal. Registered by the Charity Commission in 2009, the Cup Trust raised £176m in private donations, yet gave only £55,000 to charity and claimed £46m in Gift Aid.

Then, as now, the Charity Commission was blamed for its perceived negligence. As the regulator for charities in the UK and Wales, it has a duty to ensure charities are being run in a way that’s legal and above board.

Yet, in the case of the Dove Trust, initial fears about its governance and financial management were raised back in 2011, after the charity had failed to fill in a tax return since 2009. Shouldn’t the Charity Commission have acted sooner?

“When we opened the inquiry in August 2011, we were regularly engaging with the trustees and were being given reassurances that they were attempting to resolve the financial mismanagement within the charity,” said a Charity Commission spokesperson. “This included the charity using the service of professional advisers and bringing in new additional trustees.”

At that time, says the Charity Commission, the shortfall – and the extent of it – was unclear. When it had become clear that the trustees were unable to resolve the charity’s financial situation, the commission appointed an interim manager. The shortfall only became crystallised once he was in place. The commission described the Interim Manager’s actions to suspend the fundraising portal as “a last resort”, saying “there was no other option in order to protect the charitable funds that the public has raised”.

Trust issues

So, what will the public make of all this? Will charities’ existing supporters stop donating online?

Pauline Broomhead, CEO of the FSI, doesn’t think so. “The short answer is probably ‘no’.” she says. “Charities, especially small charities, rely on online fundraising platforms as the easiest way of ensuring that those who support them through fundraising events or donation can do so without much effort. As small charities have very close relationships with donors, who are often local themselves and motivated through an affinity to the cause, incidences like the Dove Trust and Cup Trust will have little effect on current donors.”

However, Broomhead does believe that incidents such as the Dove Trust could deter future donors from giving online. “Negative publicity of any sort, and especially negative publicity connected to online fundraising platforms, is concerning and will have a knock-on effect for those considering supporting in the future,” she says.Daniel Fluskey, head of policy and research at the Institute of Fundraising, hopes that isolated incidents such as these will be kept in perspective. “The public’s confidence in online giving, as a whole, should not be undermined by the case of Charity Giving,” he says. “Online donations, either through a charity’s own website or through online platforms, are generally a very safe way to give. The number of donations given through digital channels is growing, and we hope that these isolated incidents don’t negatively impact of people’s willingness to give.”

However, Tanya Noronha, publisher for the online giving platform Charity Choice, says incidents like this can create anxiety around online giving. “In the week that the Dove Trust made the headlines, Charity Choice was contacted by several charities who were concerned that their donations were at risk, which shows that they’ve lost some confidence in online giving,” she says, adding: “It’s hard to make any definitive comments about public confidence, but we’ve not experienced a drop in donations yet.”

Lessons learned

Clearly, some lessons need to be learned from the Dove Trust to ensure incidents like this don’t happen again. Chief among these is that funds donated by the public need to been ring-fenced.

“We also recommend that charities using online donation services regularly check that the reports provided tally with the donations reaching their bank accounts,” says Noronha. That way, charities can ensure the are receiving donations made to them and react quickly if necessary.”

Broomhead says it’s all about transparency. “We must be transparent about the income we receive,” she says. “For example, what percentage comes to the charity? What percentage is taken by the platform provider? If we are clear and transparent about what happens to the money they donate, where it goes and in what proportion, we will keep faith with donors and they will keep faith with us.

“Donating through online platforms, via text messaging and other technologies will only increase in the future. Now is the time to learn lessons from these cases.”

A tail of caution

While the Dove Trust ran into financial difficulties through its own negligence, sometimes charities can be targeted by online fraudsters. That was the case with Yorkshire Cat Rescue, which fell victim to organised bank fraud for two years running.

It started back in 2011, when the charity began noticing that small amounts of money were disappearing from the charity’s bank account. “£10, £15 and £20 were being spent on seemingly innocent items,” said chief executive Sarah Atkinson.. “It all adds up, though, particularly when you consider that, for £10, we can feed a homeless cat for a month.”

Atkinson contacted Yorkshire Bank about these fraudulent payments and the charity was immediately refunded.

However, the fraudsters were back again the following year – and, this time, the stakes were higher. Fortunately for Yorkshire Cat Rescue, the charity’s bank account was now under close surveillance. “I received a call from Yorkshire Bank to say they had stopped a standing order from a cleaning company for £280 a week,” says Atkinson. “Had they not noticed, the scam would have cost us almost £14,000 a year.”

In light of the recent events, Atkinson encourages other charities to be vigilant about fraud. “Double-check your charity’s bank account,” she says. “If our statements had gone unchecked for the past few years, we would have lost thousands of pounds.”

This article first appeared in The Fundraiser magazine, Issue 33, September 2013