Charities will best protect their reputations by being proactive in showing why they operate in the way they do. Becky Slack and Tom Collinge review the changes since the Olive Cooke scandal hit, and show how charities can guard against negative media coverage in the future. 

Summer is here, and along with the welcome return of sun, warmth and long evenings are the less welcome reminders of a grim time for fundraising in 2015.

May marked the one-year anniversary of the sad death of Olive Cooke, the nonagenarian fundraiser for the Royal British Legion who was reportedly hounded to death by incessant requests for donations from charities. The coroner found Mrs Cooke suffered from depression and insomnia and her family, while unhappy with the intrusive nature of the charities’ requests, insisted this was not to blame for her death.

A raft of poor practice

This unhappy turn of events grabbed the public consciousness and damning headlines about the moral perfidy of charities and fundraisers ran repeatedly, even drawing condemnation from the Leader of the House of Commons, and Chris Grayling MP.

Still, charities are no strangers to occasional scandal, and perhaps the storm might have been weathered if not for the events of that July. During the summer the Daily Mail sent undercover journalists into fundraising agencies, Listen, and then GoGen. The journalists discovered a raft of poor practice, including the “hounding of vulnerable people” and the exploitation of loopholes in the Telephone Preference Service (TPS). In the case of GoGen, the publicity sent all their clients running and the business went into administration with the loss of almost 500 jobs. Meanwhile – unrelated but garnering huge coverage – Kids Company, the charity beloved of the press and government alike was dramatically imploding.

Reaction to the furore: inquiries and recommendations

This storm of charity controversy led to the setting up of two parliamentary inquiries. One into Kid’s Company and the government’s funding of it specifically, and one by the Public Administration and Constitutional Affairs Committee (PACAC) into the practices of fundraising in charities.

Simultaneously, the government commissioned NCVO chief executive, Sir Stuart Etherington to review the options around fundraising regulation, in the context of possible statutory regulation. The Etherington review consultation opened on 28 July, seven days after the inquiry was opened into fundraising by the PACAC, and was published on 21September while the PACAC inquiry was still underway.

The Etherington Review made two key recommendations. First, that a new fundraising regulator be set up, better funded than previous bodies, with stronger links to the Charity Commission and the power to create its own regulations.

Second, that a Fundraising Preference Service (FPS) be created, acting as a ‘reset button’ that could be pushed by individuals to opt out of all future communications from charities, even ones they have previously okayed to contact them.

Both recommendations are being put into action, though only the creation of the new Fundraising Regulator was endorsed by PACAC in its final report. It rejected the proposed FPS saying: “It would duplicate the function of the existing TPS, and add limitations to the activity of charities that do not exist for any other sector”.

Implementing the changes: where are we now?

On 17 November 2015, the Cabinet Office appointed Conservative peer and former chief executive of ITV, Michael Grade as interim chair of the new Fundraising Regulator. He in turn appointed Stephen Dunmore as interim chief executive on 16 December that year. Both men are expected to serve terms of one year, to oversee the setup of the organisation before moving on.

The new body has spent the intervening period running consultations on its funding and structure as well as securing members of its board and hiring other staff. At the time of writing it is still looking for office space of its own.

As part of the transition, the Public Fundraising Regulatory Association and the Institute of Fundraising are to merge by the end of June, and hand over responsibility for the code of practice to the new regulator, which will then ‘go live’ at some point at some point in the summer.

There has been some contention around the request from the new regulator for start-up fees from the top 50 charities by fundraised income but, with almost 40 having paid up they are unlikely to delay the launch.

Once launched, the regulator will charge a levy on charities with a fundraised income of over £100k. The number of charities this applies to is believed to be in the region of between 2,000 and 2,500, and in return they will be able to display a kite-mark signifying their membership.

The FPS, meanwhile, is further behind in its implementation. The working group, headed by George Kidd, chair of the Direct Marketing Association, is at the time of writing still taking consultations on how exactly it will work. It is due to be in place by the end of the year.

It is not yet known exactly how charities’ day-to-day interactions with the Fundraising Regulator will differ from what preceded it, other than that it is has pledged to be more effective and make the public interest paramount. Similarly, while there are consultation papers available, the final form of the FPS is some way off from being decided.

Tighter guidelines, new liabilities and increased media scrutiny

Another consequence of the summer of 2015 that fundraisers should be aware of is the Charity Commission tightening its guidelines for trustees, making them directly liable for the actions of their fundraisers. These changes will come as part of changes to the Commission’s guidance on Charities and Fundraising (CC20), due to be published in June, and are likely to mean a greater deal of board involvement in fundraising practices in future.

Scrutiny will not just be coming from the new, beefed-up regulatory bodies. Charities need to think about the media and how their activities could be presented if information about their activities finds its way into the hands of journalists – no matter how legitimate it might be.

For example, changes to the SORP mean that charities are now obliged to include pensions liabilities on their balance sheets. Given that many charities have considerable pensions deficits, some of which are so high they run the risk of forcing organisations to go under, there is potential for this to become a big news story.

Equally, the use of ‘mainstream’ financial tools, such as the way charities invest in the stock market (are Comic Relief and the Church the only organisations to have inadvertently invested in dodgy funds?) or the use of debt finance to fund capital projects, have the potential to come into question. In the past we have seen a glut of headlines around staff salaries in charities, and if “fundraiser gets paid to raise money for good causes” can be a headline, there is no reason why “donors’ money used to pay off expensive loans” can’t also be.

What will be next to hit the headlines?

There is a multitude of other areas of charity operations that have the potential to hit the headlines. Fundraising has been under the spotlight for years and will continue to be. We can almost certainly expect the same treatment that face-to-face and telephone fundraising have been given being applied to corporate partnerships and gala events, and possibly even trusts and foundations. A recent episode of Radio 4’s You and Yours – a programme highly critical of charities’ fundraising practices – made much of the increase in advertising spending since the fundraising scandal, possibly sensing another avenue of attack. And let us not forget the front page Daily Mail story about the RSPCA “snooping” on people’s wills – despite the fact that donor (customer) profiling of this nature is common practice among marketing teams worldwide, both in the charity and commercial sectors.

How charities can prevent/minimise negative coverage

While much of the criticism levied at fundraising over the last year is not ill-founded, negative media coverage has often been fuelled by a lack of understanding of how charities operate. Charities need to address these issues, be transparent, and normalise what they do so that all elements of shock and surprise are removed. For example:

• Within stories of your work, mention how the services were paid for thanks to the contributions from donors, referencing specific fundraising techniques where appropriate and relevant. For example: “The money to pay for this service was raised via our face-to-face fundraisers in Birmingham”; or “This service was funded thanks to the generosity of all those who donated to our Christmas fundraising appeal”.
  
  
• Invite journalists to see your organisation’s work in action, taking time to explain about running costs, the specialist skills needed and the cost of recruiting these professionals, etc.
  
  
• Provide information to supporters (donors and volunteers) via newsletters, your website, social media and other communications that explains how much it costs to run your organisation, the role the chief executive plays, etc.

Of course, charities cannot prevent the actions of rogue employees and other ‘bolt from the blue’ scandals but, as the annual slow news period approaches, they should consider whether their houses really are in order, and if they have a plan to respond to accusations that they are behaving in a manner that is untoward.

Becky Slack is founder and MD and Tom Collinge is editorial and public affairs officer at Slack Communications.