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FRSB almost triples fees for largest charities

FRSB almost triples fees for largest charities
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FRSB almost triples fees for largest charities1

Fundraising | 17 Sep 2008

The Fundraising Standards Board is to raise its fees for its largest charity members by up to 177 per cent, though two-thirds of its members will see their rates frozen for the time being.

The fee hike comes as part of a new plan for phase two of the FRSB’s existence, which will also see it lower its sights for membership levels from the original 4- 5,000 charities by June 2010, to 2,000 members.

The organisation is also proposing setting up an advisory forum of member charities to address criticism that the organisation is too far removed from its members.

In an interview with Charity News Alert, FRSB chief executive Jon Scourse (pictured) admitted that in its first two years the regulatory body had met with many “challenges”, but that “on balance, we feel the remit we were given to kick-start this project has been achieved. It’s reached a point now where we feel it’s the right moment to reach the second phase of our development.”

Fee restructure

Central to the new phase is a restructure of the fee scale for charities of different sizes.

The largest of charities, those with voluntary income over £50m per annum, will see their rate rise from 8p per £10,000 of income to 50p per £10,000. But for charities with less than £500,000 in annual voluntary income – around 70 per cent of FRSB members – there will be no change in fees.

“What we are doing is introducing a more equitable structure which allows for a better reflection of the proportionality of fundraising,” said Scourse.

He admitted the increases for the larger charities was critical to the financial sustainability of the FRSB.

“By June 2010 we will break even on this new fee structure,” said Scourse. “If we don’t get 2,000 members, we’ll be having serious problems.”

Just last month the FRSB was the subject of intense speculation that it was facing financial crisis.

Scourse did not rule out the possibility of a further fee restructure, but emphasised that the current changes have been planned in consultation with the larger charities, brokered by the Institute of Fundraising.

“We would like to move towards a fairer scheme where the volume of fundraising traffic is reflected. We see this as a step in that direction.

“It’s fair to say that if we went for a totally equitable scheme, the level of increase for the largest charities would be unbearable,” he said, adding that opposition to greater increases had been “emphatic”.

He stressed that membership rates remained low in comparison to other industry self-regulatory bodies such as the Advertising Standards Authority. Scourse described the rate of fees for larger charities as “absolutely infinitesimal”.

Advisory forum

Fees, however, are not the only change mooted.

“We’ve been very focused on recruitment over the last year and now we need to re-focus on engagement,” said Scourse.

While specifics are not yet finalised, the FRSB is preparing a proposal for the board to establish an advisory forum comprised of members, which Scourse hopes to be up and running by early 2009.

Initial proposals for the role and shape of the forum include that it would be consulted on any changes or developments at the FRSB, though it would not have veto power over decisions such as future fee changes. Scourse expected that members would be able to nominate themselves for it and that it would spawn smaller, specialist advisory groups.

Input from charities, said Scourse, “is something that is very important to us”.

In addition to developing the advisory body, the FRSB plans to expand its range of events for members and use bodies such as the Institute to mediate closer working relationships with charities to mutually promote self-regulation.

According to a study undertaken by the Charity Awareness Monitor for the FRSB, public awareness of the scheme currently stands at around 5 per cent. Lacking a budget to embark on major public awareness campaigns itself, the FRSB said it was looking to work with larger charities to promote the scheme to existing and potential donors. Scourse reiterated his original wish that, over time, it will become “natural” for donors to look for the FRSB tick before making a donation.

Removing barriers to membership

But the organisation will also be maintaining its efforts to recruit more members, and it is medium-sized charities that will be its focus. It has 900 members at present, significantly lower than the 1,400 that the Buse report said it should have at this stage. Scourse said it was determined to “work more effectively” with the sector umbrella bodies that are on its board to convince them to promote the scheme to their own members.

Among one of the larger barriers to entry identified by charities was the recommendation by the FRSB that the board of trustees sign off on membership. The FRSB has now changed the recommendation so that a senior executive of the charity can approve membership, though the chair or a trustee should be aware of it.

The board is also set to re-write its terms and conditions in plain English and is aiming for a Crystal mark for the document. Removing the legalese, it is hoped, will make the process of signing up to the organisation simpler and answer criticism that the previously eight page document was cumbersome.

Initial reactions positive

Paul Amadi, chair of the Institute, called on its members to support the “necessary” changes.

He said: “My sincere request to fundraisers and fundraising organisations is to continue to work with the Institute to ensure that these, and other reforms that are likely to be necessary in the future, make the susbstantive improvements that are necessary to ensure the success of a self-regulatory environment.”

Giles Pegram, director of fundraising at the NSPCC, welcomed the announcement and said that speculation had been that the fee hike would be higher.

“£5,000 is not a huge amount for a charity of our size,” he said, adding that the investment was minimal in relation to the benefit reaped from association with, and development of, self-regulation in fundraising.

Pegram, whose organisation had been consulted in the development of new phase, said the NSPCC was happy with the new direction which was “absolutely right” and a “natural part of evolution of the FRSB”.

Andrew Scadding
14 Aug 2008

Faced with increases of up to 170 per cent at the top end, members might ask two questions - where are the accounts, and where are the budgets for the future?

If the money FRSB has had in the past has been wisely spent, and their plans for the future are sensible and convincing, members may not object to the increase. But in the absence of any financial information, it is impossible for the membership to judge whether or not any increase is required.

Speculating a little, it seems possible that the root of FRSB's problem may be in its failure to recruit middle sized charities. It says says that 70 per cent of its members will experience no increase at all. Charities with an income under £500,000 are unaffected, so it seems likely that 70 per cent of the membership have voluntary income below that level. Only FRSB knows whether the low subscriptions charged to small charities are adequate, but they cannot contribute much cash to the costs of any 'campaign for public awareness'. The biggest fundraising charities have joined up amidst much publicity. They are now having to take up financial slack which we might suppose results from the middle charities having stayed away.

The essence of my objection to FRSB in the past has been that it does not require members' consent to increase its financial levies, and it is under no obligation to justify them. I was and remain concerned that if FRSB chooses to increase its fees, member charities' options are limited to paying up or leaving. Leaving would have significant cost implications since notepaper, websites and so on would have to be changed to remove the FRSB logo. This announcement does nothing to reduce those concerns.

FRSB depends on the trust and confidence of charities to achieve its objectives. It got off to a bad start. Its handling of this situation could make a real difference. An honest presentation of the current financial position, coupled with a credible and sensible plan for proportionate self-regulation in the future, could disarm opposition and give charities confidence in FRSB's integrity and management. Include in the mix a meaningful advisory forum with active power to influence policy and budgets in future, and we may be getting somewhere at last.

But the history of FRSB is one of deals done behind closed doors. Openness, to date, has not characterised their dealings. I am not holding my breath for any change in that. In this present case only the biggest charities seem to have been involved in the decision making. The bulk of the membership are being treated to a barrage of tired old cliches instead of being given hard information. There is little about future plans, and less about past or future expenditure. Tucked in at the end of their 'other plans' is the trademark FRSB threat: this time - how can we get the non-members? Has the leopard changed its spots? Apparently not.

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