My Lords, we are all understandably concerned about the reports of the fundraising activities used by a small number of charities. There is certainly no complacency on behalf of the Government on this issue; the debate and the possible disagreement are over what should be done. I hope, as the noble Baroness, Lady Barker, just said, that the self-regulatory bodies note the fact that everyone wants action to be taken and to be taken soon.
Last week my honourable friend from the other place, the Minister for Civil Society, Rob Wilson, addressed fundraisers and made it clear that the clock is ticking for them to get a grip on self-regulation. He said:
“I am giving selfregulation an opportunity to demonstrate it can work effectively and make the short term and long term reforms necessary. I urge you to take that window of opportunity seriously as the window may not remain open for much longer … Change is essential. You should embrace it and lead it, rather than wait and allow others to do it for you”.
The noble Baroness, Lady Hayter, cited a report in the Daily Telegraph. The Daily Telegraph is obviously a fantastic newspaper but I would not believe everything that I read in it. I am not sure where that particular date has come from, but I should stress that, as I have said, self-regulatory bodies have a relatively short opportunity to demonstrate that they are getting to grips with self-regulation.
It has been less than two months since poor fundraising practices were thrust into the media spotlight following the sad and tragic death of Olive Cooke. The extent to which she was influenced by poor fundraising practices is not entirely clear, but the issue, as the noble Baroness so rightly said, has clearly struck a chord with the public. Since then there has been a steady stream of media reports about unacceptable fundraising practices—whether direct mail, telephone fundraising or door-to-door fundraising.
As I said, I think almost everyone agrees that there needs to be change. The question is what change and who should lead it. It strikes me that there are three questions that need answering: first, whether the standards fundraisers have set themselves are high enough; secondly, whether the structures for self-regulation are the right ones; and thirdly, whether fundraisers and the charity
trustees who oversee them accept the need for change to ensure that donors are treated with honesty, respect and decency.
On the first question, whether the standards for fundraisers are high enough, the answer is a clear no in relation to some fundraising practices. That is why the Minister for Civil Society met the regulators at the beginning of June and set them a challenge to improve standards in a number of areas. This work is continuing but it must bear fruit.
I welcome the announcement by the Institute of Fundraising, on 24 June, that it is strengthening its code of fundraising practice by requiring door-to-door fundraisers not to knock on doors that have a “no cold calling” sticker. However, that is something it should have done proactively some time ago. I know that several review groups have been established and are looking at various issues, including options for opt-in and opt-out, frequency of contact, and whether there can be a one-stop shop for people who want to come off all fundraising contact lists.
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The second issue is structures: is the current system of self-regulation fit for purpose? We cannot have any blame-shifting or buck-passing between the three self-regulatory bodies. They need to work together and show that they can do so in the public interest. A good start would be revisiting the many sensible recommendations put forward by my noble friend Lord Hodgson in his 2012 Charities Act review. That said, I welcome the announcement last week that an independent chair and new independent board members will be recruited to the institute’s standards committee—the body that sets practice in fundraising. That is a good start.
The final issue is perhaps the most important of all. Fundraising charities need to put the donor’s needs at the centre of fundraising and not treat donors and the donations simply as a line on a spreadsheet. How would a charity’s trustees feel if they were on the receiving end of their own charity’s fundraising practices where they fall below what is expected? Good fundraising charities already put their donors in control of the level of engagement they have with the charity and do not engage in high-pressure fundraising tactics.
We all accept that charities need to ask in order to raise funds for their vital work, as my noble friend Lord Hodgson said, but this must be done responsibly if it is to be sustainable. Otherwise, there is a real risk to public trust and confidence in charities. As the noble Baroness, Lady Barker, said, Sir Stuart Etherington, the chief executive of the NCVO, put it well last week when he said that fundraisers are “overfishing the waters”, and:
“If the public’s experience of fundraising is negative, it will over time erode trust in charities, our most precious commodity”.
Once again, this is an issue of balance. Clearly, charities need to raise funds, but they also must ensure that donors are treated with the same values and respect as they would treat their beneficiaries.
Those responsible for self-regulation of fundraising are taking steps to address the public’s concerns about unacceptable fundraising practices, but there is a long way to go. Others have a role to play here, too.
Responsibility for fundraising, like all charities’ activities, ultimately sits with a charity’s trustees. Trustees need to take a much more active interest in their charity’s fundraising, not just in the income it brings in but in how it portrays their charity. Fundraising is often the public face of a charity, and hard-won trust can be quickly lost if a charity gets it wrong.
The Charity Commission, too, has an important role. Where there is deliberate abuse of fundraising, persistent poor practice or misleading of the public in a way that benefits the fundraising organisation disproportionately, and which could undermine public trust and confidence, the Charity Commission can and does take action against charities’ trustees for failing to fulfil their duties.
Indeed, only recently the commission intervened in a case of poor fundraising practice, where only a very small proportion of money raised by an external fundraising company went to the charity. The vast majority went to individual fundraisers, the fundraising company and on administration costs. The commission, concerned about damage to the charity’s reputation and to public trust and confidence more widely, sought an account for the fundraising practices employed, examined accounts and instructed it to provide the charity’s financial controls, among other documents, to determine what had happened. Ultimately, the charity terminated the contract with the fundraising company. This activity is now undertaken by volunteers. The commission has published a case to highlight the wider lessons for the sector.
Furthermore, the commission is revising and strengthening its own guidance on fundraising and trustees duties. A draft version of the revised guidance is expected to be published for consultation later this year. It will set out more clearly the expectations of how trustees of fundraising charities should meet their responsibilities, including to the care and protection of donors.
Therefore, we do not think the time has yet come for statutory regulation. There are difficult legal questions about the feasibility of using secondary legislation to mandate self-regulation against a standard set by a private body. My concern is that the amendment as it stands would trigger an irreversible slide to statutory regulation. Whether such a slide can ultimately be avoided depends upon the will and leadership in the charity sector to address this issue satisfactorily soon. I welcome the announcement today that new guidance will be produced by sector bodies for charities on the management and governance of fundraising to help strike the right balance in this area. This guidance will sit alongside and complement the commission’s.
As the noble Baroness, Lady Hayter, said, we have the reserve power which would enable Ministers to introduce statutory regulation should the sector fail to rise to the challenge, but we do not believe that it should be exercised now. It is worth pointing out that most of the charities that have been in the media recently for poor practices are already members of the FRSB, so while there is a need to increase membership, it is just as important that bodies responsible for regulation must raise the standards themselves. I hope that on that basis the noble Baroness will withdraw the amendment.