Fundraising Regulator faces financial trouble as charities refuse to pay levy

21 Jun 2017 News

The Fundraising Regulator is running on its reserves after failing to raise enough in the first round of its levy on fundraising spend to operate effectively, according to documents seen by Civil Society News.

According to a number of sources and documents seen by Civil Society News, the first round of the Fundraising Regulator’s levy is set to raise around £1.75m.

This is more than £500,000 short of the proposed yearly budget that the Fundraising Regulator announced when it first launched, and more than £200,000 short of the £1.96m minimum budget it believes it needs to operate effectively.

The Fundraising Regulator is a self-regulatory body which depends on voluntary contributions from charities. It has sent invoices asking for contributions to all charities identified as having spent at least £100,000 on fundraising activities in the 2014/15 financial year. However many charities have objected to the levy.

Hundreds of charities have refused to pay

Civil Society News has been told that some 418 charities have outright refused to pay the levy. Another 219 have been wrongly invoiced by the regulator, because its levy was based on incorrect data.

Another 155 are still in dispute with the regulator. Of these 68 will probably not pay, while 87 will probably pay a proportion of what they have been asked to contribute by the regulator.

In total, more than a third of the 2,011 charities invoiced are unlikely to pay. The regulator's figures show it anticipated that less than 10 per cent would refuse to pay.

The most recent figure available suggests that the 418 charities who have refused to contribute to the levy have cost the Fundraising Regulator an estimated £330,000 in lost income.

The 199 invoices the Fundraising Regulator has effectively had to write off due to incorrect data have cost the regulator another £300,000.

While the Fundraising Regulator has yet to respond to requests for a comment, it is understood that it will be making up this shortfall through its reserves.

Ongoing issues with the levy

The Fundraising Regulator has struggled with getting charities to voluntarily contribute to the levy, since the ‘tiered’ basis for the levy was first published in August last year. Five of the largest UK fundraising charities also publicly refused to contribute to the regulator’s request for £15,000 of start-up funding, although a number eventually relented.

In February, Children and the Arts, a London-based arts charity, reported the Fundraising Regulator to Trading Standards after receiving what its chief executive called “an unsolicited invoice”.

Also in the last two months both Sir Stuart Etherington, chief executive of NCVO, and former minister for civil society Rob Wilson have criticised charities for not contributing to the levy. 

This story has been amended after the Fundraising Regulator updated the number of charities which have been invoiced, and the number which have been removed from the levy.

 

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