The 2015 charity fundraising controversy: lessons for trustees, the Charity Commission, and regulators Contents

2Fundraising and the allegations

The Importance of Fundraising

9.Charities rely upon fundraising to carry out their activities. Analysis by the National Council of Voluntary Organisations (NCVO) shows that charities received £18.8 billion pounds from individuals in the financial year 2012–13.4

10.The charity sector is substantial, complicated and varied. The latest charity register contains 164,889 entries. Of those, only 6.4% (10,619) have an income above £500,000, who together have an annual income of £62 billion - 88.9% of the sector’s total income. This includes income from sources other than fundraising, including commercial activities like charity shops, and from Government contracts. A majority of charities earn less than £100,000, and 41% of them less than £10,000 a year.5

11.The Fundraising Standards Board (FRSB) told us that most direct marketing and what are known as ‘public collections’ come from larger charities. Public collections include fundraising on the street, whether by collecting cash or by inviting people to sign up to longer-term donations, but also door to door collections and other collections from private property.6 In 2014, the FRSB estimated that charities with a turnover of over £10 million were responsible for 85% of direct marketing and 73% of public collections by value. Charities with a turnover under £1 million pounds were responsible for just 0.5% of direct marketing and a negligible amount of public collections.7

12.The fundraising landscape is increasingly competitive. A large charity can spend in excess of £20 million a year on its fundraising activity.8 In 2014, 93% of surveyed charities said that fundraising had got tougher in the previous 12 months, and 94% of them thought it would get even tougher in the succeeding 12 months.9 The Charity Commission told us that the “harsh reality is that competition for funds, particularly for larger charities, large fundraising charities, is fierce and fiercer than it has ever been”.10

13.Some charities rely heavily upon donations from certain groups within society. Save the Children told us that 58% of their donor base was aged over 51 (compared to 45% of the general population). The RSPCA told us that 72% of their donors were either “empty nesters” or “retirees” (a greater proportion than in the general population).11 Battersea Dogs and Cats Home told us that their supporters tend to be aged over 45.12 Similarly, 19.4% of Oxfam’s donors whose age is known are over the age of 65, which is a slightly higher proportion than in the general population.13 The RSPCA told us that this was typical of the sector as a whole.14

14.Fundraising for charities can range from a national or international campaign, down to a purely local effort, like raising money for the local school or hospital. Different types of charities have different types of relationship with their donors: the relationship between a university and its former students, for example, is unique to that sector.15 Fundraising regulation must be flexible enough to deal with the different sizes, types and behaviours of different charities.

Allegations of poor practice made in the press

15.In May 2015, Olive Cooke, who was the UK’s oldest poppy seller, died. At the time of her death, allegations were made that she had been pressurised by leading charities to make donations to them.16 Newspaper reports alleged that she received 267 letters from charities every month. She had told the Bristol Post in 2014 that she was “overwhelmed” by all these requests for donations.17 Media reports confirmed in the summer of 2015 that her death was not related to fundraising.18 The Fundraising Standards Board published its own report on the case last week.19

16.In June 2015, the Daily Mail began an investigation into charity fundraising. Katherine Faulkner was the journalist on the Daily Mail who covered the story. She worked for three months under cover inside a telephone fundraising contractor called GoGen.20 Many leading charities had contracted with GoGen to raise money on their behalf. The Daily Mail continued to investigate fundraising into the autumn of 2015, publishing stories about Samuel Rae’s experiences. Despite having completed a lifestyle survey, Mr Rae’s data was then sold to charities who in turn sold them on to other charities, firms and even to criminal lotteries.21 The Sun carried out an undercover investigation of Pell and Bales, another telephone fundraising company.22

17.The Daily Mail’s investigation uncovered a number of abuses by fundraisers and charities which included

a)Ignoring the Telephone Preference Service (TPS): The Telephone Preference Service allows consumers to opt out of receiving any unsolicited telephone calls. Katherine Faulkner told us that GoGen believed that they “did not need to bother with the Telephone Preference Service”, as the people they contacted had indicated either that they were willing to be contacted by a charity or might donate to a particular cause.23 As discussed later, this claimed consent was invalid.

b)Gaining consent for calls: some charities make it difficult or impossible for donors to opt out of consenting to further communication from them or other charities. For example, both Great Ormond Street Hospital and Macmillan Cancer Support required donors to agree that the charity could pass on their details to others.24

c)Selling data: in the case of Samuel Rae, the Daily Mail (assisted by Mr. Rae’s family) were able to show that “his data was sold on hundreds of times.” His data was sold on by some charities to scamming companies.25

d)Obtaining donations from vulnerable people: we heard allegations that some fundraisers behaved unethically in relation to vulnerable people. GoGen had a call script for vulnerable people in which the fundraiser continued to press for a donation after discovering the individual was confused or suffered from dementia. Katherine Faulkner told us that there was a “certain amount of what I would call manipulation of vulnerable and elderly people”.26 She recounted a shocking instance where an elderly lady was unable to work out how much she was donating to a particular charity, yet because she could remember how much she had increased her donation by, she passed GoGen’s tests for vulnerability, and her donation was taken.27

e)Targeting vulnerable people: we heard evidence that in some charities, “vulnerable and elderly people have been seen as fair targets”.28 The Fundraising Standards Board found that in the case of Oxfam and Listen Ltd, this allegation was unsubstantiated.29

18.The Fundraising Standards Board conducted investigations into Diabetes UK’s and Oxfam’s work with their sub-contractor Listen Ltd. Diabetes UK, Listen Ltd and Oxfam are members of the FRSB, and so bound to follow the code.30 These investigations supported some of the Mail on Sunday and Daily Mail’s allegations. In the case of Diabetes UK the FRSB found that:

In the case of Oxfam, the Fundraising Standards Board found that:

Listen breached the code by failing to ‘verbally deliver the required solicitation statement’ and ‘by limiting opt out requests to three pre-selected phrases.’34 The Street Academy were found to have breached the code by failing to issue the required verbal solicitation phrase. They also failed to confirm that a follow up call would be made to ask for a regular donation.35

19.So far, the Fundraising Standards Board has only published investigations into Diabetes UK, Oxfam, Listen Ltd and the Street Academy. They are conducting other investigations currently into the other allegations made in the media.

20.In the case of Oxfam, the FRSB found against the charity on all the substantive allegations. However they criticised the Mail on Sunday for their headline, ‘OXFAM TARGETS DONORS AGED 98’ which they found to be “not only misleading but inaccurate and untrue.”36 The FRSB went on to say -

The FRSB has seen no evidence to suggest that Oxfam had targeted any age group during its PSMS campaign. There was also no evidence to suggest that Listen had done so, or had actually contacted a 98 year old on behalf of the charity. The allegation arose from a general Listen training exercise which did not specifically focus on the delivery of Oxfam’s PSMS campaign.37

The Mail on Sunday submitted their own evidence to this inquiry disputing both the FRSB’s finding in respect of the headline, and FRSB’s fitness to adjudicate on newspaper reporting -

It [the FRSB] has seemingly wilfully diverted attention away from the serious wrongdoing of Oxfam and its agents which was uncovered by a powerful Mail on Sunday investigation (carried out by an award-winning journalist and shortlisted for the Investigation of the Year award) by giving priority in its report to wholly unfounded criticisms of our article and in particular its headline, which the FRSB felt able to state was “untrue” “inaccurate” and “misleading”, relegating to a poor second place what should have been of paramount importance to any regulator, namely its censure of the serious regulatory breaches our investigation revealed. As a result, Oxfam is misleadingly declaring it has been cleared of the most serious allegation against it. The FRSB has undermined its investigation, and indeed its very raison d’etre and exposed itself as a weak and ineffective regulator that is not fit for purpose.38

21.These fundraising issues are not isolated episodes. There is plenty of evidence of public concern about fundraising, before these allegations were made. IPSOS MORI conduct a biennial survey of the public about charities. Since 2010, a majority of the public have reported that “some of the fundraising methods used by charities make me uncomfortable”.39 Research for New Philanthropy Capital shows that 15% of the public felt “there was something wrong with how charities were raising their money”.40 OFCOM in its Nuisance Calls Panel Survey, in January to February 2015, noted that 12% of the public found calls from charities “distressing”: the highest proportion of any sector.41 The Charity Commission confirmed that these polls reflect its own information.42

22.Despite this, New Philanthropy Capital and Cancer Research UK told us that most people trust charities, more than most other institutions, and most fundraising “happens to a high standard”.43 A majority of the public do find calls from charities annoying, but this is substantially lower as a proportion than any of the other institutions which commonly call the public.44

23.Fundraising supports charities in carrying out their duties to their beneficiaries. Charities do very important work to support their beneficiaries all over Britain and internationally. In a 2014 survey for the Charities Aid Foundation, 70% of people reported giving money to charity in the previous 12 months. Other surveys report similar figures: the Halifax Giving Model found that 75% gave to charity and Mintel’s Charitable Giving in the UK report found 76% gave to charity in 2014.45 83% of donors increased their donation in 2015.46

24.We have no doubt that most of the charities in the UK do not engage in the practices outlined above. However, the behaviour of some charities has damaged the reputation of the sector as a whole. Smaller charities told us that these practices have a direct effect on the reputation of all charities and make it harder for them to raise money from the public.47 The good work done by most within the sector can be undermined very easily. This makes it all the more essential that greater care is taken over the governance of fundraising in some charities and its regulation is reformed. Good governance in general is about sustainability of reputation in the long-term as well as of finances.

4 National Council of Voluntary Organisations, Civil Society Almanac Fast Facts, June 2015

5 Charity Commission Recent charity register statistics (September 2015)

6 Institute of Fundraising Public Collections

7 FCS25 (Fundraising Standards Board)

9 Price Waterhouse Coopers Managing Charities in the new normal, 2012, p.3

10 Q 425 Oral Evidence 3.11.15, FCS7 (Lepra)

11 FCS43 (RSPCA)

12 FCS18 (Battersea Dogs and Cats Home)

13 FCS34 (Oxfam), Office for National Statistics Overview of the UK Population

14 FCS43 (RSPCA), Charity Aid Foundation UK Giving 2014 p.8

15 FCS47 (Russell Group)

22 The Sun Will gotten gains (June 2015)

23 Qq 104–105 Oral Evidence 20.10.15

29 Fundraising Standards Board Oxfam and Diabetes UK and Listen Ltd

30 Ibid

31 Fundraising Standards Board, FRSB Adjudication on Diabetes UK and Listen Ltd, November 2015

34 Ibid.

35 Ibid.

36 Ibid.

37 Ibid.

38 FCS49 (Daily Mail)

39 In 2010, 60%, 2012 67%, 2014 66% of respondents agreed with that statement. IPSOS MORI Public Trust and Confidence in Charities (June 2014) p.10

40 FCS27 (New Philanthropy Capital)

43 FCS19 (Cancer Research), FCS27 (New Philanthropy Capital)

44 53% of respondents found calls from charities annoying. This compares to 88% for accident claims, 86% for PPI claims, 84% market research, 83% for TV insurance, and 60% for phone/broadband services. OFCOM Landline Nuisance Calls Panel Survey Wave 3 January–February April 2015 p.10

45 Charities Aid Foundation UK Giving 2014 (April 2015) p.7

46 Halifax The Halifax Giving Monitor 2015 (March 2015)

47 FCS37 (Keith Adams), FCS7 (Lepra), Age UK Bury Written Evidence To be published, Guardian Are charities in denial about the true harm done by fundraising scandals (November 2015)

© Parliamentary copyright 2015

Prepared 21 January 2016