The UK's Fundraising Apocalypse - And What Might Be Done About It

My GG+A colleagues in the US have been taken aback by the turn of events in the UK fundraising sector over the last year. They have asked me all sorts of questions, which essentially boil down to:

• How did this happen? How, in the span of less than a year, have events led to the establishment of a new fundraising regulator; the bankruptcy of several long-standing suppliers to the sector; the UK’s professional body for fundraisers losing control of its Code of Practice; and the creation of a scheme to allow people to opt-out of all charity communications, forever?
• Is the criticism fair?
• What do you think UK charities should do about it?

All eminently reasonable things to ask, and in this post I’ll attempt to answer them.

How did this happen?

Fundraisers in the UK cannot say they have had no warning that a perfect storm might, at some point, break over their heads. Hostile stories in the media about charity fundraising techniques had been surfacing regularly over the past two or three decades. But the 2002 coining of the term ‘chugger’ (a conflation of the words ‘charity’ and ‘mugger’ to describe professional street fundraisers) by the journalist Keith Barker-Main in the free London newspaper Metro, gave rise to a catchy and popular way for people to express their dislike of being asked for money in what they regarded as an intrusive and overly-aggressive manner.

Despite the apparent public dislike of this kind of street fundraising, the results belied the stories. Even allowing for extremely high first year attrition of street recruited donors, on-street face-to-face fundraising proved one of the most effective available methods of recruiting recurring monthly donors, with over 600,000 new donors per year recruited by the method, and most charities seeing payback periods on recruitment of about 10 to 18 months.

One thing became very evident in the course of the sustained media attention on face-to-face street fundraising: charities seemed unwilling or unable to respond appropriately to media criticism of the method in any coordinated way. In 2010 Sir Stephen Bubb, the chief executive of ACEVO (the UK association for charity chief executives), castigated chief executives of major charities for failing to defend the sector after a critical BBC report. Over the years, as the media realised that the charity sector was a soft target and unlikely to push back, the attacks grew bolder and started to encompass other forms of charity fundraising.

A 2014 Channel 4 Dispatches documentary, entitled ‘Nuisance Calls,’ focused entirely on an undercover exposé of charity telemarketing agencies, despite the fact that Ofcom research consistently shows commercial telemarketing to make up the bulk of ‘nuisance calls’ received by members of the public. The methodology and fairness of the reporting was heavily criticised at the time by one of the telemarketing agencies involved.

So by the time the Olive Cooke story broke in May 2015, it would already have been very apparent to the media that they would face little, if any, resistance to their claims that she had been “hounded to her death” by charity fundraisers – a claim that was subsequently found in the inquest to have no foundation whatsoever. This has not stopped journalists from inserting her name and image into every subsequent story about charity fundraising in the UK.

Even after the inquest into Mrs Cooke’s death showed it to be a result of ongoing severe depression, and nothing to do with charities, the sector still seemed either unwilling or unable to defend itself against the media, and the editors of Civil Society magazine highlighted this failure in a September 2015 editorial.

Shortly after this, the Etherington Review of fundraising regulation appeared with its strong recommendation of a Fundraising Preference Service to allow members of the public to opt out from all communications from charities. The swift acceptance by the Minister for Civil Society (within two weeks) of all the recommendations of the Review effectively rendered moot any defence the charity sector might have offered of its fundraising practices.

Is the criticism fair?

It is entirely possible that the criticism of the charities involved was not fair. As we now know, the original story that Olive Cooke’s death was caused by aggressive charity fundraising was not true.

The subsequent ‘exposés’ of charity telemarketing practice, which followed shortly afterwards and formed a substantial part of the evidence submitted to the Etherington Review, were not scrutinised in detail in the written report and no assessment was made of their truth or fairness.

Only 27 submissions to the Etherington Review came from members of the public and many of those were charity fundraisers writing in a private capacity.

In the Etherington Review process, attempts by some charity sector experts to present the argument that the volume of complaints about fundraising methods was low in comparison to the overall volume of fundraising communications were dismissed as ‘troublesome’ (Etherington Review, p. 59).

One area in which the criticism can be regarded as entirely fair is around the use of donors’ data by several charities in list-swapping. The Information Commissioner found very poor standards of data protection among several charities it investigated as a result of newspaper stories. And the Fundraising Standards Board’s report into the use of Olive Cooke’s data by charities revealed that her details had been shared with third parties by 24 charities, that seven out of ten charities had obtained her details from a third party, and that her details were held on donor lists maintained by 22 separate commercial suppliers. But less than a fifth of the charities who wrote to her offered her the option of stopping further communications in a way that would have been easy for her.

Saddest of all, as a result of the sustained media stories focusing on fundraising techniques – which Ian MacQuillin, director of the Rogare fundraising think tank at the University of Plymouth, has characterised as an ‘ideological attack’ on the charity sector – it would appear that public opinion on the UK charity sector has shifted significantly.

A recently announced YouGov poll shows that more than two-thirds of the 2,000 people surveyed felt the media criticism of charity fundraising methods was fair. And, arguably even worse, nearly two-thirds of those surveyed didn’t think the charity sector was taking the criticism seriously enough.

So whether the criticism was originally fair or not, it has now become generally accepted in public discourse that it was.

What should UK charities do about it?

It is certainly the case that UK charities need to look at their communications with donors, and how they explain to donors how and how often they will contact them, in a new light.

A new Commission on the Donor Experience has already been put in place and is starting a nationwide consultation of charity fundraisers. And, at the same time, Rogare has published the first comprehensive review of relationship fundraising theory and practice for 25 years. Both of these are welcome and important initiatives.

It is also likely that charities – from trustees down – will need to give much thought to ethical issues, particularly around how they balance their duty to fundraise on behalf of their beneficiaries with their duty to respect their donors. Again, the Rogare think tank is leading the way in this area, with a project to devise a ‘normative framework’ for fundraising ethics – in other words, an attempt to conceptualise why fundraisers ought or ought not to adopt particular practices.

Some have suggested that the UK urgently needs a campaigning organization to speak out on behalf of charities, similar to the Charity Defense Council which now exists in the United States. And it may even be possible that many UK charities will have to rethink their entire strategic approach to fundraising in the light of the events of the last 12 months.

This may seem like a dramatic statement, but consider the following:

As a result of the data protection failings identified by the Information Commissioner, two major UK charities, the RNLI and the British Red Cross, have recently decided to move to an opt-in only model of consent from their supporters. The RNLI expects this to cost up to £36 million – around 20 percent of its income – over the next five years. The Red Cross has not given a similar estimate of the cost of their policy, but has announced plans to save £10 million a year in costs, in anticipation of losing between 10 to 20 percent of its income from direct marketing.

How might charities like the Red Cross and RNLI replace that level of income?

The UK charity sector as a whole receives 46 percent of its income from individuals, according to NCVO’s UK Civil Society Almanac. But the majority of these donations are either from bequests or mass appeal income.

Looking at a study of 17 top UK fundraising charities called FundRatios, it would appear that only 4 percent or so of their income comes from major gifts.

This is in sharp contrast to the charities in the UK that receive the largest number of major gifts – universities and cultural institutions. For these institutions, major gifts make up a substantially larger proportion of their fundraised income. And it is not necessarily the case that it is just the ‘prestige’ of these institutions that has led to their success. These charities have made serious investments in the major gifts function, generally devoting a far greater proportion of staff and budgetary resource to major gifts fundraising than do most mainstream charities. Given this it is not entirely unlikely that they would be more successful.

And in the US, where major gifts fundraising is also far more established, donations from individuals make up around 72 percent of voluntary income, compared to 46 percent in the UK.

In fact, if you were to increase the amount of income given by individuals to the UK charities in the FundRatios report so that it made up 72 percent of the total as in the USA, it would result in £465 million extra for the charities involved, or around £27 million each in additional income.

UK charities find major gifts fundraising difficult. Trustees and chief executives need to play an active role in major gifts fundraising in order for it to succeed. And many do not care to do this, preferring to retreat from fundraising under the cover of ‘governance’ responsibilities, and leave it at arm’s length in the fundraising department.

But there is an ethical question here. Is it right to rely predominantly on the modest contributions of the less affluent – who generally give a far larger proportion of their income to charity than the wealthy – while failing to effectively approach those who can, and might, give substantially more if asked?

Developing a strong major gifts function may be an entirely ethical approach for UK charities to take, as well as being the only sure way in which charities can protect themselves from a squeeze in income from mass appeals – rebalancing their sources of income, so that they have much less need in future to treat their small individual donors as cash machines.