Several hundred charities, mostly smaller ones, have refused to pay the fundraising levy. David Ainsworth says more can be done to persuade them.
Much has been made in recent weeks about charities which won’t pay the fundraising levy – the supposedly voluntary contribution all fundraising charities have been asked to make to the Fundraising Regulator.
Around 400 charities – a fifth of all those invoiced – have made it clear that they won’t pay. Many others are engaged in some dispute. Most are smaller fundraising charities, although they are not exactly small. Most have incomes over £1m.
This has been a bit of a crisis for the Fundraising Regulator, which budgeted to have £2.4m a year to carry out its functions. It’s ended up with £1.75m, and its own documents say it will be “ineffective” at this level of funding.
The regulator and the charity sector infrastructure have mostly taken quite an aggressive approach to the organisations which haven’t paid. Sir Stuart Etherington of NCVO, who proposed the levy, said they should be “named and shamed”. Lord Michael Grade, chair of the regulator, called them refuseniks and laggards. Gerald Oppenheim, head of policy, said they don’t have to like it, they just have to pay.
The approach isn't working
One way or another, this approach doesn’t seem to be working. There are now quite widespread calls in the sector for them to try a different way. I think this is wise.
Small charities have some genuine and reasonable concerns. They have not been well represented in discussions to set up the regulator – the Small Charities Coalition has been leaned on heavily to speak for them, and it has limited capacity and is not a fundraising body. They are being asked to pay more of their turnover, proportionately, than the larger bodies.
Many feel that the Fundraising Regulator was introduced because of industrial level fundraising by the top 20 charities, and they are now paying for others’ mistakes. They may very well genuinely not have heard of the regulator.
The regulator is receiving a message from these charities – “We don’t trust you”, basically – and it needs to listen, and try to win that trust.
The problem with the existing approach is that it’s all bluster. The regulator can’t actually do anything. Naming and shaming is not going to hurt a smaller charity much, especially since there’s such safety in numbers. It may also be libellous.
Other than that, the chief threat is that the levy will be moved to a statutory basis, to which the obvious response is: “Fine, do it. Then we’ll pay.”
Personally I think there’s something to be said for moving the levy to a statutory basis, and beefing up the regulator’s statutory powers while we’re at it.
But assuming that the sector as a whole is not of that mind – and it doesn’t seem to be – what’s the alternative?
My answer would be to abandon the critical approach, and launch a charm offensive. The regulator has to show that it offers something to the small and medium-sized charities, and that their concerns are being listened to. It has to articulate what value it offers these charities, and it has to establish a direct dialogue with those who want it. The Fundraising Regulator must show it really cares what small charities think.
Initially, I would propose several remedies.
Hold a conference
Get together all the charities who haven’t paid, and offer them the chance to make proposals and suggestions. Go along in listening mode, be prepared to get grief, and accept the criticism. These charities are your stakeholders, and they have a right to be heard. They feel they haven’t been. If they need to shout a bit, let them.
Start a forum
Pull together the most active representatives of the small charity space and meet with them regularly. Consult them on the issues of the day. Ensure that membership rotates regularly, so you get a good spread of views.
Appoint small charity representatives
There should be a member of every committee at the Fundraising Regulator whose job is to speak for small charities. Then you can be sure that when you set the rules, the small charities sector is properly represented. I feel this is the right thing to do anyway, irrespective of its impact on who pays the levy. Fundraising is too often dominated by the top 100, and the others need a say.
Promise to review the levy banding
The levy is a regressive tax. The smaller you are, the higher your payments. But clearly the most benefit goes to the big fundraising charities, who are the most protective of their reputation. So perhaps the big guys should pay.
Articulate your offering
Articulate in writing your offer for smaller organisations. Send it out with the next set of invoices. Can you clearly explain what benefits small charities gain from paying the levy? Lord Grade, when I asked him this question last week, articulated quite clearly the benefits everybody else obtained from small charities paying, without ever mentioning what was in it for small charities themselves. Strangely, "It'll be good for everyone else" has not proved a compelling call to action.
Change your language
I've alluded to this above, but I'd put a ban on any pejorative terminology towards smaller charities. Calling them "refuseniks" - whether fair or not - is just going to push them further away. You can't insult people you need to persuade. Publish case studies of people who have paid, with endorsements explaining why.
I think it is still acceptable to apply pressure, but the more that can come from their peers - other small charities - and the more it focuses on a duty to donors, the sector and themselves, the more that pressure will tell.
Okay, so that’s my approach for winning the PR battle with the non-payers.
Still, there’s a decent chance this won’t work. Nobody likes to be regulated, and it may simply be that many of these charities can’t be persuaded. A lot of them are trying to scrimp literally every penny, and it’s hard to persuade them to turn the heating on, let alone pay for regulation.
But that’s okay. At least if you do this you can say you tried, and can legitimately say there is little to be done.
And my view is that these structures are sound proposals in and of themselves. They provide representation and ensure the big boys don’t dominate the discussion, as they do too often in fundraising. If they attract more levy payers, that’s a double benefit.
Even if it doesn't raise much money, and you end up with a statutory levy, these measures would still increase buy-in from all the charities you regulate. If you are trying to oversee a hostile constituency, your job is much harder.