Charities need to “tighten” their subcontracting arrangements and focus more on due diligence and contract management, the Fundraising Regulator has said in its first ever market inquiry report.
The report, which was commissioned after a Wales Online investigation uncovered that external fundraisers were pressuring people to make donations, urges all charities to review their face-to-face fundraising processes and mitigate risks of poor practice.
It says that charities should not allow training and monitoring to be sacrificed for commercial considerations.
Nonetheless, the inquiry found “many examples of good practice, and a widespread willingness to do the right thing”.
Its report also says that performance-related pay for fundraisers “can be a success both financially and in regard to compliance”.
The regulator is currently investigating Great Ormond Street Hospital, which commissioned its own inquiry after reports of “pressure selling” in the Times, and National Deaf Children’s Society and SOS Children’s Villages UK, which were both named in the Wales Online report.
‘Nothing inherently wrong with subcontracting’
The regulator carried out five fact-finding workshops with 53 people from charities and 25 from fundraising agencies in November and December 2023 for the inquiry.
Gerald Oppenheim, chief executive of the Fundraising Regulator, told Civil Society that while there is “nothing inherently wrong with subcontracting”, charities should be mindful of how they use such agencies.
Oppenheim said: “When a fundraiser is on somebody’s doorstep, wearing the charity’s t-shirt or sweatshirt, they are acting for the charity and it’s all being done in the charity’s name.
“So there’s every interest, or there should be, in making sure everything is as it should be, that the values are good, the behaviour is good, and the approach is polite and respectful.”
Oppenheim said more charities were looking to maximise their income at the moment due to the difficult economic environment.
“If they decide that they need to employ fundraising agencies to help them on that, then the market inquiry report is there to give them good advice and guidance on the things they should be thinking about and doing to get better,” he said.
Jim Tebbett, who led the inquiry, said: “As we carried out the workshops, it became very apparent that although there is evidence of poor practice in the sector there’s also evidence of face-to-face fundraising being done really well.”
“It’s essential that there’s a clear line of sight from the trustees, from the charities, to the agency, to those who fundraise on their behalf. That hasn’t always been the case,” said Tebbett, who was appointed last year as the regulator’s first head of proactive regulation and projects.
“Clearly what’s been seen in the press shows really concerning behaviour, but once we spoke to other sector organisations, and especially speaking to charities and agencies and workshops and listened to their experience, it became really clear that subcontracting itself doesn’t have to be a problem. It’s only a problem if it’s not done properly.”
Performance-related pay ‘can be a success’
The regulator’s Code of Fundraising Practice, which it is reviewing, advises charities that they “must not use commission payments unless you have explored and exhausted all other sources of fundraising investment”.
But its inquiry report says: “Some workshop participants advocated that performance-related pay does not in itself lead to bad practice.
“This is particularly so when other performance indicators are used alongside sign-ups, such as feedback from donors and attrition rates.
“The essential factors are the standard of training, monitoring and the overall organisational culture.
“If these are robust, performance-related pay can be a success both financially and in regard to compliance.”
The inquiry report adds that charities are ultimately responsible for fundraising carried out in their name, and therefore for the actions of all third parties they use to fundraise at each point in the supply chain.
The report recommends that charities must have explicit discussions about whether subcontracting will be permitted in the contract with the main agency they contract with and expressly prohibited if not.
If subcontracting is permitted, charities and agencies must ensure that any subcontracted services are provided to a standard that is no less than that agreed in the primary contract.
Commission: ‘Public generosity can never be taken for granted’
Holly Riley, head of strategic policy at the Charity Commission, said: “We welcome today’s report from the Fundraising Regulator which puts an important spotlight on the risks and issues that all trustees should be aware of when using subcontractors to fundraise on behalf of their charity.
“As stated in our guidance, all charities should raise money in a considerate and responsible way, mindful that public generosity can never be taken for granted.
“We continue to work with the Fundraising Regulator in setting out expectations and supporting the sector to follow best practice.”
Claire Stanley, director of policy and communications at the Chartered Institute of Fundraising, said: “This is a useful and informed report from the Fundraising Regulator.
“We are glad to see it acknowledges the importance and value of door-to-door fundraising – it is absolutely vital in the fundraising efforts of so many charities across the country, and one of the most effective methods of raising much-needed money, increasing awareness of causes and engaging with members of the public.
“We have a positive outlook on the future of public fundraising, and we know our members are committed to best practice.
“We will engage further with them, and use this report, to form the basis of our work in producing new or updated guidance on due diligence, training, monitoring, contractual standards, payment mechanisms, and how accountability will apply across the subcontracting chain.”
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